WIP - Account Maintenance/Enquiry
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What is
WIP is the Work-in-Progress Ledger maintenance procedure with several enquiry styles for accounting/TRADE and P+L performance analysis.
A WIP account/profile can be used when not operating WIP accounting procedures. In that situation, it is useful for grouping Purchase and Sale trades. A frequent use is when building the file for a Charter, the trade records can then be used for LayCan calculations, material analysis and GPLREP/P&L - 'View By Charter'. Another use is to auto create P x WIP accounts to represent Stock Cards e.g. buy 20MT of Coffee Beans and sell in small allocations and want to view complete history of the Purchase.
When a company is operating Charters i.e. not automatically assigning TRADE records to a WIP, this process can be used to assign, de-assign, re-assign TRADE, singularly or en-masse. In the CHARTERS equivalent process, the TRADE can be dynamically assigned/de-assigned using the Charter Party/reorganize Shipments functionality.
If the company is operating the specialist cash-match transactions in the WIP ledger feature (ctrl02_matchwipfromcash), the right-click when a WIP account has been recalled allows for the calculation of a Interest form with create TRADE/Costs and accounting documents as optional products. The process operates on the balances that have been cash-matched and any situations with multiple currencies involved will utilize the Company P&L currency as a Currency equivalence (Spot rates).
Due to their volatility and the amount of information related to the accounts held in the WIP ledger, it is convenient to view/maintain them separated from the Nominal/ General Ledger. WIP contracts are represented in the Nominal/ General Ledger by a control account that reflects their net balance, this is updated automatically without reference to the specific WIP account and there is no drill down in the N/L to the 'detail' of that control account. If you wish to view the composition of the WIP control balances, use WIPLIST with the correct filters and selections, especially exchange rates and cutoff periods.
Simple enquiry features of balances and transactions (posted and in suspense) are available. When viewing the balances, there is a feature for creating FX journals using the company nominated FX P&L account as the revaluation process (note this is consistent with DOCENT/FX journal entry). There are more sophisticated enquiries using the Physicals trading database. The reports available are a basic WIP balances and the Report Writer.
This Ledger is used to group all accounts that have a contract nature (i.e. have a finite life, are opened, posted-to and closed in a reasonably short time frame) or they are long-term Stock/Inventory units e.g. tanks of oil/soya/sugar which are consistently replenished/sold etc.
TRADE transactions (e.g. purchases, sales, freight, insurance, etc) are posted to the WIP Ledger throughout the life of the account, in this way accounting and P+L analysis can be performed for each individual account which in turn can be used to evaluate the estimated TRADE P&L.
The program displays a form with several tabs, one for the maintenance of account profile codes e.g. commodity, client, EDI code. Another form is used to define Storage (STOCKS) type data, another to define the current Vessel shipment status (if WIP account relates to a charter or shipment), another to maintain charter details e.g. lay days, demurrage rates, another to view applied TRADE contract details and their P+L and the others for varied enquiries.
A very useful feature in the tabs is called 'Contracts' whereby you can view the associated TRADE tonnages that have been allocated to this WIP account, these represent the trading basis for the account and a WIP Management P+L can be viewed.
Prior to view/maintenance of an account, there are several right-click features. Mass Closure i.e. filter to produce grid for liquidation activation. Build a list of EDI Codes and Bulk Edit for WIP x EDI Codes.
The Shipment tab provides the means to view allocated TRADE contracts and to maintain the status of the charter/shipment. Mass updating of the contracts traffic status is possible as well as selective updates where there are different loadport or discharge details for specific contracts linked to a charter.
The Charter Party tab allows for the extensive maintenance of the chartering for this account, Post Fixture and Laytime calculations.
Simple Reporting of account details is handled using the 'Report' icon on the tool bar. Two forms will have been setup by Hivedome (WIP List and Charters). These can be modified by the user and new styles can be created. A simple report of WIP account balances is also available from ‘Report’ drop-down. There are several styles of presenting WIP transactions, by currency, by Expense code and by Contract Reference. These are all available from standard tabs on the WIP form. More sophisticated reporting for the WIP accounts is handled in WIPSUM and WIPLIST.
DOCDES forms can be created using the appropriate icon on the toolbar; this is useful for Charter Fixtures, Sample/Analysis results.
