Investments Technical Documentation

This document provides technical guidance for users of the FLEX system regarding the Investments module. The Investments module is designed to manage credit union investments, facilitate accrual postings, and record income generated from investments.

1. Accessing the Investments Module

Users can access the Investments module within the FLEX Main Menu:

GL/Accounting section
Select Investments

2. Configuration Options (System Administration/Configuration > Features)

The FLEX system offers four key configuration options for Investments, found under System Administration/Configuration > Features.

Page 1 Configuration:

Post Investment Initial Purchase: Determines if the initial investment amount automatically posts to the asset general ledger account when a new investment record is added.
- Y (Yes): Automatically posts an entry to the asset general ledger.
- N (No): Does not post to the asset general ledger.

Page 2 Configuration:

Post Prem/Dis to C=Income or D=Assets: Specifies how investment premiums and discounts are handled in the general ledger.
- C (Income): Investment premiums are credited to the general ledger income account.
- D (Assets): Investment premiums are credited to the general ledger asset account.
Accrue INT When Closing Investment: Indicates whether the system should post a final accrual entry when an investment record is closed.
Still Accrue Aftr Invst Principal = 0?: Determines if the system should continue to accrue interest until the end of the month, even after the investment principal reaches zero, based on the book value in the history record.

3. Investments Screen Overview

The main Investments screen displays a list of all existing investments. Key functionalities available on this screen include:

Show Only Open Investments: Filter to display only active investments.
Post Accruals: Initiate the process for posting accrued interest to the general ledger.
Filter: Apply filters to narrow down the displayed investments.
Refresh: Update the list of investments.
Actions:
- Add: Create a new investment record.
- Copy: Duplicate an existing investment record.
- Edit: Modify an existing investment record (double-click or select and click Edit).
- Audit: View audit trail for an investment.
- Delete: Remove an investment record.
- History: View the transaction history of an investment.
- Post: Post interest received, reduction to principal, or discount/premium for an investment.

The investment list typically includes columns such as:

Number
Group
Type
Next Call Date
Maturity Date
Description
Book Value
Market Value

4. Adding an Investment

Adding a new investment involves completing fields across three tabs: General, Step Up Rates, and Miscellaneous. After completing all applicable fields, click Initial Post & Save to save the new investment and post its value to the general ledger.

4.1. General Tab

This tab captures core information about the investment.

Identification Fields:

Group: Credit union-defined field to categorize investments. Once assigned, it is not maintainable as history is tied to the group and number.
Number: Credit union-defined unique identifier for each investment.
Description: Credit union-defined field for a brief description of the investment.

Investment Details:

Type (Optional): Used for grouping investment records; does not affect the actual investment file.
CUSIP # (Optional): Stores the Committee on Uniform Securities Identification Procedures number of the financial institution tied to the investment.
Class Code (Optional): Further identifies the investment within a group (e.g., short-term or long-term).
Interest Rate: The interest rate the investment is earning.
Frequency of Interest Rcvd: Select the frequency at which interest is received.
Interest Calculation Method: Indicates the calculation method (currently supports ‘S’ for simple interest).
Discount/Premium: Indicates if the investment was purchased at a discount or premium. Additional fields will display if either is selected.
Days in Year: Number of days used for interest calculation (options: 360 or 365).
Daily Interest $: System-calculated daily interest amount.
Yield: System-calculated yield of the investment.
Term/Code: Used in conjunction to define the investment term (e.g., years, months, days).
Intent Code (Optional): Indicates the credit union’s intent (e.g., ‘H’ for held until maturity, ‘C’ for callable).
Accrual: Indicates if the investment is subject to auto accrual.
Frequency of Accrual: If ‘Accrual’ is checked, select the frequency for accrual on the investment.
Term in Months: System-calculated number of months in the investment’s life.

Balances:

Book Value: Current book value of the investment, which should match the asset general ledger account balance.
Original Cost (Optional): The actual cost of the investment, including premium or discount.
Market Value (Optional): The market value of the investment.
Total Premium/Discount: The total premium/discount at the time of purchase.
Booked Premium/Discount: System-updated amount of premium/discount booked from the opening date to the current date.
Monthly Premium/Discount: Dollar amount to be booked monthly by the system. If configured, this amount should be manually entered by dividing the total premium/discount by the ‘Term in Months’.

Dates:

Purchased: The purchase date of the investment.
Last Renewed: The last renewal date of the investment.
Maturity: System-calculated maturity date based on the purchase date and term.
Call Date 1/2/3 (Optional): Up to three optional call dates for long-term investments.
Last Accrued: System-updated date indicating when interest was last accrued.
Interest Last Received: System-updated date indicating when interest was last received and posted.
Next Interest Due: System-calculated date for the next interest payment.
Closed: System-updated date when the investment was closed. This field should be blank for open investments.

Accrual Calculation:

Accrued Date: System displays the current date, but a past or future date can be entered for ‘what if’ calculations.
Interest Accrued (MTD, QTD, YTD, Total): System-calculated fields showing accrued interest. The ‘Total’ field should equal the total amount accrued but not yet received.
Interest Received (MTD, QTD, YTD, Total): System-calculated informational fields for interest received totals.

