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Fund Accounting and Monthly
Proofs NAV CalC Process

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Version Copy…

Written by Shivraj Dukare Date : 01- Jan-2020

Version No. Date Effected Sections Brief Description of Change

1.1.0 Date : All Initial Version

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Introduction – Monthly Proofs and Recon task
◼ Monthly Proofs is an audit function to ensure that Month end trials are accurate.
This is done by matching (Trial figures) General ledger with Sub-ledger figures

◼ Monthly Proofs is necessary to ensure that the figures that flow into financial
statements are accurate

◼ Monthly proofs team is the last check point to rectify any accounting
discrepancies in the funds. All discrepancies needs to be researched and
resolved. Any unresolved exceptions needs to be updated in Issue log which the
onsite team can view and resolve. The final output of Monthly Proofs team is
utilized by the Fund Administration team for publishing their reports to the
stakeholders

◼ Monthly Proofs is performed using an exception based system LSL(Ledger to

Sub ledger) to highlight any discrepancies which further needs to be researched

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.

Monthly Proof Team – Interaction Model

Fund Accounting

CED CATR IFT NPT

Capstock/Expense/ Income Functionalized NAV production
Corporate Action and
Distribution/Recon Team/Div Team team
Trade review

Monthly Accounting

Monthly Proofs Fund Admin

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 Extracting of Trial reports from the application

o Extracting of Sub ledger reports

o Reconciliation of Ledger to Sub ledger accounts
o Resolving discrepancies
o Raising queries in Issue log for
resolution
o Commenting on exceptions
o Alert resolutions
o Packaging and sign-off

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General Ledger and Subsidiary Ledgers
Accounting cycle revolves around identifying transactions, making relevant journal
entries, posting those journal entries to ledgers, preparing trial balances from those
ledgers and finally preparing the financial statements. Accounting ledgers are critical
component of an accounting information system because they classify the effect of
different journal entries such that we get a broad overview of the overall assets, liabilities,
shareholders’ equity, revenues and expenses.

There are two types of accounting ledgers: general ledger and subsidiary ledgers.
◼ General ledger (controlling account)
◼ Subsidiary ledger (Subsidiary account)

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General Ledger

◼ A general ledger is the master set of accounts that summarize all transactionsoccurring
within an entity. There may be a subsidiary set of ledgers that summarize into the
general ledger. The general ledger, in turn, is used to aggregate in formation into the
financial statements of a business

◼ The general ledger contains a debit and credit entry for every transaction recorded
within it, so that the total of all debit balances in the general ledger should always match
the total of all credit balances. If they do not match, the general ledger is saidto be
out of balance, and must be corrected before reliable financial statements can be
compiled from it.

◼ The general ledger is also known as the book of final entry.

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 .

Subsidiary Ledger
◼ Sub ledger is the subset of General ledger in the accounting terms. The relation
between sub ledger to general ledger is many to one. i.e. there can be multiple sub
ledger accounts linked to same general ledger account.

◼ For example; ABC Company Ltd has 10 bank accounts which linked to different bank
institutions. Company wants to maintain only one bank ledger account at chart of
account level but at the same time wants separate tracking of transaction details of
every bank account as well. Here company will maintain the details of all the bank
accounts at sub ledger level and link all the sub ledger accounts to the main bank
ledger account at general ledger or chart of account level. In this way if company
wants to check its net bank balance, it will refer to the main account at chart of
account level and if it wants to check the balance of a specific bank account, it will
refer to the sub ledger level.

◼ The total of the sub ledger should match to the line item amount on the general
ledger. This corresponding line item in the general ledger is referred to as
the controlling account.

◼ A sub ledger is also known as a subsidiary ledger.

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Sub Ledger Accounts in MCH
◼ Application identifies each sub ledger with a unique 5 +
3 digitaccount number
◼ The 1st five digits are the ledger no. and the other 3 are
Sub ledger nos.
◼ For example, Cash is 11###*** and Cash in other banks
is 11###*** where 11###is the cash account and100 is
the sub ledger of Cash account for Cash in other banks.
Hence this account number will be known as 11###***

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Ledger/Sub Ledger Accounts in Applications
◼ The general ledger is split into the following 5 categories with the
respective account numbers….

