EDM: Deal With Long First Coupon Period Has Incorrect Calculation for Accrued Interest (Doc ID 2914821.1)

Last updated on DECEMBER 12, 2022

Applies to:

Symptoms

Interest Accruals are recalculated when a Deal is setup with a Long First Coupon Period. Initial Interest Accruals are calculated correctly. However, if the first Interest Payment is paid and the Payment Date is changed on a future Interest Payment (ie 03/01/2023 to 03/02/2023), the Accrued Interest on the Estimated Interest Accruals page is recalculated incorrectly for the Periods that were already paid by the first Interest Payment. Accrued Interest has increased. The sum of the Interest Accruals is no longer equal to the first Interest Payment. As a result, this is affecting the Interest Accrual amount that is generated the next month by Automated Accounting. The amount generated is almost double the amount that it should be.

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 = 02/03/2022
b. Term = 1852
c. Maturity Date = 03/01/2027
d. Day Count Basis = 30/360
e. First Coupon = Long First Coupon Period
3. Click Cashflows
4. Cashflows page shows the Interest Payment due on 09/01/2022 for a particular amount
5. Navigate to Deal Management > Capture Deals > Estimated Interest Accruals
6. Accrued Interest is the same for all Periods starting from Period 3
7. Sum of Accrued Interest from Feb 2022 – Aug 2022 is equal to the 1st Interest Payment Due on 09/01/2022 from Step 4
8. Navigate to Cash Management > Treasury Accounting > Automated Accounting
9. Run Automated Accounting for the Deal with Acctg Events End Date = 02/28/2022
10. Run Automated Accounting for the Deal with Acctg Events End Date = 03/31/2022
11. Run Automated Accounting for the Deal with Acctg Events End Date = 04/30/2022
12. Run Automated Accounting for the Deal with Acctg Events End Date = 05/31/2022
13. Run Automated Accounting for the Deal with Acctg Events End Date = 06/30/2022
14. Run Automated Accounting for the Deal with Acctg Events End Date = 07/31/2022
15. Run Automated Accounting for the Deal with Acctg Events End Date = 08/31/2022
16. On the Estimated Interest Accruals, Accrued Interest remains the same
17. Navigate to Cash Management > Settlements > Select Settlement
18. Select the Interest Payment
19. Click Select Payments
20. Status changes from Unselected to Approved
21. Navigate to Financials Gateway > Process Payments > Payment Dispatch
22. Dispatch the Payment
23. Dispatch Status = Paid
24. Run Automated Accounting for the Deal with Acctg Events End Date = 09/30/2022
25. On the Estimated Interest Accruals, Accrued Interest remains the same
26. Display the Deal
27. On the Deals page, click the Interest Dates link
28. On the Interest and Payment Dates page, Payment Date = 03/01/2023
29. Change the Payment Date to 03/02/2023
30. Click Apply then OK
31. On the Deals page, click the Interest Dates link
32. On the Interest and Payment Dates page, confirm Payment Date = 03/02/2023
33. On the Deals page, click Cashflows
34. On the Cashflows page, for the Interest, Settlement Date is now 03/02/2023 instead of 03/01/2023
35. On the Estimated Interest Accruals, Accrued Interest changed for Periods 3-8 (Mar 2022 – Aug 2022) -- Accrued Interest has increased
36. Sum of Accruals from Feb 2022 – Aug 2022 is no longer equal to the 1st Interest Payment that was paid on 09/01/2022
37. Run Automated Accounting for the Deal with Acctg Events End Date = 10/31/2022
38. Navigate to Cash Management > Treasury Accounting > Accounting Entries
39. Display the Accounting Entries created for Acctg Date = 10/31/2022
40. Interest Accrual amount displayed does not match the Accrued Interest displayed on the Estimated Interest Accruals page for Year 2022/ Period 10 -- Interest Accrual amount is almost double the amount of the Accrued Interest
41. Run Automated Accounting for the Deal with Acctg Events End Date = 11/30/2022
42. Run Automated Accounting for the Deal with Acctg Events End Date = 12/31/2022
43. Run Automated Accounting for the Deal with Acctg Events End Date = 01/31/2023
44. Run Automated Accounting for the Deal with Acctg Events End Date = 02/28/2023
45. On the Deals > Interest and Payment Dates page, Interest Payment due on 03/02/2023 has a Payment Amount = -x,xxx,xxx.xx
46. Navigate to Cash Management > Treasury Accounting > Accounting Summary
47. Interest Accrual amounts from Sept 2022 - Feb 2023 do not add up to the Payment Amount in Step 45, which is incorrect -- Interest Accrual amounts should add up to the Payment Amount in Step 45

Changes

Cause

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