4.2. Step Up Rates Tab

This tab displays and allows the addition of step-up rates tied to the investment. The system considers these rates when posting accruals.

Add: Add a new step-up rate.
Delete: Remove an existing step-up rate.
Start Date: Enter the date the step-up rate should begin.
Interest Rate: Enter the new interest rate.

4.3. Miscellaneous Tab

This tab contains general ledger offsets, financial institution information, and additional settings.

GL Offsets:

Asset Account (Principal/Premium/Discount): Select the general ledger offset for the principal balance. Used for posting reductions to principal and debiting when a new asset investment is added.
Income Account (Principal/Premium/Discount): Select the general ledger offset for posting interest. The system credits this account during accrual posting or when the ‘Post’ option is used.
Accrual Account (Principal/Premium/Discount): Select the general ledger offset for posting accruals. The system debits this account when posting accruals.
- Note: Discount/Premium fields for GL Offsets only appear if ‘Premium’ or ‘Discount’ was selected under the General tab.

Miscellaneous Settings:

Allow Auto Accrual Reversal:
- Checked: Allows accruals to be automatically reversed by the system if the investment is set to auto-accrue. When ‘Post Accruals’ is used, an accrual entry is posted (effective last day of month) and an accrual reversal entry is posted (effective first day of next month).
- Unchecked: End-of-month accruals are posted to the income general ledger account without reversal. When income is received and differs from the accrual, the system posts offsetting entries to income and accrual GL accounts.
Allow Auto Accrual After Matured: If checked, allows auto accrual posting to continue after the investment’s maturity.
Post Monthly Premium/Discount Accrual: Check this box if the investment has a premium or discount and monthly accrual posting should be automatic. The posting occurs when ‘Post Accrual’ is used, based on the ‘Monthly Premium’ or ‘Monthly Discount’ amount from the General tab. GL accounts used depend on the ‘Credit or Debit Investment Premium to Income’ configuration.

Financial Institution Information (Optional):

Contact Name
Address
City, State, Zip
Broker Name: Enter the broker tied to the investment. Brokers can be managed using the ‘Manage Brokers’ option.
Phone
FDIC #

Additional Info:

Investment Rating: Store the investment rating if known.
Fully Insured: Check if the investment is fully insured.

Notes:

A section for storing additional information regarding the investment, supporting over 40 pages of notes.

5. Initial Post and Save

After completing all relevant fields for a new investment, click Initial Post & Save.

This action saves the new investment record.
It posts the investment value to the general ledger.
Review the details and click Post to finalize.

6. Maintaining an Investment

Existing investments can be maintained by:

Double-clicking on the investment record.
Selecting the investment and clicking Edit.

7. Investment Posting

Investment posting is used for:

Posting a new investment.
Posting interest received.
Closing an investment.

To post, select the investment and click Post.

Investment Posting Fields:

Interest Amount: Enter the amount of interest received.
- If ‘Allow Auto Accrual Reversal’ is selected, posting credits the income GL account.
- If ‘Allow Auto Accrual Reversal’ is not selected, posting credits the accrual GL account.
Reduction To Principal: Enter the amount if a reduction to principal is being posted (e.g., for closing an investment). The system credits the asset GL account set on the Miscellaneous tab.
Discount or Premium: Used to post the amount for premium or discount.
Total: System-calculated total of the transaction.
Method: Select the method for receiving interest or reducing principal:
- Check: Debits the general ledger for the change fund.
- Transfer: Debits the general ledger entered in the ‘GL Offset’ field. Often used for ACH or wire transfers. If left blank, the cash in bank GL account is used.
- Compound: Debits the asset account GL offset entered under the Miscellaneous tab.
Date Interest Paid Through: Effective date interest was calculated through by the financial institution (not the receipt date).
Date Deposited: Date the transaction is performed (defaults to current date, can be unlocked and changed by authorized users).
Reference Number: Credit union-defined reference number.
Description: System automatically fills the investment description. This appears in the GL history and investment history.
Print Receipt: Indicates if a receipt should be generated.
Posting to GL Pending: Indicates if the GL posting should go to a pending GL period or an open GL period (previous month). Only shows if the GL for the previous month has not been closed.
GL Offset: If ‘Transfer’ is the payment method, specify the GL account to be used as the posting offset. If left blank, the system uses the cash in bank GL account. If ‘Compound’ is used, leave this blank; the system posts to the change fund GL account.

8. Reverse Posting

Located under the History tab, ‘Reverse Posting’ is used to reverse a previous posting (e.g., interest).

Both sides of the transaction are reversed.
The transaction color changes to reflect the reversal.
An ‘R’ is placed as the first character of the description as an additional indicator.

9. Closing an Investment

To close an investment:

Ensure funds are moved out of the investment record.
Click Post to reduce the principal of the investment.
Click Close.
Confirm the closure when prompted.

The system will populate the ‘Closed’ field under the General tab with the current date, indicating the investment is closed.

10. Post Accrued Interest

From the main Investment screen, click Post Accruals to:

Run a worksheet for accrued interest.
Post accrued interest to the general ledger.

