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Processing Configuration

Reclassification

A comprehensive guide to Reclassification in Fynapse.

Overview

Reclassification is an accounting process where, due to regulatory compliance requirements and financial reporting accuracy, certain accounts require balance transfers, e.g. due to initial missclassification. It adjusts where an amount is reported, i.e. how it is classified in the system, not the amount itself or the underlying transaction.

In Fynapse, the Reclassification functionality supports regulatory compliance and financial reporting accuracy by enabling systematic movement of balances between account classifications without manual intervention based on a set of specified filter criteria.

Fynapse provides two methods of reclassification:

  • Sweep - where adjustments of multiple Accounts are reclassified and posted to one offset Account based on a set of filtering condition defined for the source Accounts
  • Net position - where reclassification is based on the signage of the total sum balance for a selected asset and liability Account pair or pairs specified within the rule
    • if upon the calculation the total sum is negative, the transactions are moved from Accounts defined as asset Accounts to Accounts defined as liability Accounts
    • if upon the calculation the total sum is positive, the transactions are moved from Accounts defined as liability Accounts to Accounts defined as asset Accounts
Reclassification Modes

How reclassification works in Sweep method

In the example below, you can see the operation for a scenario where a reclassification rule was created for the Credit Card Receivable Account:

  • Credit Card Receivable Account - source Account
  • Credit Card Balances - offset Account
  • the rule looks for any transactions with negative balance
Reclassification Modes Sweep

How reclassification works in Net Position method

In the example below, you can see the operation for a scenario where a reclassification rule was created for pairs of Accounts:

Reclassification Modes Net Position

The Reclassification capability provides:

  • Reclassification Configurations that specify the Journal Type for the Journal that will be posted as a result and a set of rules specifying source accounts, adjustment filters on balances, offset accounts.

  • Assignment of one or more reclassification configurations to Accounting Base and Subledger Node combinations

  • On-demand execution of the balance movement process, using the current balances in the ledger, including earlier runs of reclass

How Does the Reclassification Process Work?

Reclassification operates on the principle that certain accounts require balance transfers, when specified filter criteria are met, to maintain proper financial statement classification. When the process is run, the cumulative balances from specified accounts, net of any amounts already moved in a prior run, shall be transferred to their corresponding offset accounts.

The process can be run at any time, on demand. Journals produced by the process receive the Effective Date of that same business day.

Each run reads current ledger balances, including its own postings from earlier runs. Amounts already moved therefore net off, so a repeat run on the same posting date moves only what has changed since. The check after a run is not the size of any individual posting but the resulting position: the target account holds the full reclassifiable balance as at the run date.

The way this works in Fynapse, you have to create a reclassification configuration in the desired reclassification method and which will include:

  • the Accounts for which balances, that will later be moved, will be calculated
  • the filter criteria used to verify whether the amounts/balances need to be reclassified
  • the Offset Accounts to which the Journal with the reclassified balance will be posted to
  • the Journal Type the reclassified Journals will be posted as

Then you assign the Reclassification configurations to Accounting Base/Subledger Node combinations. This provides you with a level of granularity that allows you to efficiently manage the fiscal complexity of your organization.

Finally, once the setup is complete, the process is run, i.e. the balances are reclassified.

Configuration and Execution

Configuring the Reclassification Process

Reclassification Configuration Screen

On the Reclassification configurations screen you can create new Reclassification configurations and browse the already created ones.

You can also refresh the screen using the Refresh button to see if any new changes or configurations are available.

For information on how to configure a new Reclassification configuration refer to the tutorial below.

To view the details of an existing configuration, click the three dots in the Actions column and choose View configuration. You will be redirected to the details screen where you can:

  • View the details of the configuration
  • Edit the configuration
  • Clone the configuration
  • Delete the configuration

Reclassification Assignment Screen

On the Reclassification assignment screen you can:

  • Assign configurations you created on the Reclassification configurations screen to Accounting Base/Subledger Node combinations
  • Browse existing configuration assignments in the grid
  • Edit an existing assignment
  • Use the Refresh button to see if any new changes or configuration assignments are available.

For information on how to assign a configuration, refer to the tutorial below.

