Effective Hedge Does Not Generate NRECUNR Amount Type During Revaluation

(Doc ID 1371397.1)

Last updated on MARCH 08, 2017

Applies to:

Oracle Treasury - Version: 12.0.0 to 12.1.3 - Release: 12 to 12.1
Information in this document applies to any platform.

Goal

Q1:
You have a hedge that passed effectiveness testing and should therefore receive preferential accounting treatment. You verified we have the JEA setup correctly to your liking but when you generate an Accrual/Revaluation Batch the Amount Type NRECUNR is not used instead UNREAL is used.
This is causing our accounting to be incorrect.?

Steps:
Create Hedge Attribute (17010) > Enter required information >
Set to "Shortcut/Full Effective" > Assign Hedge Items and Hedge Instruments (FX Forward 23086) >
Set Hedge to Current Perform Prospective Effectiveness Testing Set Hedge 17010 = PASS >
Create Revaluation Batch 23012 > Authorize > Run Retrospective Effectiveness Testing >
Hedge 17010 Passes > Create Accrual > Generate Accrual/Revaluation Batch >
Review Account and see the FX Forward 23086 is not receiving Preferential Accounting Treatment.

Q2: The Hedge you are executing is not a Forecast Hedge, a Forecast Hedge in Oracle must go through the fullfillment process which gathers AR and/or AP invoices. You are not hedging AR and AP invoices,
we are hedging project cashflows. This is still a bug and needs to remain open. Again, you are hedging against Forecasted Project Cashflows - not AP & AR Invoices.

Steps:
1. Create two hedge deals similar to the one where you have an issue. Just make sure that
a. the FX pricing model is Market-Deal and
b. time value is NOT excluded on the hedge
(otherwise you will not get the UNREAL amount and the gain/loss will not match).

2. Skip the prospective testing option.
3. One hedge should use Shortcut retro testing method, the other - period offset. To make sure the retro testing method passes, set the GL Daily rates close to the FX Forward rate on the deal and set the tolerance range on the hedge VERY wide (10 to 1000).

So, you should have to identical hedges where the only difference is the retro testing method.

5. Run the accounting cycle, make sure the retro testing passes (if it fails, roll everything back and play with the GL daily rates). Then look at the journal entries.

6. Give us back the results from this if the NRECUNR amount is produced for either of the either of the hedges, or both or none.

Please do not forget to upload any screenshots. Because this is our attempt at reproducing the issue, whatever steps/setups customer will do is the step that we will be using internally, whether or not NRECUNR amount is present in journals.

Solution

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