The system will post a credit to income accounts and a debit to accrual accounts.

Posting Options:

Effective Date: The date for the accrual posting.
Update Files: Yes/No.
Print Detail Report: Yes/No.
Submit to Batch: Yes/No.
Post as Lump Sum to GL: Yes/No.
Include Accrued Amount of $0 on Report: Yes/No.
Post to Pending: Checkbox.
Last Posting Date: Displays the last date accruals were posted.

FLEX strongly recommends running a worksheet prior to posting.

11. Reports

A variety of reports related to investment information are available under GL/Accounting > Investments > Reports from the FLEX Main Menu.

Available reports include:

Investments Accrual Report: Listing of all investments with accrual information.
Investments by Alpha Description: Alphabetical listing of investments.
Investments by Asset Account: Listing of all investments sorted by asset account.
Investments by Broker: Listing of all investments by broker.
Investments by Call Dates: Listing of all investments by call date.
Investments by Class Code: Listing of all investments sorted by class code. Users can leave the Class Code blank to show all investments or enter a specific code.
Investments by FDIC/CUSIP#: Listing of all investments by FDIC/CUSIP number. Users can leave the FDIC number blank or enter a specific number.
Investments by Group and Maturity: Listing of all investments sorted by group and maturity.
Investments by Income Account: Listing of all investments by income account.
Investments by Identification: Listing of all investments sorted by identification group and number.
Investments by Maturity: Listing of all investments sorted by maturity date.
Investments by Maturity Month: Listing of all investments by maturity month.
Investments GL Interface List: Listing of all investments and their associated G/L Accounts.
Investments Premium/Discount & Accrual: Listing of all investments with a premium or discount and accrual information.
Investments Yield List by Group and Maturity: Listing of investment yield on all investments sorted by group and maturity date.

12. Examples of Accrual Handling

12.1. Auto Accrual and Auto Accrual Reversal (Y/Y)

Configuration: Auto Accrual = Y, Auto Accrual Reversal = Y.
Scenario: Investment purchased Dec 15, 2014; interest received quarterly, accrued monthly.
Dec 31, 2014 (Auto Accrual Posting):
- Accrual: $250
- System Posts: Credit income account ($250), Debit accrual account ($250).
- Last interest accrued date updated to 12/31/2014. Total Accrual Account bucket: $250.
Jan 1, 2015 (Reversal Posting):
- System Posts: Debit income account ($250), Credit accrual account ($250).
Jan 31, 2015 (Auto Accrual Posting):
- Accrual: $500
- System Posts: Credit income account ($750), Debit accrual account ($750).
- Last interest accrued date updated to 1/31/2015. Total Accrual Account bucket: $750.
Feb 1, 2015 (Reversal Posting):
- System Posts: Debit income account ($750), Credit accrual account ($750).
Feb 28, 2015 (Auto Accrual Posting):
- Accrual: $500
- System Posts: Credit income account ($1250), Debit accrual account ($1250).
- Last interest accrued date updated to 2/28/2015. Total Accrual Account bucket: $1250.
Mar 1, 2015 (Reversal Posting):
- System Posts: Debit income account ($1250), Credit accrual account ($1250).
Mar 15, 2015 (Interest Check Received):
- Check deposited using investment posting program.
- System Posts: Credit income account (amount of check), Debits change fund.
- Last interest accrued date updated to 3/15/2015. Total Accrual Account bucket: $0.

12.2. Auto Accrual and NO Auto Accrual Reversal (Y/N)

Configuration: Auto Accrual = Y, Auto Accrual Reversal = N.
Scenario: Investment purchased Jan 15, 2014; interest received quarterly, accrued monthly.
Jan 31, 2014 (Auto Accrual Posting):
- Accrual: $250
- System Posts: Credit income account ($250), Debit accrual account ($250).
- Last interest accrued date updated to 1/31/2014. Total Accrual Account bucket: $250.
Feb 28, 2014 (Auto Accrual Posting):
- Accrual: $500
- System Posts: Credit income account ($500), Debit accrual account ($500).
- Last interest accrued date updated to 2/28/2014. Total Accrual Account bucket increases by $500 (new total: $750).
Mar 31, 2014 (Auto Accrual Posting):
- Accrual: $500
- System Posts: Credit income account ($500), Debit accrual account ($500).
- Last interest accrued date updated to 3/31/2014. Total Accrual Account bucket increases by $500 (new total: $1250).
Apr 15, 2014 (Interest Check Received):
- Check received for $1500, deposited using investment posting program.
- System Posts: Credit accrual account (amount of check), Debits change fund.
- System compares check amount to total in accrued bucket ($1250 vs $1500, difference of $250).
- System Posts: Credit income account ($250), Debit accrual account ($250) to adjust for difference.
- Last accrued date updated to 4/15/2014. Total Accrual Account bucket: $0.

12.3. Investment with Monthly Premium/Discount

Configuration: Post Prem/Dis to C=Income or D=Assets.
Premium (Credit union pays more than book value):
- System Posts: Credit accrual account, Debit income account.
Discount (Credit union pays less than book value):
- System Posts: Credit income account, Debit income account.