Ledgers Account no. Debit Impact Credit Impact

Assets 100**/0** Positive+ Negative-
Liabilities 200**/0** Negative- Positive+
Income 300**/0** Negative- Positive+
Expenses 400**/0** Positive+ Negative-
Capital 500**/0** Negative- Positive+

◼ Here is the annexure of all important Sub Ledger account numbers.

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 Ledger/Sub Ledger Accounts in Application

STARTS WITH
55**/*** ID COST 55**/*** PAYDOWN GAIN LOSS
55**/*** CASH 55**/*** PAYDOWN GAIN LOSS
55**/*** RECEIVABLE FOR INV SOLD 55**/*** PAYDOWN GAIN LOSS
55**/*** U\R GAIN LOSS 55**/*** PENDING FORWARD
55**/*** PAYBLE FOR INV PURVHASED 55**/***
55**/*** AVG COST 55**/***
55**/*** TAX RECLAIM RECEIVABLE EARNED INCOME LT
55**/***
55**/*** TAX RECLAIM PAYBLE
55**/***
55**/*** GAIN LOSS
55**/***
55**/*** PAID IN SURPLUS SUBSCRIPTION
55**/***
55**/*** PAID IN SURPLUS RED. EARNED INCOME ST
55**/***
55**/*** TAX PAID(WITHHELD)
55**/***
55**/*** LT CURR LOSS ON SECURITIES
55**/*** DIVIDEND INCOME
55**/*** LONG TERM CURRENCY GAIN ON SECURITIES
55**/*** INFLATION INDEX
55**/*** ST CURR LOSS ON SECURITIES
55**/*** ST CURR GAIN ON SECURITIES 55**/*** CALL A/C
55**/*** SHORT TERM CURRENCY LOSS ON DISP OF CURR 55**/*** SEC LITIGATION
55**/*** SHORT TERM CURRENCY GAIN ON DISP OF CURR 55**/*** Premium
55**/*** LONG TERM CURRENCY LOSS ON DISP OF CURR 55**/*** Discount
55**/*** LONG TERM CURRENCY GAIN ON DISP OF CURR 55**/*** Discount

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Ledger/Sub Ledger Accounts in Application
ENDS WITH

/12* EQUITY & DIVIDEND

/20* BOND & INTEREST
/40* OPTION
/80* SHORT TERM INV & INT.
/62* FUTURE & SHORT POSITION
/60* SWAPS
/12* SWAPS SHORT
/X2* CURRENCY GAIN LOSS(APPLIES ONLY IN 30000)
/21* MBS PAYDOWN & PRINCIPLE

(Note: IB, HF and MF use diff accounting Platform’s like MCH.Multi Magar, Geneva and Genesis )

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Trial Balance
◼ A trial balance is a list of all the general ledger accounts (both revenue and capital)
contained in the ledger of a business. This list will contain the name of each nominal
ledger account and the value of that nominal ledger balance.

◼ Accounts with zero balances will most likely be omitted

◼ The debit balance amounts are listed in a column with the heading "Debit balances"
and the credit balance amounts are listed in another column with the heading "Credit
balances." The total of each of these two columns should be identical.

◼ A company prepares a trial balance periodically, usually at the end of every reporting
period. The general purpose of producing a trial balance is to ensure the entries in a
company's bookkeeping system are mathematically correct.

Note : in order to reiterate, the Monthly proof team reconciles the monthly Trials with the
Monthly Sub-Ledger

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 .

Exercise for understanding the Trial Balance

◼ Basically the trial balance in MCH consists of 3 sheets..

1. Page 1 : Consists of all Asset and Liabilities (also known as Balance Sheet)
2. Page 2 : Consists of Income and Expenses
3. Page 3 : Consists of the Capital (Including Net Income from Page 2)

◼ Now we will go through an exercise in order to get a good understanding on

Trial Balance

You will be asked to fill in sections of the trial as you go along.

You may also take notes and jot down questions you may have on the material

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 ASSETS
TRIAL - PAGE 1
ASSETS EXCLUDING MARKET VALUE
◼ Assets are
ID COST - LONG TERM INVESTMENTS 14,980,884.66
anything
TOTAL SHORT TERM INVESTMENTS 2,490,000.00
owned by or
CASH
CASH - SAVINGS ACCOUNT
1,230.31
0.00
owed to the
TOTAL CASH BALANCE 1,230.31 fund.
RECEIVABLE FOR INVESTMENTS SOLD 411,446.45
RECEIVABLE FOR FUND SHARES SOLD 13,984.38 ◼ An increase to
RECEIVABLE FOR FUND SHARES SOLD-EST 0.00
DIVIDENDS RECEIVABLE 62,672.50 an Asset
INTEREST RECEIVABLE 82,331.31
MISCELLANEOUS ASSETS 114,362.55 increases the
TOTAL ASSETS EXCLUDING MARKET VALUE value of the
fund.