WIP + WIPV control their more critical processes by use of CMP/Privileges i.e. STATUS, ARCHIVE, ACCOUNTTYPE, INTERNAL, FORMEDIT and MEPACCRUE.
Use WIP as a Stock unit
Depending on how postings are transacted through these accounts, the WIP ledger can represent the accounting value of STOCK or it can be a combination of non-realised P+L and Stock.
Hivedome will discuss the best method for your company to operate this ledger. ITAS can be set-up to transfer an estimated P+L for each sale invoice directly to the General ledger utilising Cost of stock and estimated costs.
Account close/archiving/accrual accounting
There are several styles for liquidating WIP accounts into the realised PLR, the options are controlled at Company level and are activated by Hivedome. All the options will transfer the balances using CM journals per currency. The styles are:-
A Post to the specified WIP liquidation account for each account/currency combination using the nominated EXP code (use EXP/right-click/maintain control codes). This is the ITAS company setup default method.
B Post to the specified WIP liquidation account for each unique account/currency/expense code combination.
C Post to the specified WIP liquidation account for each account/currency/expense code group combination using the group expense code for the CM document
D Post to EXP liquidation account using the expense code, for each account/currency/expense code/department combination
E Post to EXP liquidation account (root) and WIP liquidation account (stem) for each account/currency/expense code combination that is has been grouped by EXP importance 00, 01, 90 and the rest (hard coded = DIRECT).
The reversal postings in the WIP account will be 1 per currency with its’ own Liquidation expense code
F. Post to the EXP liquidation account (root) and WIP liquidation account (stem) for each count/currency/expensecode.
The reversal postings in the WIP account will be 1 per currency with its’ own Liquidation expense code. Associated with this style is an option for partial liquidation, very explicit to Agman operation.
G. Post to EXP liquidation account using the expense code, for each account/currency/expense code/Dept combination
V. Post to EXP liquidation account (root) and WIP/DEPT liquidation account(stem) for each account/currency/expensecode
The clearance postings in the WIP account will be 1 per currency with its’ own Liquidation expense code
The difference between ‘V’ and ‘F’ styles is that ‘V’ will create reversing CM documents if the WIP is re-opened
X. Special mode where WIP close/liquidate does NOT remove/post any balances but will ONLY mark as closed.
This mode is needed for companies that operate their WIP control account in the PLR, and will have manually or by use of an accrual type program removed their stock to Balance sheet
.
There is a mass account closure procedure available, mouse right click before making any selections. This feature will present a grid of open status WIP accounts and will prompt for which accounts are to be closed. When closing a WIP account, either en-masse or by individual selection, you will be asked if you wish to close all the assigned TRADE contract tonnage.
The archiving of the closed WIP accounts is actioned in MEP/MEPACT when the account fulfills the criteria of :-
1. last accounting entry is in an accounting period that is NOW closed
2. The date of WIP closure is in excess of the number of days that is specified for the company (SSU setting)
There is a manual ARCHIVE process that is controlled by CMP/Privileges, this is activated by mouse right-click after entry of a closed WIP account.
There is a feature to action a partial archive process in the MEP/MEPACT. This is activated by ticking the request box in WIP for each account that requires this facility. Inventory/Stock accounts, where there are large numbers of intakes/deliveries, are the types of account that will benefit by using this feature. There is a mode of STOCK that will generate the appropriate temporary adjustment documents that will create a balanced accounting/administration situation ready for the archiving of the transactions in MEP. MEP will produce it's report in the company OPRINT directory illustrating successes and failures of the archive.
How different types of WIP account can be used:-
a) Purchase - represents the book-keeping account for a TRADE purchase .000 whereby all the costs for the purchase e.g. goods, freight, insurance, forex are posted and all the Sales proceeds for any TRADE allocated deals are also posted.
Example 100mt trade purchase of Sugar Crystals , FOB $200 pmt and cost estimates of $80 pmt. Sold as 60mt and 30mt with 10mt unsold (i.e. stock)
PI0000001 PURCH +100mt usd 20,000DR
PI0000002 FREIGHT usd 4,500DR
JL0000003 INS_MAR eur 1,000DR
CP0000007 BANK stg 250DR
SI0000001 SALE -60mt usd 18,000CR
SI0000002 SALE -30mt stg 8,000CR
In this scenario you will note that the grand totals represent STOCK and unrealised P+L (with missing accruals for late expenses) This would require further analysis for fiscal reporting.
