Inheritance

The following are the associated attributes:

Target Tab Attributes

Default Inheritance

When it is set to Yes, all the Properties of Inheritance Property Class type are inherited from the source arrangement.

Target Property

This is mutually exclusive of the Default Inheritance attribute. When the Properties are not inherited, the system allows the user to specify individual target Properties for inheritance.

Source Product

This attribute allows the user to designate the Source Product from which Properties are to be inherited.

Source Property

This attribute indicates the Property of the Source Product for inheritance.

CRINTEREST in TR has to be inherited from SA's INHCRINTEREST Property. In this case SOURCE.PROPERTY has to be given as INHCRINTEREST.

Inheritance

When this attribute is set to,

• Yes - The Source Property attribute is set to be inherited from the source arrangement.
• No - This Property is not be inherited from source arrangement.

Source Tab Attributes

Default Inheritance

When this attribute is set to Yes, then all source Properties of Inheritance Property Class type can be inherited from the source arrangement.

Source Property

This attribute is mutually exclusive of the Default Inheritance attribute. When all the Properties are not inherited, the system allows the user to specify the individual source Properties that can be inherit can be specified here.

CCY

Product Condition of Property with given currency can only be inherited.

Inheritance

The Property can be inherited from source arrangement depending on the values set on this attribute. When this attribute is set to,

• Yes—Property can be inherited from the source arrangement.
• No—Property cannot be inherited from source arrangement.

Arrangement level Inheritance involves a source arrangement and a target arrangement.

The Inheritance Property Class is defined on both the source and the target Products to drive the rules of Inheritance.

• Certain Property Classes have been enabled for this kind of Inheritance, namely Interest, Charge and Payment Schedule.

• Named Properties under these Property Classes can be configured in the Inheritance Product Condition.

Inheritance here means copied from the designated source arrangement and subsequently refreshed whenever there is a change in the source arrangement Conditions.

• Any back dated activity on the target resulting in Interest adjustment goes by the target’s copy of the Condition as of that back value date and does not try to re-inherit or refresh from the source arrangement as of that date.

There are two distinct Events impacting the inherited Conditions on the target arrangement:

• Any changes to the Conditions at the source arrangement level.

• Change to the source arrangement itself (which needs to result in a re-evaluation of the next available source arrangement). This can be a result of,
  • Switching Inheritance off on the current source arrangement (or)
  • Changing the parent of the target arrangement (or)
  • Closing the current source arrangement (or)
  • Switching on Inheritance at a closer parent to the target arrangement (or)
  • Disinheriting one or more Properties in the target arrangement

The Arrangement Link Type attribute in AA.ARRANGEMENT.ACTIVITY supports values from the AA.ARRANGEMENT.LINK.TYPE virtual table.

The algorithm supported to derive the source arrangement is specific to a balance netting cash pool hierarchy where it goes bottom up through the parent, grand parent, currency concentration account and the master account.

The rules to finding the most suitable Condition to inherit are as follows:

• Rule 1 - The closest in the hierarchy (if currency summary (CS) is a parent and multi currency summary account (SA) is a grandparent), then CS is more suitable to inherit from. If none within the corporate hierarchy, then it looks for currency top (CT) and if not, then master account (bundle arrangement representing the pool in AA).
• Rule 2 - Inheritance is switched On in that source account.
• Rule 3 - The condition is available for Inheritance in the target’s currency.
• Rule 4 - The condition is available for Inheritance as of the effective date of the current Activity.

• At the product level, Inheritance Property is setup on both the source product (dedicated set of attributes drive the rules for the source arrangement) and the target product (dedicated set of attributes drive the rules for the target arrangement).
• At the source arrangement level, the user can,
  • Set up Inheritance Conditions for Interest, Charge and Payment Schedule as the case may be.
  • Switch on Inheritance using a purpose built Activity. The source arrangement now has the Conditions available for Inheritance by other arrangements.

• At the target arrangement level, the user can:
  • Setup the Arrangement Link Type attribute to be INHERITANCE in AA.ARRANGEMENT.ACTIVITY.
  • Input the arrangement reference of the master account (Cash Pool Hierarchy).
    • Upon committing, the algorithm is triggered, which then finds the most suitable source arrangement for this target.
    • Once found and the relevant properties inherited, they now track the source arrangement for any subsequent changes
    • It is possible that there could be different source arrangements for different target properties (For example, Credit Interest may be inherited from source arrangement 1 while Debit Interest may be inherited from source arrangement 2)
    • If no relevant source arrangement is found for a given Property, the Condition defaults from the Product definition
• As part of maintenance activities at the source arrangement level, the user can:
  • Change the Inheritance Conditions either current dated or back dated or forward dated – which then is propagated to the target arrangements via a background service
  • Switch off Inheritance for one or more Inheritance Properties (For example, Credit Interest). The target arrangements retain what was already inherited but no longer gets refreshed by any changes to that Property.
  • Switch on Inheritance for one or more Inheritance Properties. This triggers a re-evaluation of source arrangements at the target level to determine if this source arrangement is more suitable than the one already being followed by the target arrangement.
  • For example: In a balance netting hierarchy, a target may be inheriting from a grandparent but if the Inheritance is switched on at its parent level, it should now inherit from the parent as the source arrangement.
• As part of maintenance activities at the target arrangement level, the user can:
  • Dis-inherit one or more Properties —This allows the user to set account specific settings for those Properties on that target arrangement level
  • Change parent of the target arrangement—This triggers a re-evaluation of a new source arrangement based on the new hierarchy.
• Back Dated Interest adjustments on the target
  • Any back-dated credit or debit movement results in the Interest adjustments in the normal way and the system considers the conditions already inherited at the target arrangement level
  • Any back-dated rate change at the source arrangement level triggers a back dated rate change at the target arrangement level resulting in interest adjustments. This has the same effect as if the user had done a manual back dated rate change on the target arrangement.