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 ◼ The Identified Cost of
ASSETS TRIAL - PAGE 1
Securities Account is
the historical cost,
ASSETS EXCLUDING MARKET VALUE not the current value
of the securities. We
ID COST - LONG TERM INVESTMENTS 14,980,884.66 track the original cost
TOTAL SHORT TERM INVESTMENTS 2,490,000.00
for purposes of
CASH 1,230.31
CASH - SAVINGS ACCOUNT 0.00 calculating gains and
TOTAL CASH BALANCE 1,230.31 losses on securities.
RECEIVABLE FOR INVESTMENTS SOLD 411,446.45 The ID Cost is NOT
RECEIVABLE FOR FUND SHARES SOLD 13,984.38
RECEIVABLE FOR FUND SHARES SOLD 0.00 part of the Total Net
DIVIDENDS RECEIVABLE 62,672.50
INTEREST RECEIVABLE 82,331.31
Assets Excluding
MISCELLANEOUS ASSETS 114,362.55 Market Value
TOTAL ASSETS EXCLUDING MARKET VALUE because we value
our securities at
market.
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 ASSETS TRIAL - PAGE 1 ◼ For Example: if
a bond is
ASSETS EXCLUDING MARKET VALUE
accruing
interest the
ID COST - LONG TERM INVESTMENTS
TOTAL SHORT TERM INVESTMENTS
14,980,884.66
2,490,000.00
Total Assets are
increased
CASH 1,230.31
CASH - SAVINGS ACCOUNT 0.00
TOTAL CASH BALANCE 1,230.31 ◼ DR: Interest
RECEIVABLE FOR INVESTMENTS SOLD 411,446.45 Receivable
RECEIVABLE FOR FUND SHARES SOLD 13,984.38
RECEIVABLE FOR FUND SHARES SOLD-EST CR: Interest
0.00 DIVIDENDS RECEIVABLE 62,672.50
INTEREST RECEIVABLE 82,331.31 Income
MISCELLANEOUS ASSETS 114,362.55 ◼ Calculate total
TOTAL ASSETS EXCLUDING MARKET VALUE 3176027.50 assets and
record on your
trial.
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 LIABILITIES
TRIAL - PAGE 1
LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED 405,635.50

PAYABLE FOR FUND SHARES REPURCHASED 0.00
PAYABLE FOR FUND SHARES REPURCHASED - EST 0.00
ACCRUED EXPENSES 97,188.41
INCOME DISTRIBUTION PAYABLE 0.00
CAPITAL GAINS DISTRIBUTION PAYABLE 0.00

TOTAL LIABILITIES 502823.91

◼ Liabilities are anything that is owed by the

fund.
◼ An Increase in a Liability decreases the value
of the Fund.
◼ Calculate the total liabilities and record on your
trial.
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LIABILITIES
TRIAL - PAGE 1
LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED 405,635.50

PAYABLE FOR FUND SHARES REPURCHASED 0.00
PAYABLE FOR FUND SHARES REPURCHASED - EST 0.00
ACCRUED EXPENSES 97,188.41
INCOME DISTRIBUTION PAYABLE 0.00
CAPITAL GAINS DISTRIBUTION PAYABLE 0.00

TOTAL LIABILITIES 502,823.91

◼ For Example: an Expense Accrual increases the

Liability of a fund, which means the funds overall
value is decreased.
◼ DR: Expense CR: Accrued Expense

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 TRIAL - PAGE 1

TOTAL NET ASSETS EXCLUDING MARKET 2,673,203.59

MARKET VALUE OF INVESTMENTS 15,980,647.98
TOTAL NET ASSETS

◼ Another name for Total

Net Assets Excluding TOTAL NET
Market Value is NET ASSETS
CASH or BOTTOM LINE. EXCLUDING
MARKET= TOTAL
◼ Calculate the Total Net ASSETS - TOTAL
Assets Excl. Market and LIABILITIES
record on your trial.
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 TRIAL - PAGE 1

