Data Entry

Logged-In Account 

The first nominal account is the ‘logged-in account’. In practice this is usually the bank account. However it is referred to as the logged-in account as it can be used for payments and receipts from other sources such as petty cash or from the Suspense account. To log in to the logged-in account click Account on the Client Menu screen. It is possible to have no logged-in account set, in which case you must enter the logged-in account in Data Entry.

Entry Details 

The Entry details screen has three buttons:

• Close, returns you to the Add Bank Payments screen.
• Additional, allows a second date, reference or description to be added to the entry. In practice the second description is the most useful field. It is a longer description of the entry allowing up to 80 characters. The second description is shown on most reports, if present. The second date and reference are only available through Transaction Reporter.
• Postings, The Postings details screen shows the entry in the form of debit and credit lines. If the logged-in account and the analysis account have been entered then the first two lines are pre-defined. If the entry has any extra lines they can be added here. In other words the Add Bank details screen is sufficient for double-sided entries; but the Postings details screen is used for multi-sided entries.

It is impossible to exit from the Postings details screen until the entry sums to zero. The Unallocated amount appears on the screen. A useful shortcut is to press the Return key when entering an amount on the Postings details screen, which defaults the figure to the Unallocated amount and the entry balances. Pressing the Return key again takes you to the OK button and so out of the Postings details screen.

Another useful shortcut when entering multi-sided entries is to leave the analysis account blank on the Add Bank Payment screen. If this is done you are taken directly to the Postings details screen without needing to select it.

In addition to the account a nd the amount, each line of the entry, after the first two, requests the journal type.

Journals 

The preceding discussion covered Bank Payments and Receipts. Journals follow a very similar approach. They are used for all other Nominal ledger adjustments. The two nominal accounts on the Add Journals screen are referred to as the ‘debit account’ and the ‘credit account’ and are not predefined with the logged-in account. The debit account is the first line of the journal and the credit account is the second. The terms ‘debit account’ and ‘credit account’, are a little misleading. If the first line of the journal is in fact a credit then the amount is entered as negative and is posted to the ‘debit account’!

If a double-sided journal is being entered then the entry can be done entirely through the Add Journals screen. But if a multi-sided journal is being entered then the credit account should be left blank to take you directly to the Postings details screen, where the rest of the entry can be made.

Movement Code 

All investment entries begin with the movement code. This code indicates whether the transaction was a purchase, sale, dividend, interest payment, sale of rights etc. The movement code can be selected by pressing the F2 key within the field. The movement code itself has fields set up on it which tell the system what type of transaction is being entered. For instance, the movement code, DIV, for dividends, has an indicator on it that the transaction is income and that the system should not try to calculate a capital gain on it. You can set up your own movement codes, but when starting this is unnecessary as a fairly comprehensive set has been provided.

Investment 

In Investment Entries you can select a holding from the client’s portfolio by pressing the F2 key. Alternatively the security code can be entered directly. If there is more than one holding of the stock then it is necessary to specify the fund it is held in, (e.g. 00004455 is Abbey National ord 10p), whereas 00004455/2 is the holding of Abbey National in fund 002. If a valid security code is entered and the security does not already exist in the client’s portfolio, you are given the chance to add it.

Property Entries work in a slightly different way. The property is selected from a drop down picklist. If a new property has been acquired then it can be added by clicking Inv Ledger.

Units 

The units of a stock that have been purchased or sold. Some movement codes have an indicator on them that allows the units to be zero. For instance, entering the units on a dividend entry is optional. Units can only be entered to the precision set on the security. Property entries allow a precision of 2.

Description 

The description of the entry is filled in automatically by the system. It is made up of the movement code and a short description of the entry. For instance, a dividend for Abbey National ord 10p has a description of ‘DIV Abbey National Ordinary 10’. It is usually best to leave this description unchanged as the entry appears on both the Nominal ledger and on the Investment ledger. On the Dividends account on the Nominal ledger the description identifies that the entry relates to Abbey National. On the Abbey National account on the Investment ledger the description indicates the entry is a dividend.

If more description is required this is entered in the second description field accessed from the Entry details screen, by clicking Additional.

Nominal Accounts 

The two nominal accounts are described as the Logged-in Account and the Analysis Account. These are usually filled in correctly by the system as follows:

Logged-in Account 

1. The system checks the movement code to determine if the entry is a capital entry or an income entry.
2. Then it checks the Investment Defaults on the fund. If the fund has a Bank Capital or Income Account defined then the Logged-In Account is set to the appropriate account.
3. Otherwise the system uses the client Logged-In account, if defined.
   (The process is a little different if multi-currency is in use and the entry is in a foreign currency. In this case the Logged-In Account is set from the default bank account of the currency of the transaction.)

Analysis Account 

The system uses the investment account’s capital or income account as appropriate.

Entry Details - Capital Gains Details 

There is an extra button available on the Entry details screen for Investment Entries called CGT details. The resulting Edit Capital Gains details screen is used when the CGT value of an entry differs from the accounting value of an entry. This is likely to happen with takeovers and demergers when these fields are filled in automatically by the CCT Wizard. The details of these fields (such as CGT Override Value, Heldover Gain, Indexation on Acquisition etc.) are described in the section on Movement Codes. But without going into detail at this stage it is worth pointing out that the CGT part of the system is fully integrated with the accounting part of the system.

