Revaluation is the process of adjusting the rates and prices of your financial instruments to reflect the current market value and calculate the realized or unrealized profit and loss.
Revaluation is an optional step in the accounting process. If you set the Accounting - Perform Deal Revaluations company parameter to Yes, you must perform revaluations as part of the accounting process. If you set the parameter to No, you cannot perform revaluations. For more information on setting company parameters, see: Setting Up Company Parameters.
When you perform revaluations, you:
Define the end date for the accounting batch period. If this is your first ever accounting batch for this company, you will also need to define the batch start date.
Capture the rates that you want to use to revalue the batch from the Current System Rates window.
Review and adjust the revaluation rates, as required.
Calculate your mark-to-market and currency gain or loss revaluations. The currency gain or loss is calculated using the GL daily rate.
Authorize the revaluations.
The rates that you capture to revalue your financial instruments (interest rates, bond and stock prices, foreign exchange spot rates, or volatility rates) are collectively called revaluation rates. Revaluation rates are captured from the Current System Rates window for the specified batch period. For more information on rates, see: Current System Rates.
Once you capture the revaluation rates, you can review and adjust the rates as required. You can either calculate revaluations using the captured rates, or you can enter different Bid and Ask rates.
Financial instruments are revalued using either mark-to-market or currency gain or loss revaluation. Mark to market revaluation calculates the fair value, or current replacement cost, for the financial instrument. Currency gain or loss revaluation calculates the value of foreign currency holdings. For example, if you have a foreign currency bank account and the exchange rate fluctuates, you will experience a currency gain or loss. The method of revaluation used depends on the type of financial instrument being revalued. For more information on the revaluation methods used for each financial instrument, see: Price Models by Deal Type.
The following financial instruments are revalued using both mark-to-market and the currency gain or loss revaluation.
Bond Option (BDO)
Bonds (BOND)
Equities (STOCK)
Foreign Exchange Options (FXO)
Foreign Exchange Spot or Forward Deals (FX)
Forward Rate Agreements (FRA)
Interest Rate Option (IRO)
Interest Rate Swap (IRS)
Interest Rate Swaption (SWPTN)
Negotiable Securities (NI)
Wholesale Term Money (TMM)
The following financial instruments are revalued by calculating only the currency gain or loss.
Current Account Balances (CA)
Intercompany Transfers (IG)
Short Term Money (ONC)
Hedge item gains/losses are also calculated by the revaluation process.
You can recalculate revaluations as often as you want. Once you are satisfied with the revaluation results, you must authorize them before you can move to the next step in the accounting process. You cannot change revaluations once they are authorized.
To change authorized revaluations, you must first reverse any authorizations that exist for the batch. For example, if you authorized the revaluations and accruals for a batch, then you must un-authorize the accruals and revaluations before you can change the revaluations for the batch. You cannot recalculate revaluations for a batch once you have transferred the daily journals for the batch to General Ledger.
Use the Revaluations window to set the start and end dates for the accounting batch period and to capture and adjust the rates you want to use to revalue the batch.
Set up current system rates. See: Current System Rates.
Navigate to the Revaluations window.
Choose a Company.
Choose an existing Batch ID or, if this is a new batch, adjust the Period From and To dates.
If this is the first time you create a batch, the Period From and Period To fields are automatically populated. The Period From date is the date of the earliest deal for the company. The Period To date is the current system date.
If you previously created an accounting batch, then the Period From date is automatically populated based on the Period To date of the previous accounting batch. The Period To date is automatically populated based on the accounting calendar for the company. You can set the Period To date to any date that is equal to or earlier than the current system date.
To capture the revaluation rates, choose the Capture Rates button. The revaluation rates for the specified period are captured from the Current System Rates window.
If you are capturing rates for historical periods, the accuracy and type of rates that are captured depend on how frequently you obtain or enter your current system rates. For more information on archiving rates, see: Archiving System Rates.
If this is a new batch, Treasury automatically populates a Batch ID.
If you want to adjust the captured rates, you can enter adjusted bid and ask rates in the Overwrite Bid and Overwrite Ask fields. Treasury uses the rates that you enter in these fields to calculate your revaluations. If you do not enter rates in these fields, then the rates you captured earlier are used to calculate your revaluations.
If you want to recapture the revaluation rates from the Current System Rates window, choose the Recapture Rates button. If you recapture rates, this deletes any rates that you previously entered in the Overwrite Bid and Overwrite Ask fields.
If you want to delete the batch, first ensure that the revaluations for the batch have not been authorized, then choose the Delete Batch button. For more information on deleting batches, see: Accounting Batches.