TOTAL NET ASSETS EXCLUDING MARKET 2,673,203.59

MARKET VALUE OF INVESTMENTS 15,980,647.98
TOTAL NET ASSETS
18,653,851.57

TOTAL NET ASSETS = Total Net MARKET VALUE:

Assets Excluding Market + Market
WHAT THE
Value. **Calculate the Total Net
Assets and record on your trial. SECURITIES IN
THE PORTFOLIO
◼ Market Value makes up ARE WORTH
90% of the fund’s value TODAY
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SUMMARY
TRIAL - PAGE 1
Page 1 of the trial is also known as the “Balance
Sheet”
Page 1 shows Assets, Liabilities, Cost, Market
Value and Total Net Assets
Total Identified Cost is NOT part of the Total Net
Assets Excluding Market Value.
We keep track of cost for the purpose of
calculating gains and losses on securities.

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I The income and expense accounts are year-to-date totals. At the
N beginning of the year the accounts are closed out and start at a
C zero balance. They are actually part of capital. We separate out
T
the detail so our clients can easily see what income and
O R expenses are for the year. Our clients must report this
M I information for tax purposes.
E A INCOME - CURRENT PERIOD
& L
E * DIVIDEND INCOME-DOMESTIC 621,019.25
X INTEREST INCOME-DOMESTIC 496,969.18
P ACCRETION OF DISCOUNT 0.00
P A AMORTIZATION OF PREMIUM 0.00
TOTAL INCOME 1,117,988.43
E G
N E EXPENSES AND TAXES - CURRENT PERIOD
S 2
E EXPENSES 220,603.69
S TAXES 0.00
EXPENSES/TAXES-UNPOSTED 0.00
TOTAL EXPENSES AND TAXES 220,603.69

NET INCOME - CURRENT PERIOD

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 .

Expenses are the costs associated with running

the fund. Expenses decrease the value of the
N fund. If a fund has many expenses, there should
C be separate accounts for each.
O R
M I INCOME - CURRENT PERIOD
E A
& L DIVIDEND INCOME-DOMESTIC 621,019.25
INTEREST INCOME-DOMESTIC 496,969.18
E * ACCRETION OF DISCOUNT 0.00
X AMORITZATION OF PREMIUM 0.00
P TOTAL INCOME 1,117,988.43
P A
E G EXPENSES AND TAXES - CURRENT PERIOD
N E
S EXPENSES 220,603.69
TAXES 0.00
E EXPENSES/TAXES-UNPOSTED 0.00
TOTAL EXPENSES AND TAXES 220,603.69

NET INCOME - CURRENT PERIOD

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 .

I
NET INCOME-CURRENT PERIOD = Total Income - Total
N
Expenses
C
•Calculate the Net Income and record on your Trial.
T
O R
M I
INCOME - CURRENT PERIOD
E A
& L DIVIDEND INCOME-DOMESTIC 621,019.25
E * INTEREST INCOME-DOMESTIC 496,969.18
ACCRETION OF DISCOUNT 0.00
X P AMORTIZATION OF PREMIUM 0.00
TOTAL INCOME 1,117,988.43
P A
E G EXPENSES AND TAXES - CURRENT PERIOD
N E
S 2 EXPENSES 220,603.69
E TAXES 0.00
EXPENSES/TAXES-UNPOSTED 0.00
S TOTAL EXPENSES AND TAXES 220,603.69

NET INCOME - CURRENT PERIOD 897384.74

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CAPITAL
TRIAL - PAGE 3

◼ This section of the trial shows the

owners equity in the fund. The Capital
section of the trial can be difficult to
understand because it is made up of
many different accounts. For example,
some lines represent dollars, and other
lines represent shares.

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 Net shares
UNDIST. NET INCOME - BEG. OF PERIOD 331,117.58
NET INCOME-CURRENT PERIOD 897,384.74 outstanding
TOTAL UNDIST. NET INCOME 1,228,502.32 DISTRIBUTION PAID
FROM INCOME -740,993.14
represent the
UNDIST.NET INCOME - CURRENT PERIOD 487,509.18 0.33
number of
CAPITAL STOCK......PAR VALUE( $.000)
TREASURY STOCK
29,512.14
-14,753.49 shares of the
ESTIMATED SHARES 0.00
NET SHARES OUTSTANDING 14,758.65 0.01
fund that are
PAID IN SURPLUS
SURPLUS-ESTIMATED
17,730,188.21PAID IN
0.00
collectively
TOTAL PAID IN SURPLUS 17,730,188.21 12.01
MISCELLANEOUS CAPITAL
IDENTIFIED REALIZED GAIN/LOSS 343,150.71
0.00 0.00
0.23
owned by the
ACCUMULATED ID. REAL. G/L-INVST
DISTRIBUTION PAID FROM CAPITAL GAINS
-921,518.50
0.00
-0.62
0.00 shareholders.
TOTAL CAPITAL
UNREALIZED APPREC./DEPREC.
Shares are
TOTAL NET ASSETS

