- Manual assignment of the accounting category in the front office and import
- Automatic assignment of the accounting category within the solution taking business model and cash flow characteristics into account. For this option two alternatives are supported depending on the available data provided by the source:
- If the source can deliver the SPPI flag and the business model for financial assets, specific components help to derive the appropriate accounting category.
- If the information cannot be delivered, FlexFinance components derive the SPPI flag and the business model by analysing the contractual deal information that was imported. In the front office, information that describes the business model and that can be used to determine if the objective of the financial asset is to collect contractual cash flows or sell financial assets, is captured. To this end, it is assumed, for the solution provided, that the business model itself is captured in the front office and delivered to the solution, or alternatively, criteria are defined that enable the identification of the business model in a separate step during the ETL process.
For the consideration of the cash flow characteristics, it is assumed that, based on the “Deal Type Overview”, which is part of a bank´s portfolio analysis during the project, deal information such as floating interest agreements, embedded caps/floors, early repayment rights can be identified to check the SPPI criteria. Of course such an analysis depends on the availability of comprehensive deal information. For this purpose, the contractual deal information needs to include supplementary agreements such as options and specific rights (e.g. caps, floors, cancellation rights, early repayment rights) as these might have an impact on the accounting category assignment.