Making Manual Adjustments in SAS Solution for IFRS 17

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Introduction

A key aspect of IFRS 17 compliance is effectively managing complex financial data to ensure precise reporting. The SAS Solution for IFRS 17 offers powerful tools to assist insurers in handling these challenges, including options for making temporary journal and manual adjustments. These features are crucial for maintaining accurate and current financial statements. This article offers a basic overview of the two methods for using the manual adjustments facility for accounting entries within the solution. The article assumes that you have a basic knowledge of SAS Solution for IFRS 17 on SAS Risk Stratum.

You can obtain more information on SAS Risk Stratum and

SAS Solution for IFRS 17 through the following

training programs.

Data Preparation, Configuration, and Administration in SAS® Risk Stratum

Business Overview of SAS® Solution for IFRS 17 in SAS® Risk Stratum

Manual Adjustments to Temporary Journal

Temporary journal adjustments are manual changes or adjustments to the provisional entries made in the financial records to correct or adjust account balances for a specific period. These adjustments are not intended to be permanent changes; instead, they are used to address temporary discrepancies or to reflect changes that will be resolved in subsequent periods. In the context of IFRS 17, temporary journal adjustments might be necessary to account for unforeseen events or remove erroneous entries to align the financial data as late adjustments.

For example, an insurance company might make a temporary journal adjustment to account for a sudden change in claims experience that has not yet been fully reflected in the actuarial models or solution's database. These adjustments ensure that the financial statements for the period accurately reflect the company's financial position, even before a permanent adjustment or model update can be made.

Tasks Associated with Adjustments

Manual Adjustments contains four main tasks:

• Adjust Temporary Journal
• Manual Adjustment (There are separate tasks to Review, Approve and Reject manual adjustments)
• Load External Accounting Events or Measures
• Run End of Period Adjustments

 Illustration of subtasks for Manual Adjustments. 

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In the Manual Adjustment step, users have several options: they can generate manual entries from scratch, query the journal for previously posted entries to review details or use them as templates for new entries, manually reverse journal entries, or delete previously entered manual entries that have not yet been signed off. The two ways the entries can be adjusted are:

• Edit on Screen: This option is used when the number of adjustments to entries are small. For adjusting via "Edit on screen", use the Add Row button to add two new rows to the spreadsheet. One row will be for a debit entry and the other for a credit entry. Alternatively, if having queried the journal, select one or more rows and use the Add Row button, and the selected row(s) will be duplicated to the top of the spreadsheet to provide a template. The row number on all new rows will contain an asterisk (*) to mark that the row is new and not a queried entry.
• Edit via Excel file: This option is used when the number of adjustments to entries are large. You query the journal, and you get a return file in the specified location that provides the ability to verify any issues with the entries, make changes and upload it back.

To perform manual reversals or delete adjustments, you can use the same two methods. If adjusting via "Edit on screen," identify the entries to reverse or delete by selecting the appropriate check boxes in the list of journal entries. If adjusting via "Use local file," download the returned entries from the Queried Entries File cell, remove any entries in the Excel file that should not be reversed or deleted, and then upload the file to the Adjustments File cell. Additionally, for manual reversals, ensure you enter the SL Comment to log the specific Subledger comment.

Furthermore, there is another option available to the user, which is to generate new journal entries from data provided through external files. This option is not discussed in this article.

What Roles Perform Late Adjustments?

Apart from Administrator or IFRS 17 Analyst roles, SAS Solution enables you to configure three optional roles:

• Manual Adjustment Entry Officers
• Manual Adjustment Entry Review Officers
• Manual Adjustment Entry Approval Officers

The tasks or features related to Manual Adjustments usually get customized during the implementation. For example, IFRS 17 user or analyst can act as manual adjustment entry officers, and a senior finance officer can act as both manual adjustment entry review officers and manual adjustment entry approval officers. New roles can be configured using SAS Management Console and SAS Solution for IFRS 17 Administrator interface. For more information, refer to the course Data Preparation, Configuration, and Administration in SAS® Risk Stratum.

Case 1: On Screen Adjustments

Initial Assumptions: This case assumes that a cycle using the standard solution workflow for a complete accounting cycle is underway and the trail balance report is created. The current task is Review Trail Balance. It also assumes that the review of trail balance and details postings report reveals that late adjustments are required.

Steps to Perform Manual Adjustments

1. Review the Trial Balance Report.
2. Access the relevant Cycle.
3. In the Cycle, for Workflow Actions, select Adjust. Notice that the Manual Adjustment subtasks open.
4. For Workflow Actions, select Manual Adjustments. There are other options of Review Manual Adjustments and Load External Entries.
5. For Query for journal entries, use dropdown to select "No" or "Yes". Note that, if "No" is selected, the user can only add manual entries to the journal. To select existing entries to be reversed or deleted, the user must choose to query the journal.
6. For Adjustment method, select Edit on Screen.
7. For Entry type code: Keep the default value of MANUAL.
8. Click Add a row Notice that two rows are added for handling credit and debit entries.
9. Enter the modified entries in the two rows. Use dropdown to select the values. For a person entering the values using this method, it is expected that the person has experience or knowledge of accounting events, GL account ids, insurance contract groups and so on.

