Security Deposit Interest Accrual

[Former Member]

We have a requirement to calculate SD interest on monthly basis and book those amounts to the GL.  We are running FPINTM2 in simulation mode and then have a custom program to summarize the GL bookings into SD Interest Owed and Expense GLs.  However whenever move-out happens deposits are released and SD interest is paid out for certain accounts which hit the cash and the expense GLs.  Now the following month when we are re-calculating SD interest owed we are reversing out the GL documents posted earlier and then rebooking for the current month calculations.

I would like to know if someone else had a similar requirement and is there any standard way of achieving this.  Thanks in advance.

[AmlanBanerjee]

Hi Yuvraj,

I would recommend you to run the transaction FPINTM2 in simulation mode only for active accounts.

You can use event 2015 to block the Security deposit interest calculation for in-active accounts.

Now during the SD release at the time of move-out, you can code at event 870 to calculate the interest and trigger the custom program to summarize the GL bookings in to the SD interest owed and expense GL's.

This will ensure that you don't have to reverse the GL documents posted.

Hope it helps..

Thanks,

Amlan

[Former Member]

Thanks Amalan for the reply.

I have general questions about the SD Interest application.

When SD interest is posted we are Dr Liability and Cr A/R.

When we are accruing SD interest (FPINTM2 simulation run) we are Dr. Expense and Cr. Liability.

The issue is when SD interest is paid out we are not booking any Expense entries.

Eg.  CA      -     Deposit Amount     -     Interest Accrued     Interest Paid               Inter Accrual on Feb

         111          100                              1 on jan 31                                                  1.05

          222          200                             2 on Jan 31               2.05 on Feb5

Dr. Exp - 3        Cr. Liab - 3

                        Dr Liab - 2.05          Cr A/R - 2.05

Cr. Exp - 3         Dr Liab - 3 (reverse previous month accrual)

     Deb - 1.05     Cr Liab 1.05 (re-book current month accrual).

The issue with the above postings is that we are missing the Expense of 2.05.  Is it okay to hit the Expense GL at the time of Deposit Interest posting instead of hitting the Liability account.  It seems like I am missing something. 

[william_eastman]

It sounds like you have an account determination error - the system can certainly post to those accounts.  Having said that, my accounting background tells me interest is a liability and not an expense and so the entries are correct to me.

[Former Member]

Hi ,

         you are right the second entry should be

Interest Paid(Expense ) -2.05            Cr A/R -2.05

yes, you should hit Expense G/L at the time of interest posting .I think the only enhancement you can do is to automate your reversal of provisions in the subsequent month/year.This functionality exists in FI.

you can do away with creating provisions if you post (Run your actual interest run Before month/year end ).