Introduction to Financial Accounting

The accounting process is a series of activities that begins with creating accounting entries for each transaction and ends with the closing of the books of accounts. As this process is repeated during each accounting period, it is referred as Accounting Cycle.

In Temenos Transact, some of the activities in the Accounting Cycle occur concurrently as well as sequentially.

• After a transaction is authorised in the product module, information is handed over to the accounting processing.
• Accounting entries (sometimes also known as journal entries) are posted to accounts/contracts and the balances of the individual ledger accounts are updated automatically.
• Accounting entries for interest and charge accruals, revaluations and deferred items are raised, posted during Close of Business. These are known as Special ‘Spec’ entries in Temenos Transact.
• Check reports are generated to check the integrity of the GL, verifying the accounting accuracy of transactions processed during the day.
• General Ledger is generated with the balances from the individual ledger accounts.
• There is no core month-end Closure procedure. If required the optional module, Post Closure can be deployed to meet the client’s month-end requirements.
• To facilitate the year end reporting, the year-end procedure must be run. It generates accounting entries to move the Profit and Loss to internal account identified in the year-end configuration parameters. Profit and Loss are zeroed out getting the GL ready for the new year.

Banks verify the accounting accuracy by viewing the financial reports. Based on the transactions processed during the day (online and COB), the balances of the account or contract is updated and the General Ledger (GL) report is generated to ensure that the system is balanced with the assets and liabilities positions.

Temenos Transact uses the Central Reporting Base (CRB), built from the accounting entries and contract balances.

Temenos Transact Transact does not have a predefined set of chart of accounts. The GL Accounts in Temenos Transact are referred to as GL Consolidation Keys. They are formed based on the grouping conditions defined in the CONSOLIDATE.COND table.