Here is a sample of entries:

Illustration of Manually Added Entries. 

10. For Workflow Actions, select Run Manual Adjustments.        

At this stage, the manual entry officer will log out and manual entry review/approval officer will login.

11. In the upper right corner, for Workflow Actions, select Review Manual Adjustments.
12. The entries can be reviewed on screen when you access the task. In the cycle, you must click the task to access the details.  

Illustration of Entries Available for Review 

Note that there are additional foreign exchange related adjustment entries generated by the script in case reporting and functional currencies are different.

13. In the upper right corner, for Workflow Actions, select Approve. This approval is provided by Manual Adjustment Entry Review Officers.
14. In the upper right corner, for Workflow Actions, select Approve. This approval is provided by Manual Adjustment Entry Approval Officers.
15. For Workflow actions, select Run EOP Adjustments.

Note that you are back to Review Trial Balance task. Usually, a financial analyst or IFRS 17 user logs in and verifies the entries using the Detailed Postings report and Trial Balance report.

Case 2: Using Excel File

The initial assumptions in this case are similar to Case 1 above.

Steps to Perform Manual Adjustments (Using Excel file)

This step assumes that a corrected Excel file with right entries is created and is available for upload. Following are the steps, note that some steps are different from case 1.

1. In the Cycle, for Workflow Actions, select Adjust. Notice that the Manual Adjustment subtasks open.
2. In the upper right corner, for Workflow Actions, select Manual Adjustments.
3. For Query for journal entries, select Yes.
4. For Expression Editor, click Configuration.
5. Enter the Expression: INSURANCE_CONTRACT_GROUP_ID = “sub_ptf_01” (This is just an example; you can add any complex expression using logical operators.)

Illustration of Expression Editor. Only a simple Expression is presented. 

7. Click OK.
8. For adjustment method, select Use file on server. Notice that the screen refreshes and it should resemble the following:

Illustration of adding entries via Excel file using the file on server. 

Notice that the New entries file name is modified to manual_entries_rev. Keep the default value of Trigger Export for the option, Trigger the export of the entries to the provided server location. It will create a file Queried_entries_production.xlsx.

Illustration of Excel File Used for Uploading Manual Entries.

9. For New entries file name manual_entries_rev.
10. For Validate adjustments, select Yes. Verify that there are no validation error messages.
11. For Workflow actions, select Run Manual Adjustments. Wait the task to complete.
12. Verify that the following files:

Checked_manual_entries.xlsx and Queried_entries_production.xlsx

exist at the following location: D:\SAS\Config\Lev1\AppData\SASIRM\fa.ifrs17.10.2021\rgf\misc

You can explore the checked_manual_entries.xls file. The columns with prefix E_ tell us about any errors. This return file contains information about the validity of each entry in added columns. The valid_flg column indicates whether an entry is valid or not. If not, the columns starting with E_ followed by the dimension lookup key name, indicate whether there is an error with a given dimension. The columns AMOUNT_INVALID_FLG and the DC_CD_INVALID_FLG indicate whether there is an issue with the DC_CD (should be D or C) or the posting amount (should be non-missing and positive.)

13. For Workflow actions, select Review Manual Adjustments.
14. Access the task, scroll down and review the entries.
15. For Workflow actions, select Approve. This approval is by the reviewer.

Note that the same review screen shall be available to the approver officer. In your case, the reviewer and approver might be the same person. If it is not the case, the reviewer must sign out and approver must sign in to proceed in the workflow.

16. For Workflow actions, select Approve. This approval is by the Approver.
17. For Workflow actions, select Run EOP Adjustments.

Note that you are back to Review Trial Balance task. Usually, a financial analyst or IFRS 17 user logs in and verifies the entries using the Detailed Postings report and Trial Balance report.

Conclusion

Manual adjustments are crucial because they provide the necessary flexibility to adapt financial statements, ensuring that they accurately represent the company's true financial position. This is particularly important when dealing with unforeseen events or errors that could otherwise distort the financial picture. The process of making these late adjustments allows accountants to correct discrepancies and maintain the integrity of the financial reports. It's important to note that the steps outlined in the article are merely indicative, serving as examples to illustrate the process rather than definitive instructions. This highlights the need for professional judgment in applying these adjustments effectively. For more details refer to the documentation of the solution available at Documentation for SAS Solution for IFRS 17.               

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