NaviCon FSI

The investment company accumulates the money of private investors raised by means of sale by them of issued own securities and renders to clients broker and additional services. The investment company places borrowed funds in the country and abroad by share purchase and bonds of the enterprises.

The scheme of investment company in terms of placement of information systems is given below:

The main objective of front-office - the conclusion of transactions on purchase and sale of securities. As a rule, the specialized trading system integrated with the electronic exchange systems is for this purpose used.

On middle-office functions of control of a trading activity of the front office, monitoring and risk management, reconciliation and the analysis of a trading portfolio and also support functions on execution of transactions lie.

Back-office is responsible for carrying out payment under the bargains concluded by the front office, accounting. As a rule, for this purpose the separate system importing results of trading day from a front office system is used.

For accounting of transactions of a back office two systems are usually used:

• The specialized system importing transactions from a front office system and complemented with functionality of conducting settlings with partners. In it only account of a trading activity is kept. As a rule, it is management accounting which is based on international standards (IFRS/US GAAP). Let's call further it a "back office" system.
• Accounting systems: are intended for full accounting, including uncommercial (economic) transactions. Data on a trading activity from a back office system are imported to such systems, the possibility of input of uncommercial transactions, accounting according to necessary standards is provided: IFRS/US GAAP, RAS + WELL.

Separation of stages of the transaction into its conclusion and accounting of calculations and also differences in requirements of IFRS and RAS accounting, causes one of important features of accounting in investment companies: account of trade operations under RAS is kept, proceeding from settlement date according to transactions (settlement date), and accounting according to IFRS, as a rule, proceeds from transaction date (trade date).

Proceeding from existence of several systems and also a large number of necessary handbook data (currency rates, quotations, ratings) the auxiliary systems importing the reference information from news agencies and distributing it in the company are usually selected.

Other important feature of investment companies is a large number of the persons and the organizations creating requirements to preparation of the general and specialized reporting including.

• Investors, owners: the reporting under international standards (MSFO, US GAAP), the management reporting (as a rule, it is the reporting under international standards with the certain differences admitted to the companies)
• Regulatory authorities: reporting under RAS
• Tax authorities: tax statements
• Federal commission on financial markets: FFMS reporting.

Each type of the reporting has the features on reflection of financial transactions, assets, obligations and calculation of their market value and cost value that results in need of conducting parallel accounting according to several standards.

One more important feature of activity of investment companies is presence of several legal entities who are often registered in the different countries that results in need of obtaining the consolidated statements of group.

The main accounting items in investment companies are the transaction and a financial instrument. For the long-term history of financial markets a large number of different types of financial instruments, transactions was thought up, each of which should be reflected in accounting by certain rules.

Summarizing the aforesaid, the accounting system for automation of investment companies should allow:

• Keep account of trading and business activities, both according to international standards, and under RAS, according to requirements of the Russian tax accounting, to have the data necessary for formation of the FFMS reporting.
• Have possibilities for formation and reconciliation of the group reporting.
• Have the developed opportunities for integration with external systems both on import and transformation of postings, and on independent generation of postings on the basis of the received facts of trade operations.
• Have opportunities for loading of a large number of handbook data: currency rates, quotations, ratings, parameters of securities, reference books by partners, exchanges, etc.
• Have the developed possibilities for data analysis and creation of the necessary reporting with the required detail level.

And main condition: a system should do all this quickly in connection with dynamism of investment business and a large number of trade transactions.

Solving of tasks on automation of accounting of investment company

For the solution of above-mentioned tasks the NaviCon Group company develops the solution NaviCon FSI about which the speech will go further. The solution was successfully implemented in the largest investment companies, such as Troika Dialog, VTB Capital, in UFG Asset management company.

The generalized scheme of creation of the most difficult configuration of accounting is provided on Scheme 3.

Principal components of the solution:

1. Import and transformation of postings, the facts of transactions from the back office systems

In the solution NaviCon FSI the functionality allowing to obtain data on financial transactions in the following representations is implemented:

• In the form of financial postings. In this case when importing to the system of wiring undergo transformation, will be transformed to the chart of accounts and a system the analyst of the accounting system.
• In the form of records about the facts of transactions. In this case records in the structured view with approximate sense come to a system: "sale of a financial instrument to the X client of Y, transaction No. Z, date 1/1/2012, …". Further for each transaction type the scheme of postings which forms in a system when importing the fact of transaction is defined.

In the presence in the back office system of postings on trade operations, coincidence of an accounting principle (on registration date or on settlement date) more justified is use of transformation of postings when importing. At the same time transformations can be exposed initial accounts, analytical signs, different help elements.

There are cases when use of postings from a back office system is impossible, for example:

• if account in a back office is kept according to international standards, on registration date of the transaction, and under RAS formation of postings by date of implementation of calculations is necessary;
• in case of considerable differences in cost accounting of financial instruments between accounting in a back office system and accounting (MSFO-RSBU, RSBU-NU, …).
• in the absence of postings in a back office system.

In above-mentioned cases the functionality of import of the facts of transactions and formation of financial postings on the configured schemes is used.

2. The automated process of import and transformation of operations with the configured schedule

Important feature of the solution is its automatic, transparent work. The unloaded facts of transactions and wiring without participation of users are processed and shifted in a system. Specialists need to conduct periodically monitoring of this process and to supplement settings according to changes in business of the company.

3. Parallel accounting of the financial instrument transactions (RAS, WELL)

Accounting rules of securities and transactions considerably differ in RAS and tax accounting. The example which became classical: in RAS repo transactions regarding securities are made out as purchase and sale, and in NU – as pledge. Similar differences result in need of parallel broadcast of the facts of transactions separately in BU and separately in NU. In the solution NaviCon FSI the mechanism allowing to support similar accounting, to create independent financial results on both methodologies is implemented.

4. Operational analytical reporting

In large investment companies the daily number of transactions is tens and hundreds of thousands that imposes increased requirements to an analysis system and the reporting. The subsystem implemented in the solution NaviCon FSI BI-completely covers all range of tasks of the analysis of financial transactions of investment company. As a basis for an analysis system the OLAP cube containing the results of activity of group aggregated on more than 40 measurements and 30 indicators is used. Financial analysts and accountants have an opportunity in real time to build necessary cuts of the reporting and to receive ready forms of the procedural reporting. The model developed on the basis of Microsoft Excel allows users to create necessary reports independently that considerably simplifies support of a system and accelerates work of financial specialists.

5. Consolidation

One more important link of the solution NaviCon FSI is the subsystem of consolidation which allows to carry out consolidation of financial statements of group, to make allocation of costs, income both at the level of the legal entity, and at the level of group.

Summing up the aforesaid, we can propose for investment companies the complete solution for accounting, both according to International Financial Reporting Standards, and according to requirements of the Russian accounting. Thanks to universal integration mechanisms, the solution can be built in a complex system of the software of investment companies.

The main results of high-quality automation of accounting are:

• Considerable reduction of labor costs and time for data purification and preparation of the reporting.

As a result – reduction of the horizon of availability of the reporting in the company (group): monthly-> weekly-> daily.

• Availability of exact, detailed information in real time on all transactions of the company with any extent of detailing. Among the most demanded reporting it is possible to select: balance; profit and loss statement; cash flow statement; the report on capital utilization (investment of funds on divisions, currencies, asset types); structure of debt (age, ratings of partners).

Thus, automation of accounting using the solution NaviCon FSI allows investment companies to receive one more qualitative asset: the timely exact and complete information about the performed financial transactions, necessary for development of the correct management decisions.