EAP: Accrued Interest Not the Same for All Periods Even Though Deal Setup With "Same Interest Each Period/ Long First Coupon Period" (Doc ID 2889789.1)

Last updated on AUGUST 16, 2022

Applies to:

Symptoms

Even though Deal is setup with "Same Interest each Period / First Coupon = Long First Coupon Period", Accrued Interest is not calculated the same for each Period on the Estimated Interest Accruals page when a Deal is created for the middle of the month. When Automated Accounting is run, the Interest Accrual amounts on the Accounting Summary page match the Accrued Interest amounts from the Estimated Interest Accruals page. However, the sum of the Interest Accrual amounts on the Accounting Summary page is not equal to its corresponding Interest Payment Amount on the Deals > Interest and Payment Dates page or the Payment amount displayed on the Select Settlements page. This is incorrect. The sum of the Interest Accrual amounts should be equal to the Interest Payment amount.

STEPS
1. Navigate to Deal Management > Capture Deals > Deals
2. Add a Deal where the Instrument Type is associated to a Debt
a. Enter Transactions Date, Settlement Date, Issue Date, and Coupon Start Date = 11/19/2021
b. Term = 10968
c. Maturity Date = 11/30/2051
d. Day Count Basis = 30/360
e. Same Interest each Period / First Coupon = Long First Coupon Period
3. Click Cashflows
4. Click the Interest Dates link
5. Interest and Payment Dates page has 1st Interest Payment due 05/30/2022 for -4,934,166.67
6. Navigate to Deal Management > Capture Deals > Estimated Interest Accruals
7. Accrued Interest amounts, starting from Year 2021/ Period 12, are not the same for all Periods (This is incorrect. They should be the same since Step 2e is setup with "Same Interest each Period / First Coupon = Long First Coupon Period".)
a. For example, Year 2022 / Periods 4 and 5 have different Accrued Interest amounts
8. Navigate to Cash Management > Treasury Accounting > Automated Accounting
9. Run Automated Accounting for the Deal with Acctg Events End Date = 11/30/2021
10. Run Automated Accounting for the Deal with Acctg Events End Date = 12/31/2021
11. Run Automated Accounting for the Deal with Acctg Events End Date = 01/31/2022
12. Run Automated Accounting for the Deal with Acctg Events End Date = 02/28/2022
13. Run Automated Accounting for the Deal with Acctg Events End Date = 03/31/2022
14. Run Automated Accounting for the Deal with Acctg Events End Date = 04/30/2022
15. Run Automated Accounting for the Deal with Acctg Events End Date = 05/31/2022
16. Navigate to Cash Management > Treasury Accounting > Accounting Summary
17. Interest Accrual amounts from 11/2021 - 05/2022 match to Accrued Interest amounts from Estimated Interest Accruals in from Step 7
18. Navigate to Cash Management > Settlements > Select Settlement
19. Interest Payment amount, which is the amount from Step 5, does not match the sum of Interest Accrual amounts from 11/2021 – 05/2022 (This is incorrect. These amounts should match.)
20. If Year 2022 / Periods 4 and 5 had the same amounts (Step 7a states these amounts are different), then the Interest Accrual amounts from 11/2021 - 05/2022 would match the Interest Payment amount in Step 19

Changes

Cause

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