SHARES OUTSTANDING 2,951,082.444

always
TREASURY SHARES
ESTIMATED SHARES
-1,475,325.321
0.000
carried out to
NET SHARES OUTSTANDING 1,475,757.123
3 places after
NET ASSET VALUE PER SHARE 12.64
OFFERING PRICE PER SHARE 12.64 the decimal.

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 UNDIST. NET INCOME - BEG. OF PERIOD 331,117.58
NET INCOME-CURRENT PERIOD 897,384.74
TOTAL UNDIST. NET INCOME 1,228,502.32
C DISTRIBUTION PAID FROM INCOME -740,993.14
UNDIST.NET INCOME - CURRENT PERIOD 487,509.18 0.33
A
P •The Mutual Fund earns income and has to distribute it
back to the shareholders.
I
T •The Net Income-Current Period flows directly from the 2nd
page of the trial.
A
•This trial is telling us that so far in this period we have earned
L
$1,228,502.32 and distributed back to shareholders
$740,993.14.

•0.33 represents the per share impact the Undistributed Net

Income has on the fund. The balance (487,509.18) is divided
by the total net shares outstanding. (1,475,757.123)
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 TOTAL CAPITAL 17654088.25
UNREALIZED APPREC./DEPREC.
TOTAL NET ASSETS
TOTAL CAPITAL

C The Total Capital line of the trial captures all activity except theunrealized
Appreciation/Depreciation. You will not receive the total market value until
A after 4:00pm, so this line allows you to
P tie out before you price out your fund.

I **After you total down the capital page, how can you double
T check your total? Try this calculation:

A (Long Term Identified Cost page 1 + Total Net Assets

L Excluding Market Value page1) = TOTAL
CAPITAL
**Calculate the total capital and it’s per share impact, record it
on your trial and double check it.

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 TOTAL CAPITAL
UNREALIZED APPREC./DEPREC. 9,99,763.32
C TOTAL NET ASSETS

A
UNREALIZED APPRECIATION/DEPRECIATION
P For Securities, Unrealized Appreciation/ Depreciation is
I the comparison of the Current Market Value of Securities to the
Identified Cost of Investments. In short, what the shares are worth
T now compared to the cost we purchased
A them at. (historical cost) Each day your fund will be

L adjusted for this change.

Appreciation/ Depreciation is calculated :
Market Value (Trail 1)- Identified Cost(Trail 1)

**Calculate the Appreciation/Depreciation and it’sper

share impact. Record it on your trial.

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 TOTAL CAPITAL
UNREALIZED APPREC./DEPREC.
C TOTAL NET ASSETS 18653851.57
A
TOTAL NET ASSETS
P Total Net Assets = (total capital +/- the unrealized
I appreciation/depreciation.) ** The Total Net Assets (TNA)
is used to calculate the final price of the fund.
T
A Total Net Assets divided by Net Shares Outstanding (Trial
L 3) = NAV per share

TNA on page 1 of the trial must equal TNA on page 3.THIS IS AN

IMPORTANT DOUBLE CHECK.

**Calculate the TNA and the final price of the fund.

Record it on your trial

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 CAPSTOCK

CAP STOCK SHARES OUTSTANDING 2,951,082.444

TREASURY SHARES -1,475,325.321
NET SHARES OUTSTANDING 1,475,757.123

◼ Capstock shares outstanding are shares thatare

held by the shareholders. When a shareholder
subscribes to the fund, they receive shares in
exchange for their money.
◼ Treasury shares are shares that were once
owned by shareholders, but now have been
“bought back” by the fund. An example of thisis
when a person redeems their shares and
receives the cash for them.