An alternative posting method exists for sales invoicing where the P+L is calculated using the TRADE estimated costs and the SI document would have 2 additional postings transferring the P+L from WIP account direct to Nominal ledger realised P+L. The grand totals would then represent the current cost of Stock (10mt) with some missing accrual postings. At fiscal year-end the missing accruals should be posted to reflect the true cost of stock irrespective of whether the purchase is classified as warehoused or in-transit.
b) - would operate in the same manner as the purchase except that the TRADE drives the postings. However the purchase costs would need to be identified as to which sale WIP account they pertain, probably splitting by tonnage allocation.
c) Header Account - can be operated as a suspense account holding expenses/costs for a business sector prior to allocation to specific account(s). The account can also operate as a mini ledger to which other WIP accounts are linked e.g. Biz sector is Sales of Sugar to Gibraltar for fiscal year 2000 = account GIB2000.00, postings could include setup bank charges and other miscellaneous expenses. A series of charter accounts can be linked to GIB2000.00
d) Charter account - these can be used for the tracking and accounting of a specific physical movement. By using these accounts a 'vessel P+L' can be tracked, with a charter/vessel representing any logical grouping e.g. rail car movements for a month from A to B, a real charter with many sales and purchase tonnage’s assigned to that reference.
e) Miscellaneous account - useful for tracking charges etc that can not be assigned to a charter yet e.g. opening LC costs.
f) Stock/Inventory account - used in the INVENTORY subsystem and represents a more permanent stock entity e.g. a silo of grain/sugar which is regularly updated with intakes, deliveries, inter-site movements etc
Technical (allocation style -
ctrl30_allocstyle)
Style 'A' TRADE can 'allocate' P+S tonnage. TRADE, WIP, CHARTERS can 'assign' contract pairs or individual Purchase and Sales to a WIP account (Charter/Vessel/Shipment) Note WIP account must be created before assignment
Style 'B' TRADE can 'allocate' P+S tonnage and will automatically 'assign' the P+S contracts to a WIP account, which is coded using the Purchase contract stem and suffix '000'. WIP can be used to (de)assign individual contracts.
Style 'C' TRADE can 'allocate' P+S tonnage. Need to use WIP to 'assign' P+S pair to relevant WIP account, usually coded as tranche identity i.e. purchase contract stem and suffix 'A00', 'B00' etc
Style 'D' TRADE can allocate/assign (simultaneously) P+S tonnage to WIP account (e.g. Stock type0 ‘STOCK' can 'assign' purchases to WIP/Stock accounts.
Agman style Partial close/liquidate
- Retrieves contract pairs for the active WIP account. Only picks contracts that are allocated or if not allocated, weight-loss and write-loss status. It excludes contracts that are excluded from MEPACCRUE.
- Contract pairs are displayed but cannot be selected if they meet any of the following criteria:
- They have open F&O or FX
- The allocation’s WIP account is closed.
- The contract is allocated and not fully sales invoiced.
- Once contract pairs have been selected, all transactions for these contracts are read. FX and F&O details are calculated using the same method as MEPACCRUE, and displayed as separate rows.
- The user can tick all rows to close except for rows that represent the actual accounting for FX and F&O – instead the MEPACCRUE rows must be selected.
- If an FXT account doesn’t exist, but is required, it is created automatically.
- If the company can only liquidate menu currency balances, it automatically transfers any non-menu currency balances using a pair of journals. All legs are grouped by contract and use expense code KLOSE. This was changed in March 2004 to additionally group by expense code on the WIP legs, and use that expense code if the WIP account is an FXT account.
- P&L is then taken for the remaining balances, using a journal per currency. WIP legs are grouped by account and contract number. The WIP postings use KLOSE, unless they are FXT accounts, in which case they use the original expense code.
- Any contracts selected are closed and marked as excluded from MEPACCRUE.
