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DEMYSTIFYING DT ACCOUNTS

 

akoyaGO’s unique Due To/Due From system makes keeping the books simple. This system allows funds to get credit for revenues and record losses for expenses immediately while removing the need to manually move assets within all funds.

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                Shorthand for Due To/Due From

          Automatic G/L entry that moves asset balances between a target fund and the operating fund. This process is called Autobalance

            Funds get immediate credit for gifts they receive and immediately incur expenses in their pool when the cash account is affected, i.e. funds are deposited or payments are made

 

DT ACCOUNTS

                 A DT Account represents an investment pool or asset account where a fund maintains a balance.

                In the example below, the fund only participates in one pool: Account 1005 at 100%. The Start Date is the earliest date the fund participated in this pool at this percentage.

 

 

                              If a fund has a 50/50 allocation in two pools, it would have two lines each with a percent of 50% and a different account number. Both lines must share a Start Date.

 

                When a fund leaves a pool, you will open the existing DT Account record(s) by double-clicking on the line item, then enter an “End Date” of the last day the fund participated in that pool and click “Save and Close”

 

                Then click the + New Dt Accounts button to create the new DT Account(s).

                By closing and starting new DT Account records you’re building a history of where this fund’s assets lived and when

 

 

DTS IN ACTION: GIFTS

                When a gift payment* is transferred to Business Central from CRM, four lines are immediately created.

          A revenue account is increased (for example, 4010)

          A receivable account is increased (for example, 1300)

          The receivable is backed out since the gift is realized (1300)

          The Undeposited Funds account is increased (1999)

 

 

                 *excludes some gift types such as pledges, in kind or gifts of property

 

  • When the gift payment is deposited two more lines are added.
    • The Undeposited Funds account balance is backed out (1999)
    • The cash/checking account is increased (for example, 1001)

 

                You’ll notice, all the G/L entries are entered for the gift fund (00589) with the exception of the cash/checking entry. That account uses the Operating Fund (00001)

                The use of the Operating Fund in the deposit would leave the two funds out of balance, as the gift fund would be short the deposit amount, and the operating fund has gained the deposit amount in the checking account

                To correct this, Business Central will make an Autobalance entry (or DT entry)

 

                The entry puts both funds back into balance by increasing the gift fund’s DT account (example, Pooled Investment Account) and decreasing the balance of the Operating Fund in the same account.

                The net affect in the gift fund is an increase in the DT account balance. The activity for the receivable account and Undeposited Funds account both net to zero.


                The total assets for the Operating Fund don’t increase. However, the checking account balance increases because of the real world deposit of the gift, and the Autobalance entry decreases the balance in the DT Account (example, pool).

 

 

                If we look a our consolidated account balances for this transaction we’ll see the activity for the receivable account, Undeposited Funds account, and the DT Account (pool) all net to zero. The only account with positive activity is the checking account where the deposit was made.

 

 

 

 

DTS IN ACTION: REQUESTS

                 When a request payment is transferred to Business Central from CRM two lines are immediately created.

          An expense account is increased (for example, 5010)

          A payable account is increased (for example, 2010)

 

 

 

                You’ll notice, all the G/L entries are entered for the request fund (00975) with the exception of the cash/checking entry. That account uses the Operating Fund (00001)

                The use of the Operating Fund in the payment would leave the funds out of balance, as the request fund would increase by the amount of the payment, and the Operating Fund has decreased by the amount of the payment in the checking account

                To correct this, Business Central will make an Autobalance entry (or DT entry)

 

 

                The entry puts both funds back into balance by decreasing the request fund’s DT account (example, Pooled Investment Account) and increasing the balance of the Operating Fund in the same account.

                The net affect in the request fund is a decrease in its DT Account balance as no G/L entries for this fund utilize the checking account, and the activity for the payable account nets to zero.

 

 

 

                The total assets of the Operating Fund don’t decrease. However, the checking account balance did decrease because this is where the payment was paid from. And the DT entry has given the Operating Fund a positive balance in the DT Account.

 

                If we look a our consolidated account balances for this transaction we’ll see the activity for the payable account and the DT Account (pool) all net to zero. The only account with negative activity is the checking account where the request was paid.

 

 

 

 REAPPORTIONMENT 

                Reapportioning compares a fund’s DT Account breakdown to its asset balances*

          If assets are in balance according to the DT Account breakdown nothing happens.

          If assets are not in balance, Business Central “reapportions” the money to where it belongs

                If there are 2999s because of bad data entry/missing DT accounts/incorrect DT Account percentages, Reapportioning will find and correct them (after DT Account setup issues have been corrected)

*Reapportion does not apply to asset accounts where the fund has never had a DT Account

 

 EXAMPLE:

                The Tenbusch Family Fund has

          A DT Account with 100% in account 1200 with an end date of last year

          A DT Account with 70% in account 1100 ($70,000 balance)

          A DT Account with 30% in account 1110 ($30,000 balance)

          Has $30,000 in real estate represented by a balance in account 1540. No DT Account represents this

                When JIA for 1110 is run The Tenbusch Family Fund receives a $5,000 allocation.

                Reapportionment runs automatically and realizes The Tenbusch Family Fund is out of proportion for the 70/30 split and moves $3,500 from 1110 to 1100

                Accounts 1200 and 1540 are not affected

                There is no change in total assets for the Fund. The system just brought the fund back into the 70/30 split.


 

               The Operating Fund is also affected during Reapportionment. An entry opposite of what was recorded in the target fund is recorded in the Operating Fund. Total assets of the Operating Fund don’t change.


                If we look a our consolidated account balances for this transaction we’ll no Ending Balances have changed and the Activity nets to zero for all accounts.


 

 

KEEPING THE BOOKS

                 Because of the Autobalance entries, the target fund appropriately shows the gain or loss of money in the DT Account (pool). This simplifies reporting and processing Joint Investment Allocation since each funds’ pool balance reflects their activity in their DT Account

 

                In both scenarios we see the consolidated account balance overall effect was the change in balance in the checking account. This reflects reality since this was the account that actually received/paid the funds.

               

 

               The Operating Fund, sometimes referred to as the balancing fund, is the key to help keeping the books. The Autobalancing entries in the Operating Fund show us where money is due.

          For a Gift, money is due to the pool and due from the checking account

          For a Request, money is due to the checking account and due from the pool

                The Operating Fund Balance Sheet shows you how much money to move

                You will enter a simple two line adjusting journal entry for the Operating Fund to mimic the real world transfer

 

 

 

 

 

       

 

 

 

 

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