After you capture and adjust your revaluation rates, use the Revaluation Details window to calculate your revaluations. A different formula is used to calculate the revaluations for each financial instrument. For more information, see: Pricing Models by Deal Type.
Capture and adjust revaluation rates. See: Capturing and Adjusting Revaluation Rates.
Navigate to the Revaluations window.
Choose the Company for which you want to calculate your revaluations.
Choose the Batch ID of the batch that you want to calculate revaluations. Depending on how much information has been saved for the batch, a batch can have one of these statuses:
Null: Revaluation rates for the date are saved, but revaluations are not yet calculated. You can calculate revaluation rates for a batch with the status of Null.
Generated: Revaluation rates are saved and revaluations are calculated. You can recalculate revaluation rates for a batch with the status of Generated.
Authorized: Revaluation rates have been authorized. You cannot modify revaluation rates if they have been authorized.
Choose the Revaluation Details button. The Revaluation Details window appears.
To calculate revaluations for the batch, choose the Calculate Revaluations button. A concurrent process calculates your revaluations based on the revaluation formulas for the financial instruments and the revaluation rates you specified in the Revaluations window.
A message appears stating whether or not a concurrent request to calculate revaluation was successful. If the calculation was not successful, check the log file for details on why the calculation failed (for example, no rate was found, the deal was not exercised, the deal has expired, and so on).
For more information on the revaluations formulas used for each financial instrument, see: Pricing Models by Deal Type.
Note: If you are recalculating revaluations, the existing revaluations are replaced with the new calculations.
If the concurrent process is successful, close and reopen the Revaluation Details window. The Revaluation Details window appears populated with the calculated revaluations.
If you want to view the original deal details for a revalued deal, select the revalued deal and choose the Goto Input Form button. The deal input form appears and shows the full deal details for the selected deal.
To overwrite the calculated revaluations:
In the Overwrite Type field, choose the overwrite type. You can choose either Fair Value or your own pricing model, if you defined your own pricing models. For more information on defining pricing models, see: Adding Pricing Models.
In the Overwrite Value field, enter the revaluation calculation that you want to use for the overwrite.
Note: You must enter values in both the Overwrite Type and Overwrite Value fields. If you do not, the revaluation for the affected record is considered incomplete and the Incomplete check box is checked.
In the Reason for Overwrite field, you can optionally enter a reason for the overwrite.
To recalculate your revaluations:
Choose the Delete Revaluations button.
Close the Revaluation Details window.
In the Revaluations window, capture and adjust your rates as described in Capturing and Adjusting Revaluation Rates. See: Capturing and Adjusting Revaluation Rates.
Repeat steps 3 to 5 in Calculating and Re-calculating Revaluations.
Note: You cannot recalculate revaluations if they are authorized. To recalculate revaluations that have been authorized, first choose the Un-authorize button to un-authorize the revaluation, then choose the Delete Revaluations button.
If the Incomplete check box is checked for a financial instrument, use the scroll bar to review the fields and determine what is incomplete. You can also review the concurrent request log to identify what prevented the deal from being successfully revalued.
Revaluation Details window to authorize your revaluations. You must authorize your revaluations before you can proceed to accruals (or Retrospective Hedge Effectiveness Testing), the next step in the accounting process. See: Accruals and Amortizations. and Retrospective Hedge Effectiveness Testing
You cannot authorize a batch if the batch contains incomplete deals. An example of when you might have an incomplete deal is when you revalue bond or equity deals where there is no price from the current system rate assigned to the issue. You must resolve the issues that caused the incomplete deal revaluation, and then delete and re-generate the revaluation details before attempting to authorize the revaluations.
If you want to adjust revaluations after they have been authorized, you must first un-authorize the revaluations. You cannot un-authorize a revaluation once you transfer the daily journals for the batch to General Ledger.
Calculate revaluations. See: Calculating and Recalculating Revaluations.
Navigate to the Revaluations window.
Query the batch that you want to authorize for transfer, then choose the Revaluation Details button. The Revaluation Details window appears.
To authorize the revaluations for the batch, choose the Authorize button. Once you authorize the revaluations, you can proceed to the next step in the accounting process, Accruals (or Retrospective Hedge Effectiveness Testing).
To un-authorize a revaluation, navigate to the Revaluations window and query the batch that you want to un-authorize. Choose the batch, then choose the Revaluation Details button. In the Revaluation Details window choose the Un-authorize button.
Note: The Un-authorize button is available only if the selected revaluation has already been authorized.