Account Control - REV140

This program allows you to set up and maintain the Revenue Account Control Master file. This file is very important because it controls the generation of accounting transactions to the General Ledger and Property Ledger. Establish this file carefully and with the assistance of your IFS Excalibur Systems Consultant.

All companies that process revenue or have net transactions generated such as insider cutbacks must have an Account Control File. If there is continuity between all companies' Charts of Accounts, IFS Excalibur can copy the Account Control File from one entity to another or applicable portions, so you do not have to enter it completely manually.

For every income and expense component, you must specify accounts for each product and for each type interest that you use. This allows for great flexibility of maintaining control over where dollar amounts are recorded. If separate accounts are needed to record various interest types, the Account Control File handles that situation. The Account Control File also establishes the payable amount for taxes that are paid to taxing authorities.

The Account Control File is built for both actual and accrual amounts. It is best to have a separate journal code for them. You should also establish separate accounts for the accrual amounts, that is, actuals and accruals should not be booked to the same account.

If it is not necessary, from a General Ledger perspective, to have all different type interest transactions go to separate accounts; only the type categories associated with each type interest must be set up. For example, if you have type interests WI, WIX, and WIM and all three type codes have the same type category of WI, you only need to set up WI in the Account Control File. For more information, refer to the Type Interest Master - REV135 program.

You must establish the Account Control File for all of the categories and components described below, prior to processing any checks. If you add new components to the system, it is important to set up the corresponding Account Control items, or processing is impeded. Review this entire process and refer to Revenue Account Control Master List - REV740 in the Reports section before entering your accounts.

The following preestablished component codes are:

1 = Gross Sales

6 = Net Paid Out

7 = Paid in Subsequent Month

8 = Our Company Net

9 = Suspense

10 = Net Payable to Insider Companies

A = Net Actually Paid to Us by a Check

Product `A' (any) is a pre-established product code. Refer to the list of components by number and reference them to the above table.

You must enter the following components which you cannot delete:

Component 1 = For All Products
Component 6 = Product A
Component 8 = Product A

If you delete any numeric component or component `A', the following message displays:

"Deleting Item With This Component May Cause Undesirable Results."

An audit hard copy report prints all of the deleted items.

The theory of the accounting transactions created in the Revenue system is:

The system makes a Revenue cash receipt (see AR103) when you receive the revenue - a debit to cash and a credit to revenue clearing.
When revenue is processed, all net amounts paid to outside owners, all net amounts paid or payable to inside entities (insider owners), and net retained by this company are offset against revenue clearing.
Any net amounts suspended are taken out of revenue clearing and sent to a revenue suspense account if Component code 9 has been set up. If Component code 9 has not been set up, the suspended amounts remain in the revenue clearing account.
This company's share of gross income is credited to whatever account is listed for the appropriate product and type interest or type category under Component 1. The tax or expense amount for this company is debited to the account specified for the product and type interest or type category under each tax or expense component.
All tax and expense components that you specify as "We Remit" components have the payable amounts credited to the liability account that you can set up in the Production Taxes - REV128A program for this component by state, optional district, and product.

For tax and expense components not set up in the Production Tax Master, a liability account must be set up in this screen using a special type interest code `NA' meaning "Not Applicable." You use the `NA' code to define the default account to use for "We Remit" transactions, and it cannot be set up in the type interest code file. If the `NA' code is not set up for existing users, you can use the credit account from the `WI' code. You can only use the `NA' code for components with type `E', `T', or `S,' and you can only enter a credit account.

You can post the cash entry to the period end of the check date (Component 7, product A is set up) or to the period end date revenue is processed for. (Component 7 is not set up.) It is recommended to set up Component 7, product A and post cash to the correct period end date to avoid making a journal entry from the revenue period end date to the check period end date. This is optional, to allow existing clients to continue posting to the prior period end date.
You can set up Components 6, 8, 9, and 10 with different products. You should use this option if you are transferring gross sales from the IFS Excalibur Gas system and entering other purchaser checks into the same company. Set up these components for the gas product in addition to product `A' and use a different revenue clearing account for the gas product.

The exact process depends on your internal operating procedures. The system generates transactions for four general categories as follows:

Gross (8/8th's) amounts get posted to the Property Ledger only. The entry created is not the normal "balanced" entry, but one that captures the Gross sale and related taxes, expenses, or both. The entries created for the Property Ledger are:
Gross Sale - Credit account from Component 1, by product and type interest.
Tax (or Expense) - Debit account from corresponding tax/expense component, by product and type interest.
Balanced Gross Sales Transactions

Our Company's Share

Gross Sale

Credit account from Component 1, by product and type interest

Tax (or Expense)

Debit account from corresponding tax/expense component, by product and type interest

Revenue Clearing

Debit revenue clearing account from Component 8 for our company share net amount (gross, taxes, expenses)

Revenue Paid Out (Outside Owners or Insider Companies)

Revenue Clearing

Debit revenue clearing account from Component 6 for the amount paid to outsiders.