Property Classes enabled for Inheritance

The following Property Classes have been enabled for Inheritance:

• Interest
• Charge
• Payment Schedule

The Type called Inheritance indicates that this Property Class is enabled for Inheritance. The screenshot below displays an example of Interest Property Class definition.

Inheritance Only Properties

It is possible for the source arrangement accrue or capitalise interest and there might be a need to setup Interest, Charge or Schedule Conditions purely for Inheritance purposes.

This can be accomplished by attaching specific Properties to the source product that are flagged as Inheritance Only in the respective AA.PROPERTY.

Given below is an example of one such INHCRINTEREST Property. The Inheritance Only attribute tells the system that this Property is not actually operational (no accruals or posting) at the source arrangement level and is meant only as a placeholder for specifying Inheritance Conditions.

In order to facilitate setting up Conditions for Inheritance at bundle arrangement level, Interest, Charge and Payment Schedule Property Classes are available in bundle arrangement but can only be properties marked as Inheritance Only in order to be used for Inheritance.

• In the case of Interest Properties, the system does not try to do any kind of accrual or posting for these Inheritance Only Properties.
• In case of Payment Schedule (not enabled as a Multi-Property Property Class), a second Schedule Property is allowed in the Product only if it is of type Inheritance Only.
• In cases where the Inheritance Condition needs to be specified for currencies other than the source arrangement currency, it is possible to do so only for those Properties flagged as Inheritance Only.
  • The currencies allowed in this case are either the currencies in which the Product is available for sale (AA.PRODUCT.DESIGNER Currency attribute) or optionally controlled by a new attribute called Inheritance Currency in AA.PRODUCT.DESIGNER).
  • This situation arises when setting up Inheritance Conditions on a multi-currency summary account or at the master account level (AA Bundle) in a balance netting pool structure.
• The Inheritance Only Properties need not have any Conditions associated with them in the Product Designer. They can be, but not required.

Inheritance Property Class

• The Inheritance Property Class is used to setup both the source rules (Properties meant to be available for Inheritance in the source arrangement) and target rules (Properties meant to be inherited by the target arrangement).

  

• In both cases, the Properties for Inheritance are fixed at the product level and cannot be changed at the arrangement level.
• Their Inheritance behaviour (Currency, Switched On Yes or No and Target Inherit Yes or No) can be changed at the arrangement level.

Inheritance Product Condition – Source

The source set of attributes (from Source Property – Inheritance) in Inheritance Property Class are used to specify the rules for the source arrangement.

• Default Inheritance
  • Default option for the source Inheritance multi-value attribute, associated with source Property.
• Source Property
  • The Property of the source arrangement that can be made available for Inheritance.
  • Open for input only at the Product level and cannot be changed at the Arrangement level.
• CCY
  • Associated with source Property and with source Inheritance. Source Inheritance allows the user to switch on a source property for Inheritance for a specific currency.
• Inheritance
  • When set to No at both source product & source arrangement level, it means the associated source Property is not yet available for Inheritance.
  • When set to Yes at the source arrangement level, it creates a trigger for the system to propagate the Property Conditions to all relevant target arrangements.
    • Any new arrangement also finds this Property available for Inheritance.

Inheritance Product Condition – Target

• The Target set of attributes target Property – Target Inheritance drive the rules for Inheritance at the target arrangement level.

  

• Target Property
  • The Property on the target arrangement that is meant to be inherited from a source arrangement.
  • Open for input only at the Product level and cannot be changed at the Arrangement level.
• Source Product & Source Property
  • Where the Property name in the source arrangement may not be the same as the target Property name, these two attributes can be used to define a mapping between the target Property and its respective source Property, based on the source product.
  • The system finds the suitable source Property in the order specified in this attribute.
• Target Inheritance
  • Indicates whether the associated target Property is set to inherit.
  • When this is set to yes, the target Property (for example, CRINTEREST in the screenshot above) is not open for user input and is updated only by the Inheritance Framework.
  • To set account specific setting for one of these target properties, the user can run the Update. Target Inheritance Activity and set this attribute to No.
  • Subsequently, when the user modifies the Update or Change Activity (say, CHANGE-CRINTEREST), they find that it is now open for negotiation. This also means that this target arrangement no longer inherits this target Property (unless the target Inheritance is again set to Yes).