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 NET ASSET VALUE PER SHARE 12.64
OFFERING PRICE PER SHARE 12.64
C The Net Asset Value per share is the price the
A
shareholder pays for one share of the mutual fund. Itis calculated:
P
TNA divided by Net Shares Outstanding
I
T In this section we round the price to two places
after the decimal.
A
The Offer price is the same as the NAV per share if
L the fund has No Load. If it is a load fund, the offer
price is different. The rate of the load will be stated inthe
prospectus of the fund.
**Assume this is a No Load fund and calculate the
NAV and Offer price and record on your trial.

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SUMMARY

◼ Trials can be customized to meet client needs, so

they all might not look exactly like this. Also, the
trial may be different because of the activityyou
have on your fund. For example, if you have
Futures on your fund the trial may have specific
future accounts.
◼ The trial is an important reporting tool we supplyto
our clients.
◼ On the basis of trials we can consolidate our
balance sheet

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Exceptions
The reasons for variance between Ledger to Sub ledger’s
are as below..

➢ Due to as off activity (late postings)

➢ Due to weekend accrual
➢ Due to new account being added
➢ Manual entries
➢ Formula issue
➢ Rule issue
➢ BSLP variance

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 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 1 - Interest income received on 01st July 2016

Lets research……
❑ $2,538.24 - Trade cancelled on accounting but still not reflected in sub ledger reports.
❑ $1826.85 - Trade posted on accounting with incorrect amount.
❑ $1,192.98 – Trade has been booked correctly by $15,477.34 but sub ledger report is wrongly
updated by $ 14284.36.
❑ $2,284.67 – Trade rebooked on accounting but still not reflected in sub ledger reports.
❑ $1993.24 – Trade posted on accounting with incorrect amount.
❑ $2569.59 – Trade has been booked correctly by $18900.54 but sub ledger report is wrongly
updated by $ 16330.95.
What are the possible causes for the variance????

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 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 2 – Gain Loss Investment
Ledger Account Sub ledger Account

Sub ledger - Total Long term

❑ 1-5 year (LT) – 40,011,781.18
❑ Long Term – 188,024,253.29
❑ 4 year (LT) - 17,082.64
Difference 413,439.67
❑ Long term - 237,798,163.94
Total - 465,851,281.05

Sub ledger - Total Short term

❑ Less than 1 year (ST) - 61,823,134.28 Lets research……
❑ Short term - 153,711,624.18
Total - 215,534,758.46

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 Ledger to Sub ledger reconciliation Scenarios
Gain Loss Investment – Difference 413,439.67 Lets research further …
Trial Balance (Ledger account) (Short term) there are 4 entries
❑ ST Reit Reclass - $ 2,598,480.03
❑ Security Gains - $1,057,970,597.12
❑ Litigation proceeds - $ 9,67,497,793.32
❑ Identified Realized Gain/loss (ST) – (1,983,195,809.88)
Total - ($44,871,060.59)

Sub ledger (Short term) there are 4 entries

❑ Security Gains $1,057,557,157.45 Difference 413,439.67
❑ ST Reit Reclass - $ 2,598,480.03
❑ Litigation proceeds - $ 9,67,497,793.32
❑ Identified Realized Gain/loss (ST) – (1,983,195,809.88))
Total - ($ 45,284,500.26)

“The Security Gains should have been $ 1,057,970,597.12 instead of $ 1,057,557,157.45 on Sub ledger”
The gain and loss was reflected correctly on Trial (Ledger) however incorrect amount was reflected on Sub ledger.

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 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 3 -
IDENTIFIED COST -Ledger to Sub ledger reconciliation for the month of July
2016.
Lets research further …
Ledger Account
TOTAL SHORT TERM INVESTMENTS $3,982,937,175.46

Sub Ledger Account

❑ PRIOR FYE BALANCE $11,133,923,452.16
ADD
❑ COST OF PURCHASES $40,377,971,568.78
Difference
❑ ACCRETION OF DISCOUNT $9,346,869.55
1,202.58
LESS
❑ PROCEEDS OF SALES/MATS $(47,835,707,701.51)
❑ AMORTIZATION OF PREMIUM $(3,278,049.58)
ADD
❑ GAIN LOSS $300,682,238.64
TOTAL SHORT TERM INVESTMENTS $3,982,938,378.04

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 Manual entry posted in August for July month.