Tutorials

  1. Go to Accounting Configurations > Reclassification > Reclassification configuration.
  2. Click Create new configuration.
  3. Type a unique Configuration name for the Reclassification configuration.
  4. From the drop-down list, select the Journal Type of the Journal that will be created and posted as the result of running the Reclassification process.
  5. Select the Dimension set that will procide filtering attributes for reclassification rules.
  6. You can optionally add a Configuration description.
  7. Select the Sweep reclassification method
  8. In the next section you will create rules for your configuration:
    1. Type a unique Name for your rule.
    2. Select the Account Codes of the Accounts for which you want to run the Reclassification process from the drop-down list. You can select multiple Accounts.
    3. Select the filtering attributes from the drop-down list. This list consists of attributes from the selected Dimension Set, excluding Systemic Fields, and a “Balance” attribute that allows you to setup matching criteria for Balances.
    4. Select the Offset account from the Chart of Accounts in the drop-down list. This is the account which will be used to balance any amounts from the Account(s) you defined in the previous step.

      You cannot use the account that you configured as a source Account.

    5. If you want to configure multiple rules for your configuration, click + Add new rule to add another one.
  9. Click Save configuration to save your configuration, or Cancel to discard.

Once you have defined Reclassification configurations, you need to assign them to an Accounting Base/Subledger Node combination to be able to run the Reclassification process.

  1. Go to Accounting Configurations > Reclassification > Reclassification configuration.
  2. Click Create new configuration.
  3. Type a unique Configuration name for the Reclassification configuration.
  4. From the drop-down list, select the Journal Type of the Journal that will be created and posted as the result of running the Reclassification process.
  5. Select the Dimension set that will procide filtering attributes for reclassification rules.
  6. You can optionally add a Configuration description.
  7. Select the Net Position reclassification method.
  8. In the Accounting Pairs section you will create netting rules for your configuration:
    1. From the Assets drop-down list select an asset Account.
    2. From the Liability drop-down list select a liability Account to pair with the asset Account. Any offset Journal Lines from either Account will travel between this pair.
    3. Add as many pairs as you need.
    4. Select the filtering attributes from the drop-down list. This list consists of attributes from the selected Dimension Set.
  9. Click Save configuration to save your configuration, or Cancel to discard.

Once you have defined Reclassification configurations, you need to assign them to an Accounting Base/Subledger Node combination to be able to run the Reclassification process.

Considerations:

  1. The scheduler functionality is equipped with smart validations to ensure if you configure multiple runs they are not in conflict.
  2. If you enable Enligible days as Working days only, the labels for Reclassification date will change to Previous working day and Last working day of previous period
  1. Go to Accounting Configurations > Reclassification > Reclassification Configuration.
  2. You can configure Scheduler:
    1. When you are creating a new reclassification configuration. In this case click the Create new configuration button, configure the reclassification rules and then click the + Add recurrence schedule button in the Schedule section.
    2. You can add it later to an existing configuration. Select the configuration from the grid, go to the Details screen and click the Edit configuration button. Then click the + Add recurrence schedule button in the Schedule section.
  3. The + Add recurrence schedule button is a drop-down list where you select the frequency of the recurrence of reclassification runs:
    1. Each day - one or more reclassification runs every day
    2. Each period - reclassification occurs on any day near the first or last day of each fiscal period
    3. Each fiscal year - reclassification occurs on any day near the first or last day of the selected fiscal year
    4. Each week - reclassification occurs on selected days of the week
    5. Each month - reclassification occurs on any day near the first or last day of the selected month
    6. Each year - reclassification occurs on any day near the first or last day of the selected calendar year
  4. Depending on the type of recurrence you select, the configuration will look differently. You can choose multiple different recurrences for one configuration.
  5. The Eligible days are effective for all types of selected recurrences, you cannot define them for individual recurrences. Choose the Eligible days - select if you want the reclassification runs to occur on:
    1. Working days only
    2. Working and non-working days The working and non-working days are determined based on the Business Calendar assigned to the configuration in Reclassification assignments.
  6. Each day
    1. Each day - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    2. Use + Add run to add more runs per day.
    3. Reclassification date - the date for which reclassification run will occur and Journals will be posted
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. if reclassification run occurs on November 3rd, the Reclassification date will be October 31st.
  7. Each period
    1. Select when the reclassification run occurs Counted from:
      1. Start of the period
      2. End of the period
    2. Set a day between 1-26 counting from the start or the end of the period, e.g. if set to Start of the period + Day = 1, the reclassification will run on the first day of the period.
    3. Choose the Runs time - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    4. Use + Add run to add more runs.
    5. Reclassification date - the date on which
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. if reclassification run occurs on November 3rd, the Reclassification date will be October 31st.
  8. Each fiscal year
    1. Select when the reclassification run occurs Counted from:
      1. Start of the firscal year
      2. End of the fiscal year
    2. Set a day between 1-26 counting from the start or the end of the fiscal year, e.g. if set to Start of the fiscal year + Day = 1, the reclassification will run on the first day of the fiscal year.
    3. Choose the Run time - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    4. Use + Add run to add more runs.
    5. Reclassification date - the date on which
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. if reclassification run occurs on January 3rd, the Reclassification date will be December 31st.
  9. Each week
    1. Select the days of the week when you want the reclassification to run.
    2. Use + Add run to add more runs.
    3. Choose the Run time - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    4. Reclassification date - the date on which
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. if reclassification run occurs on Monday November 3rd, the Reclassification date will be October 31st.
  10. Each month
    1. Select when the reclassification run occurs Counted from:
      1. Start of the month
      2. End of the month
    2. Set a day between 1-26 counting from the start or the end of the month, e.g. if set to Start of the month + Day = 1, the reclassification will run on the first day of the month.
    3. Choose the Run time - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    4. Use + Add run to add more runs.
    5. Reclassification date - the date on which
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. if reclassification run occurs on November 3rd, the Reclassification date will be October 31st.
  11. Each year
    1. Select when the reclassification run occurs Counted from:
      1. First day of the year
      2. Last day of the year
    2. Set a day between 1-26 counting from the start or the end of the year, e.g. if set to Start of the year + Day = 1, the reclassification will run on the first day of the year.
    3. Choose the Run time - select the time for the reclassification run; please note that the time is determined by the Subledger Node defined in the Reclassification assignments.
    4. Use + Add run to add more runs.
    5. Reclassification date - the date on which
      1. Current day - the day on which the reclassification run is scheduled
      2. Previous day - the day before the reclassification run is scheduled
      3. Last day of previous period - the last day of the previous period before the reclassification run is scheduled, e.g. for a configuration using standard Gregorian calendar, if reclassification run occurs on January 3rd, the Reclassification date will be December 31st.
  1. Go to Accounting Configurations > Reclassification > Reclassification assignment.
  2. Click Edit assignments.
  3. Select the Accounting Bases/Subledger Node combination for which you want to assign a Reclassification configuration, then select the configuration from the drop-down list. You can select multiple configurations.

    You cannot assign two configurations which operate on the same accounts to one Accounting Bases/Subledger Node combination. This will cause an error to be thrown.

  4. Multiple selection
    1. You can also select multiple Accounting Base/Subledger Node combinations using the check list in the first column on the left.
    2. From the drop-down list at the top of the screen, select the reclassification configuration. You can select multiple configurations.
    3. Click the Assign for selected button.
  5. Click Save changes to save your changes, or Cancel to discard your changes.

Running the Reclassification Process

Reclassification Screen

On the Reclassification screen you can run the Reclassification process.

The screen includes:

  • The Run button - click it to start the Reclassification process

  • The Process date - allows you to set the date for which Journals created as the result of the reclassification process will be posted.

    This can be either the current business date or a specific date.

    Please note that the Process date is calculated based on the time zone of the Subledger Node/Accounting Base combination assigned to the reclassification configuration used for the reclassification run.

  • The Show logs button - a new button that allows you to view detailed logs for reclassification runs.

  • A grid which comprises:

    • Information about Accounting Base and Node combinations and Reclassification Configurations assigned to the given combination
    • Last run status - status of the last run
    • Last run for - the date for which the given Reclassification was run
    • Last run at - the timestamp for when the Reclassification run was started
    • Actions - the Actions column allows you to perform the following:
      • Rerun - rerun the cleardown for the date in the Last run for column
      • Open journals - redirects you to the Journals screen in the Subledger, where the system automatically runs a query based on the Ingestion ID of the Journals which were created by the reclassification process
      • View errors - if a run is unsuccessful, you can view the errors in a pane that will open on the right-hand side of the screen.

Tutorials

  1. Go to Subledger > Reclassification.
  2. Select the Accounting Base/Subledger Node combination for which you want to run the reclassification.

You can run reclassification for multiple selections.

If you have multiple configurations assigned to one Accounting Bases/Subledger Node combination each configuration will have a separate row in the grid and will have to be run separately.

  1. Click the Run button to perform Reclassification.

Watch a Video about Reclassification