Distributed Revenue Payable

Credit distributed revenue payable account from Component 6 for the amount paid to outsiders. This is the cash account if Component 7 (Paid in Subsequent Month) is not set up.

Net Payable (Insider Companies)

Net Amount

Debit (Revenue Clearing) and credit (Intercompany Payable) accounts from Component 10 if the insider company is a "Release with No Pay" (no check is cut). If the insider company has a check cut to them, the net check is processed against Component 6 (Net Paid Out).

Cash Account - This single entry is made in the accounting period of the check date only if Component 7 is set up. The credit account from Component 6, product `A' is used for the debit account for this entry and the credit account from Component 7, product `A' is used for the credit account for this entry.

If a check is actually written to this company, an additional entry is made using Component `A' (with product `A') to transfer the cash from a revenue cash account to an operating cash account.

You create all entries with or without property numbers, depending on the property flag on the Chart of Accounts Master. Make sure that a property required flag is on the necessary accounts.

If revenue is paid to an insider entity, you must also set up this file for that entity. The system generates entries the same as for our company's share, as described above, and posts them to the General Ledger and Property Ledger belonging to the insider company.

Account Control File Requirements

Component 1 - Gross

Set up this component for all products and all type interests or type categories. Use the appropriate sales account for the credit account.

Component 6 - Net Paid Out

Set up this component for product code `A', leaving the other products as optional. The debit account is revenue clearing and the credit account is normally distributed revenue payable. The credit account for Component 6 is the revenue cash account if Component 7 (Cash Paid in Subsequent Month) is not set up. Make an entry in the period end where the revenue check process is run to clear the net paid amount out of revenue clearing and into distributed revenue payable. Make a corresponding entry in the period end of the check date which clears this amount out of distributed revenue payable and into cash. You do not enter a type interest or type category for this component.

If an insider company has a check cut to them, the net check amount is processed against this component (Component 6). If the insider company is a "Release with No Pay" (no check is cut), the net amount is processed against Component 10.

This component with product code `A' is also used by the Cash Receipts Function Processor - AR100 program to identify the revenue clearing account from the debit side of this item.

Component 7 - Cash Paid in Subsequent Month

Only set up this component for product code `A'. You do not enter a type interest or type category for this component. The credit account should be your revenue cash account. You use it to make the cash clearing entry in the period end of the check date. (Refer to Component 6 above.) This component is optional. However, if not set up, cash is credited to the revenue check processing period.

Component 8 - Our Net Retained

Set up this component for this company's net revenue with a product code of `A', leaving the other products as optional. The debit account would normally be the revenue clearing account for this company. You can also use this component for insider companies for which a check is cut, and the debit account would normally be the revenue clearing account for the insider company. The debit account could also be a cash account for the insider company if the insider company does not do any revenue distributions.

Component 9 - Suspense

Set up this optional component when you want current month suspense taken out of revenue clearing and put in a suspense account. You need a product code of `A,' leaving the other products as optional. The debit account would normally be revenue clearing and the credit account revenue suspense. When the revenue is released from suspense, a debit is created to the suspense account, and the credit account on the appropriate `Net' component would be used as the offset. If this component is not set up, no transactions are generated until the revenue is actually released and suspended revenue remains in the revenue clearing account.

Component 10 - Net Payable to Insider Companies

You must set up this component if any inside entity is a "Release with No Pay" on both this company and the inside entity. This component is usually set up with a product code of `A' but can be set up with other products. You do not need any type interests or type categories. If any insider company is designated as a "Release with No Pay" (no check is to be cut for this inside entity), the net amount owed to the insider is processed against this component. The debit account is normally revenue clearing and the credit account would normally be an intercompany account. If you only enter a general account for the credit account, the sub-account you actually use for the insider receivable is the insider's company ID on this company and you use this company's ID as the sub-account on insider company.

Component A - Paid to Us

If a check is written (to ourselves), for our net, use this component with product code `A'. The debit account would be operating cash and the credit account would be revenue cash.

Tax and Expense Components

You must set up all tax and expense components, as set up in the Component Codes - REV125 program, for all appropriate products and type interests or type categories. Use the debit and credit accounts to post the amount to the Property Ledger (8/8th's and our share) and the General Ledger (our share). If you enter the default JIB lease operating component, this is a special situation that you should review with IFS Excalibur personnel before using.