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Reverse journal data processing

Introduction

The reverse data processing forms part of the Preliminary operations, and is run on Entity data filtering by entity, and on Group data filtering by node. The purpose of this data processing is to keep track of all the operations carried out.

The reversal variations are usually converted with the Initial balance FX rates conversion type, so that the converted data, especially for normal accounts at the historical FX rate, are entirely written off by the reversal entry. This FX rate is calculated at the same time as the data processing and is obtained from the ratio of the converted data item to the proportional data item of the normal account.

The reversal, like carry forwards, analyses the data of the maximum period of the previous scenario.

The various possible reversal methods are described below.

Set BS accounts to 0 (cut off)

This reversal allows you to manage, for example, cases in which a journal (typically pre-consolidation) is used to complete the financial statement data in a certain year, but the same data are entered directly as amounts in the subsequent year. Therefore, the journal must be carried forward and “deconsolidated”.

The reversal takes place as follows:

  1. Immediately after the carry forwards, CCH Tagetik deletes all the rows with origin PREL_REVERSE1, for the processed original scenario/period and for the entities/nodes indicated in the initial filters.
  2. All the rows with origin PREL_RESTORE and PREL_RESTORE_RED related to journals entered on Entity Journal and Consolidation Journal categories belonging to the Data Collection Process processed with the To run and Reverse type option in the header set to Set BS accounts to 0 will be selected.
  3. For every row entered on a variation account, CCH Tagetik inserts a row with the same amount, and the opposite amount on the account which, in the corresponding control group, has the Reverse option selected. For the rows entered on normal or detail accounts, it defines a row with the same amount and the opposite amount on the specific account.

In short, the following happens:

  1. The rows present on the journal with the following origins are written off:

  2. PREL_RESTORE and PREL_RESTORE_RED

  3. PREL_DECONSOLIDATION1 and PREL_DECONSOLIDATION2
  4. PREL_MERGE1 and PREL_MERGE2
  5. The normal and detail accounts are written off on themselves.
  6. The variations (initial balance and merger) are written off through the specific variation for “Reversal” of the same control group to which they belong.

Example

In this example, a reclassification is run in year n between two balance sheet accounts.

Year n
Assets1_Increment 100 From_management
Assets1 100 Basic calculation
Assets2_Decrement -100 From_management
Assets2 -100 Basic calculation

Year n+1
Assets1_IB +100 Carry forward
Assets1 +100 Carry forward
Assets2_IB -100 Carry forward
Assets2 -100 Carry forward
Assets1_ann -100 Reverse journal
Assets1 -100 Reverse journal
Assets2_ann +100 Reverse journal
Assets2 +100 Reverse

Set BS accounts to 0, write off P&L impact (IC)

This type of reversal allows you to carry our particular restoration entries, particularly useful for balance sheet elimination journals.

If this type of reversal is indicated for a journal, in the carry forward step, CCH Tagetik will carry forward the normal balance sheet rows, but without carrying forward the details. Then it reverses all the balance sheet accounts, inserting a row on the same account with the amount sign changed and with origin PREL_REVERSE2. Net equity accounts, accounts subject to the minorities calculation and accounts that have been indicated as Deferred taxes fund (debit/credit) in the list of defined fiscal policies are excluded from the write off.

It also reverses the P&L effect of the opening scenario (normal and detail accounts), inserting a row on the same account, with changed amount sign and with origin PREL_REVERSE2. Exception is made for the P&L net result and deferred tax accounts (debit/credit) present in the list of fiscal policies. For these, no write off operation is performed.

The rows entered on the P&L accounts which have origin PREL_REVERSE2 on the opening scenario are also excluded from the reversal.