“Late manual entry was posted on accounting on 2016*** which was not reflecting in the Sub ledgerof
July month”
 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 4 – Dividend receivable
Ledger -
❑ Dividend Receivable - Unrealized Gain Loss -90.67
❑ Open Purchases - Unrealized Gain Loss 65.86
❑ Receivable - Dividend Reclaim - Unreal Gain Loss -3.77
❑
❑
Open Spot FX - Purchases - Unrealized Gain Loss -713.14
Open Spot FX - Sales - Unrealized Gain Loss 61.18
Lets research……
❑ Tax Exp Payable - Dividend - Unrealized Gain Loss 7.69
Total – $(672.85)

Sub ledger –
❑ Dividend Receivable - Unrealized Gain Loss -105.69
❑ Open Purchases - Unrealized Gain Loss 65.86 Difference
❑ Receivable - Dividend Reclaim - Unreal Gain Loss -4.01 $(14.59)
❑ Open Spot FX - Purchases - Unrealized Gain Loss -713.14
❑ Open Spot FX - Sales - Unrealized Gain Loss 61.18
❑ Tax Exp Payable - Dividend - Unrealized Gain Loss 8.36
Total - $(687.44)

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The above highlighted entries didn’t pick correct amounts in Sub ledger due to which the variance
has occurred.

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 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 5 – Long term investment (Reconciliation done for the month of
July 2016)

Ledger -
❑ IDENTIFIED COST - LONG TERM INVESTMENTS $37,970,858,357.94
Sub ledger -
❑ UNADJUSTED PRIOR FYE BALANCE 37,618,361,004.02
ADD
❑ EQUITIES 18,349,527,420.02
❑ FIXED INCOME 23,167,272,337.59
❑ PAY UPS 0.00
❑ ADJUSTMENTS RPT + 28,849,638.78
❑ SHORT BUYS 669,969,086.83
LESS
❑ EQUITIES (21,367,535,723.47)
❑ FIXED INCOME (20,121,698,408.81)
❑ PAY DOWNS 0.00
❑ ADJUSTMENTS RPT - (10,234,008.72)
❑ SHORT SELLS (736,606,647.97)
❑ AMORTIZATION OF PREMIUM (33,673,049.80)

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 Ledger to Sub ledger reconciliation Scenarios
Long term investment

ADD
❑ AMORTIZATION OF DISCOUNT 14,595,742.06 Ledger Total - $37,970,858,357.94
❑ INVESTMENTS 360,561,385.05 Sub ledger Total - $37,963,550,484
❑ MBS 4,247,595.56 Difference 73,07,873.94
❑ SHORTS 19,914,112.97
Total – $37,963,550,484

Adjustment report

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The variance has occurred due to Inflation Adjustment postings done in the month of August

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 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 6 - Receivable for Interest Income

Ledger –
Interest Receivable 2,632,472.90
Receivable for Swap Interest 63,233.83

Difference $(12.03)
Subledger –
Interest Receivable - 2,102,681.45 MCH A/c no Ending balance
28500/200 12.03
Interest Receivable - MBS 529,779.42
Interest Receivable - Swaps 63,233.83

Ending Balance 1
Ending Balance 2
MCH A/c no Ending balance
17000/200 2,541,704.06 MCH A/c no Ending balance
17341/000 90,768.84 17400/000 63,233.83
Total 2,632,472.90 Total 63,233.83
Your text here

Ending balance is matching with MCH account numbers, however in the Subleger proof a new
account (28500/200) has been added which is not reflecting in the ledger account on MCH.

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Ledger to Sub ledger reconciliation Scenarios
 Ledger to Sub ledger reconciliation Scenarios
◼ Scenario 7 - Futures

Ledger –
Starting Balance - Realized Gain/Loss Futures Short Term -34,425,123.50
Difference
$ 3537.33
Ending Balance - Realized Gain/Loss Futures Short Term -34,428,660.83

Subledger –
Futures Buy to Close - Security Gain – ST 0
Futures Buy to Close - Security Loss – ST 0

A/c no Star ng Balance Post ac vity Ending balance

54300/500 5,354,952.31 0 5,354,952.31
54770/400 3,610.79 -3,537.33 73.46
54400/500 -39,783,686.60 0 -39,783,686.60
Total -34,425,123.50 -3537.33 -34,428,660.83

Here we can see that Proof rule has not picked up Sub-ledger value of 547**/4** resulting into
variance of same amount.

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Ledger to Sub ledger reconciliation Scenarios
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