In some systems the CGT system comes from a different supplier to that of the accounting system. This can be a problem because if an entry is edited for accounting purposes the CGT system may not be aware of the change. But with Trust Accounts the accounting system and the CGT system come from the same supplier and are, in fact, a single system.

Some Simple Investment Entries 

PUR - Purchase 

To enter a purchase the movement code is PUR. There is usually no need to enter more than the details required for the appropriate main screen. However if the entry relates to a government stock for which you record Accrued Income, the accrued income allowance (or charge) is requested. If the Certificate Register is in use then details of the movement of the certificate can be entered at the same time as the purchase, if this has been selected in Database Parameters.

SAL - Sale 

To enter a sale the movement code is SAL. Again the accrued income allowance (or charge) is requested, if relevant, as is any certificate movement. The system automatically calculates the accounting profit on the sale and displays this. So if the Postings details screen is viewed there could be up to > postings already filled in on it, e.g.

However, for most sale entries there is no accrued income posting. Several points are worth noting: Although the system immediately calculates the accounting profit on disposal (using average cost) it only calculates the gain for CGT when a CGT Report is run or when the data is imported into CCH Personal Tax.

Investment transactions can be entered retrospectively in the sense that even if a sale has been made an earlier purchase can still be entered. This causes the profit on disposal calculations to be reworked on any subsequent disposals. All of this is done automatically as soon as the entry is posted.

The system can also calculate the accounting profit if you ‘go short’ (i.e. sell shares and repurchase them later). In this case the holding is negative after the initial sale and the profit arises on the purchase transaction rather than the sale. The system can also calculate the CGT on these transactions, although there is a limitation in that it cannot handle positions that are held short over the tax year end.

It is not currently possible to add extra lines to a purchase or sale transaction. So the system cannot explicitly record the commission on a purchase or sale. These amounts could be entered as a second transaction, but in practice that would be cumbersome. Almost all Trust Accounts users record purchases and sales after commission has been added or deducted.

DIV - Dividend 

To enter a dividend the movement code is DIV. The net amount is entered. The system jumps straight to the Posting details to enter the tax. For domestic tax, the system can fill in all the fields automatically:

• If a default ‘UK tax journal type’ has been entered in the client class investment defaults, the journal type is automatically completed.
• The UK tax account from the investment account is automatically completed.
• If the option in Database Parameters to Calculate Tax Credits in Data Entry is ticked, the amount field is automatically completed. The amount can be edited if necessary.

The resulting entry appears as follows:

If the Foreign Tax a/c on the investment account has been filled in then the system fills in a second tax line as follows:

1. If a default ‘Foreign tax journal type’ has been entered in the client class Investment Defaults, the journal type is automatically completed.
2. The foreign tax a/c is automatically completed.
3. You must enter the foreign tax amount manually.

If there are any other lines needed on the dividend (e.g. for collection charges), then these can also be added.

On dividend entries any tax amounts entered automatically update the gross amount of the entry (i.e. the second line of the entry), and there is never an unallocated balance.

INT - Interest 

Entering interest is the same as entering a dividend except that the movement code INT is used.

Other examples of more complex investment entries are documented under Movement Codes.

Prior Year Nominal Entries 

The heading, Prior Year Nominal Entries, refers to bank payments, receipts and journals. Prior year investment entries work differently and are described in the following section. When a prior year nominal entry is posted it only updates the balances for the year in which it was posted. This means that if the entry was dated last year, according to the year end dates in Nominal Client Details, then only the last year balances in a trial balance are affected. No changes are made to the current year balances. The same applies if a prior year entry is edited or deleted.

Sometimes this behaviour is what you want and sometimes not. Suppose that a journal entry is made to last year that reclassifies an investment management expense as a legal expense. Then no change is required in the current year and the system is doing all that is needed. But if there is an adjustment between a current bank account and a deposit account then this change may well need to be brought forwards into the current year. So in this case the user must enter, in addition to the prior year adjustment, a current year adjustment:

For multi-currency clients, prior year nominal entries are allowed, but they are always treated as historic rate postings. Prior year nominal entries never alter the prior year difference on exchange, even when made to a closing rate account.

Prior Year Investment Entries 

Prior year investment entries affect the investment ledger but have no affect on the nominal ledger. So if a matching change is also required in the nominal ledger then a second prior year journal entry is required. However usually no change is required in the nominal ledger. This is because prior year investment entries are usually made in connection with writing up the capital history.

One common scenario where prior year investment entries are made is when a new client is set up and there is not enough time to write up the full capital history. Instead the user enters just an opening balance for each holding which is correct for accounting purposes. Later on when there is a quieter period the user goes back and deletes the opening balance and replaces it with the full history for CGT purposes. However by this stage the client has usually been balanced forwards. So these entries are prior year investment entries. In this case the user does not want to upset the prior year trial balances. This is the reason why prior year investment entries do not affect the nominal ledger.