Due to the nature of the way that Agman uses WIP accounts, it is necessary for the users to be able to close and liquidate some but not all contracts assigned to a WIP account. The basic scenario is that a WIP account might contain a single contract, which is split into a number of tranches over a period of time. Some of these might be allocated and others might be written off. The allocations may have different WIP accounts and both sets of contracts could have futures, option and FX deals assigned to them. All of this can generate accounting transactions (invoices, settlement documents, FX journals and so on) posted to the WIP account. Partial liquidation involves closing all selected contracts and moving all of the WIP account postings for the selected contracts (which could involve other WIP accounts) into P&L.
On the main WIP screen, there is a menu option Close/Liquidate Partial. This appears directly underneath the standard Close/Liquidate Account item, and follows the same criteria for the item being visible and for the user being able to select it.
First Screen
Once selected, the user is presented with a new screen. This contains a grid where the user can select items to liquidate, as well as buttons for Proceed, Cancel, Select All and Clear All. There is a standard reduced toolbar (Discard, Print, Close, Helps).
Grid Layout
- Status
- Contract Number
- Shipping Status
- Allocation. Blank if unallocated
- Weight Code
- Quantity
- Purchase Invoice
- Sales Invoice
- Quantity Percentage Sales Invoiced
- Open F&O
- Open FX
- Tick
Contents
The program locates contract/allocation pairs for the active WIP account. So a contract will only appear once if both the contract and its allocation share the same WIP account. Only contracts that are not excluded from MEPACCRUE will be picked up. Only allocated contracts, or weight loss/write-off contracts will be picked up. It is valid for contracts that have already been closed to be picked up; the user might have closed it in TRADE, but not yet liquidated the P&L. Therefore, the crucial filter for contracts is exclusion from MEPACCRUE.
The Open F&O column will be ticked if either the contract or its allocation is referred to on an open futures or options record (not an instruction), explicitly or by fix family. The Open FX column will be ticked if either of the contracts is referred to on an open treasury deal, explicitly or by FX family (use phys11/trs01).
A row can only be ticked if there are no open F&O, FX, or if the contract is allocated and not invoiced and not 100% sales invoiced. Additionally, it cannot be ticked if the allocated contract's WIP account is closed.
Accounting Screen
Once the user has made his/her selections in the contracts screen, the accounting screen is then built and displayed. This collects the accounting details for the selected WIP accounts/contracts, and in addition uses MEPACCRUE methodology to determine assigned F&O and FX.
The screen has the grid described below, plus buttons for OK, Cancel, Select All and Clear All. The user will be able to tick rows in the grid to include and also alter the amount and two exchange rate columns.
Grid Layout
- Status
- WIP Account
- Allocation
- Contract
- Expense Code
- Currency
- Amount (editable)
- Exchange Rate Type (editable – see below)
- Exchange Rate (editable – see below)
- Menu currency equivalent according to entered rates
- Tick
There is a quick-sum facility on the grid, to allow the user to compare the menu currency balances with printed MEPACCRUE report.
Grid Contents
The program reads WIP transactions based on the contracts selected in the previous screen. Since this could include allocations, there will be multiple WIP accounts involved.
For each of these WIP accounts, it reads current transactions that are not document dated later than today, and where the contract number on the transaction matches the selected contracts. These are grouped by WIP account, contract, allocation, expense code and currency. This is similar to the way it is done for the standard closure process, using the xx_alloc_liquid stored procedure.
There are additional rows according to MEPACCRUE methodology:
FX
The value we want is the margin. We only need to read settled FX trades since the user cannot get this far if there are open trades. That means documents (FJs) have been posted, but we don’t use these values, instead we use the variation margin (profit and loss). The expense codes come from the expense codes control table (ctrl06_fxpurchase, ctrl06_fxsale). The WIP account shown will be the .FXT account.
F&O
This reads settled F&O from the archived F&O table (futarc). The commission value and contract value are displayed in the grid as separate rows, the expense code coming from the ctrl06 (ctrl06_setts, ctrl06_comsn). The WIP account shown will be the .FXT account.
The ctrl30 stores the start date for processes settled F&O (ctrl30_mepaccsetfutdate) – do not process F&O settled (fut02_arcdate) prior to this date.