In short, the following happens:

  1. The values of the Normal and Detail Balance Sheet accounts with the following origins are written off:

  2. PREL_RESTORE and PREL_RESTORE_RED

  3. PREL_DECONSOLIDATION1 and PREL_DECONSOLIDATION2
  4. PREL_MERGE1 and PREL_MERGE2
  5. The variations (initial balances or merger) are not written off.
  6. On the Balance Sheet Accounts, only the initial balance or merger is obtained.

IMPORTANT: this configuration must be used in IC eliminations because every year the value is eliminated based on the final balance, and not as the sum of the eliminations on the individual variations.

Example

In this example, the deferred taxes calculation is run in the journal to be reversed.

Year n (tax rate=30%)
Credits -1500 Ctp Elimination
Debts 500 Ctp Elimination
Account of P&L nature 1000 Counterparty / Balancing
P&L net result -1000 Basic calculation
BS net result_current year 1000 Basic calculation
BS net result 1000 Basic calculation
Taxes (P&L) -300 Deferred taxes
Tax provisions_variation +300 Deferred taxes
Tax Provisions 300 Deferred taxes
P&L net result 300 Basic calculation
BS net result_current year -300 Basic calculation
BS net result -300 Basic calculation

Year n+1 with reversal type 2 (tax rate 20% - delta=-10%).
Credits_IB -1500 Carry forward
Credits_ -1500 Carry forward
Credits 1500 Reverse journal2
Debits_IB 500 Carry forward
Debts 500 Carry forward
Debts -500 Reverse journal2
Tax Provisions_IB 300 Carry forward
Tax Provisions 300 Carry forward
Profit_IB 1000 Carry forward
BS net result _previous result -1000 Carry forward
Reserve_ previous result 1000 Carry forward
Reserve 1000 Carry forward
P&L nature account (used as balancing of the elimination of year n) -1000 Reverse journal2
Tax provision_variation of the year -200 Deferred taxes
Tax provision_rate variance variation -100 Deferred taxes
Tax Provisions 0 Deferred taxes
Tax (P&L) - annual impact +200 Deferred taxes
Tax (P&L) - exchange rate +100 Deferred taxes
P&L profit +700
BS profit_current year -700
BS profit -700

Set BS accounts to 0, write off P&L impact and variations

As regards the Set BS accounts to 0, write off P&L impact (IC) type, it has the following differences:

  • In addition to the normal deferred taxes accounts, the related variations are also excluded.
  • The origin is PREL_REVERSE3.
  • The variations (initial balances) are written off, except for the Net result variation, using the variation defined on the opening journal.
  • The Net Equity accounts are also written off, except for the Carry forward account. The reversal of the reserve takes place indirectly by reversing the P&L accounts present in the opening journal.

In short, the following happens:

  1. Rows present on the journal with the following origins are written off:

  2. PREL_RESTORE and PREL_RESTORE_RED

  3. PREL_DECONSOLIDATION1 and PREL_DECONSOLIDATION2
  4. PREL_MERGE1 and PREL_MERGE2
  5. All Normal accounts are written off on themselves.
  6. The variations are written off, except for the Net result variation, not using the “reverse” variation, but using the variation valued on the opening journal.
  7. The variations are read from the opening journal and reported, with inverted signs and origin PREL_REVERSE3, on the processed journal.

Example

Year n
Assets_F1 1000
Assets 1000
Depreciation -1000
Year's BS Profit -1000
Year's P&L Profit 1000

Year n+1
Assets_IB 1000 PREL_RESTORE
Assets 1000 PREL_RESTORE
Year's Profit_IB -1000 PREL_RESTORE
Year's Profit_Allocation of profit 1000 PREL_RESTORE
Reserve_Allocation of profit -1000 PREL_RESTORE
Reserve -1000 PREL_RESTORE
Assets_F1 -1000 PREL_REVERSE3
Assets -1000 PREL_REVERSE3
Depreciation 1000 PREL_REVERSE3
Year's BS Profit 1000 PROC_CALCULATED_BASIC
Year's P&L Profit -1000 PROC_CALCULATED_BASIC