1. ACCOUNTS-UPDATE.INHERITANCE-ARRANGEMENT
   • This Activity Class updates the Inheritance Conditions on all Inheritance Only Properties in the source arrangement.
     • This arrangement level Activity class facilitates ease of maintaining Conditions for Inheritance in one screen per currency.
     • All Inheritance Only Properties under Interest, Charge and Payment Schedule displays in the Screen.

       

   • With this example, the user has setup Conditions for Credit Interest, Debit Interest, Penalty Interest and Payment Schedule.

     

2. ACCOUNTS-UPDATE.INHERITANCE-INTEREST

   This Activity updates the Inheritance Condition on a single Interest Property.

3. ACCOUNTS-UPDATE.INHERITANCE-CHARGE

   This Activity updates the Inheritance Condition on a single Charge Property.

4. ACCOUNTS-UPDATE.INHERITANCE-PAYMENT.SCHEDULE

   This Activity updates the Inheritance condition on a Payment Schedule Property.

5. BUNDLE-UPDATE.INHERITANCE-ARRANGEMENT

   This Activity sets up the Inheritance Conditions for all Inheritance Only properties at the bundle arrangement level, where a bundle arrangement is set to act as a source arrangement.

6. BUNDLE-UPDATE.INHERITANCE-INTEREST

   This Activity updates the Inheritance Condition on a single Interest Property at the bundle arrangement level.

7. ACCOUNTS-UPDATE.INHERITANCE-CHARGE

   This Activity updates the Inheritance Condition on a single Charge Property at the bundle arrangement level.

8. ACCOUNTS-UPDATE.INHERITANCE-PAYMENT.SCHEDULE

   This Activity updates the Inheritance Condition on a Payment Schedule Property at the bundle arrangement level.

   Read the Inheritance user guide Activity Classes section for more information.

9. ACCOUNTS-CHANGE.SOURCE-INHERITANCE
   • Once the Condition(s) for Inheritance is setup (Refer to the UPDATE.INHERITANCE-ARRANGEMENT Activity Class), this Activity is used to Switch On or Off Inheritance at the source arrangement level for one or more Properties, telling the system that those properties are now available to be inherited.
   • The source Property is closed for input regardless of the negotiation rules.

     

   • With the above update, the user defines the USD Conditions for Credit Interest, Debit Interest, Penalty Interest and Schedule available for Inheritance.

     

10. ACCOUNTS-CHANGE.TARGET-INHERITANCE
    • Target Properties meant to be inherited from a suitable source arrangement are set as Inheritance Product Condition on the target Product (refer INHERITANCE Property Class). This Activity is used to either inherit or disinherit one or more of these target Properties.
      • The user can input only the Target Inheritance attribute. The user cannot provide details in the other attributes regardless of the negotiation rules.
      • In the screenshot below, this target arrangement has all these Properties to be inherited.

        

      • These Conditions cannot be directly amended at this Arrangement level. Given below is an example of CHANGE-CRINTEREST Activity on this arrangement (where it has inherited from its Parent but Condition not open for input).

        

    • To set account specific Conditions for one or more of these Properties, the user uses CHANGE.TARGET-INHERITANCE Activity to disinherit (set TARGET.INHERITANCE = NO) for those Properties.

      

    • Once the Credit Interest is disinherited, this Property is open at this target arrangement level to set Account specific settings.
      • Once disinherited, this arrangement no longer follows the source arrangement for this Property.

        

• Properties meant to be inherited appear as non-editable fields as displayed below.

  

• The user can run the Change.Target-Inheritance Activity to disinherit one or more properties for which Account specific settings are to be set at the Target Arrangement level.
  • The Debit Interest Property is disinherited. Also, this Property no longer follows the Source Arrangement 84573 for Debit Interest Conditions.

    

• Now, the usual Change-Debit Interest Activity can be run to amend the Conditions (Margin rate changed from 0.75 to 1.45).

  

• The changes reflect on the arrangement overview where it no longer indicates that Debit Interest is inherited.

  

• When the Conditions are inherited from source, a copy of it is stored at the target arrangement level.
• Any back dated credit or debit movements on the Target Arrangement results in Interest adjustments as standard behaviour in AA.

• Any back dated rate change on the source arrangement triggers a change of interest on all the target arrangements following it.
• This in turn results in Interest adjustments on the target arrangement.
• However, this back date is from the date when this target arrangement had started following that source arrangement.

The following balance netting specific events happening on a target arrangement trigger a re-evaluation of the source arrangement:

• When a stand-alone AR Account is added to a Balance Netting Pool as a Target Arrangement
• When a Target Arrangement is removed from a Balance Netting Pool
• Parent of the Target Arrangement is changed
• When the Target Arrangement is moved from one Balance Netting Pool to another