F&O commission is gross, that is we just sum the values rather than taking buys from sells. F&O and FX amounts are proportioned according to the contract quantity and the family quantity. The family quantity does not include write-offs unless these write-offs are the family header and there are no splits over which to apportion them.
For both FX and F&O there was the option to use the stored MEPACCRUE values to report these details. However, we are unable to do so easily for FX, because all stored MEPACCRUE values are in menu currency, and we decided not to do so for F&O because the process was actually quite simple.
There may also be accounting values equivalent to the MEPACCRUE data. These should be displayed but greyed out. They can all be recognised by their expense codes as being from the ctrl06 table.
Exchange Rates
The Partial Closure process handles both normal and Single Currency methodologies. For the normal methodology, the exchange displayed are the spot rates to the menu currency. When the company operates single currency, we don't need exchange rates for the transactions, as the two amounts (currency and menu currency) are already secured on the transaction. Therefore, the exchange rate columns are left blank, and cannot be changed. For the MEPACCRUE rows, we don't have access to the amounts, so instead we have to find the transactions with matching expense codes. If the transactional amount matches the MEPACCRUE amount, we can use that, otherwise we have to extrapolate the rate from the two values and apply to the MEPACCRUE row. If no matching transactions are found, we use spot rates as per the normal methodology.
Update Process
When the user has selected the contracts to close, the following will take place:
For each selected contract, the contract will be marked as closed (if not already closed) and excluded from MEPACCRUE.
If the balance is not in the company’s menu currency, FJs will be created to perform an FX transfer.
P&L is taken using journals. If the .FXT account doesn’t exist (for posting F&O and FX) it will be automatically created and marked as excluded from
MEPACCRUE.
The document date is prompted, and the value date follows that.
The journal legs are built as follows:
- WIP postings: one leg per contract, expense code KLOSE.
- P&L posting: one leg per expense code and contract, original expense code.
If the WIP account is a .FXT account, the WIP postings are per expense code, rather than using KLOSE.
Example
WIP account P03073.000 has 22 lines of balances available for partial transfer. The user chooses 8 of these, relating to four different expense codes (BGS, CSP, DD, PP) for two different splits: P03073.A00 and P03073.B00:
| WIP | Contract | Expense Code | Balance |
| P03073.000 | P03073.A00 | BGS | 6,000.00 |
| P03073.000 | P03073.A00 | CSP | 5,000.00 |
| P03073.000 | P03073.A00 | DD | 8,000.00 |
| P03073.000 | P03073.A00 | PP | 460,000.00 |
| P03073.000 | P03073.B00 | BGS | 6,000.00 |
| P03073.000 | P03073.B00 | CSP | 5,000.00 |
| P03073.000 | P03073.B00 | DD | 8,000.00 |
| P03073.000 | P03073.B00 | PP | 460,000,000.00 |
This should generate the following postings:
| Account | Contract | Expense Code | Amount |
| P03073.000 | P03073.A00 | KLOSE | 479,000.00CR |
| P03073.000 | P03073.B00 | KLOSE | 479,000.00CR |
| NL | P03073.A00 | BGS | 6,000.00 |
| NL | P03073.A00 | CSP | 5,000.00 |
| NL | P03073.A00 | DD | 8,000.00 |
| NL | P03073.A00 | PP | 460,000.00 |
| NL | P03073.B00 | BGS | 6,000.00 |
| NL | P03073.B00 | CSP | 5,000.00 |
| NL | P03073.B00 | DD | 8,000.00 |
| NL | P03073.B00 | PP | 460,000.00 |
The WIP account will then have the following balances per contract:
| Contract | Expense Code | Balance |
| P03073.A00 | BGS | 6,000.00 |
| P03073.A00 | CSP | 5,000.00 |
| P03073.A00 | DD | 8,000.00 |
| P03073.A00 | KLOSE | 479,000.00CR |
| P03073.A00 | PP | 460,000.00 |
| P03073.B00 | BGS | 6,000.00 |
| P03073.B00 | CSP | 5,000.00 |
| P03073.B00 | DD | 8,000.00 |
| P03073.B00 | KLOSE | 479,000.00CR |
| P03073.B00 | PP | 460,000.00 |
Contents of WIP - Account Maintenance/Enquiry
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Related Options
There are several different (run) modes of WIP (K01) to handle specific actions.