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Technical Data

Technical Name of Business Function

FIN_TRM_INS_LOCFR

Type of Business Function

Enterprise Business Function

Available From

SAP Enhancement Package 5 for SAP ERP 6.0

Technical Usage

Financial Services

Application Component

Transaction Manager (FIN-FSCM-TRM-TM)

Required Business Function

TRM, New Instruments, Accounting Enhancements, Reporting (FIN_TRM_LR_FI_AN_3)

Financials Extension (EA-FIN) Enterprise Extension

You can use this business function to meet country-specific requirements in the Transaction Manager (FIN-FSCM-TRM-TM) component for France. In particular, it enables French life insurance companies to carry out treasury processes in accordance with the requirements of French GAAP and French tax GAAP.

Prerequisites

  • You have installed the following components as of the version mentioned:

    Type of Component

    Component

    Required for the Following Features Only

    Software Component

    EA-FINSERV 605

    Not relevant

  • You have activated the Financials Extension (EA-FIN) Enterprise Extension.

  • You have activated the TRM, New Instruments, Accounting Enhancements, Reporting (FIN_TRM_LR_FI_AN_3) business function.

  • You have made the required generic settings in Customizing for Financial Supply Chain Management under Treasury and Risk Management.

  • You have made the required country-specific settings in Customizing for Financial Supply Chain Management under   Treasury and Risk Management   Transaction Manager   Country-Specific Functions   France  .

    Note that you have to activate each required feature for specific company codes in the Customizing activity Activate Functions for Company Code.

Features

Amortized Cost

This feature enables you to use the linear amortized cost (LAC) method or the scientific amortized cost (SAC) method for debt securities, depending on the difference between the purchase price and the nominal price. According to French GAAP, if the difference between the purchase price and the nominal price of a debt security is less than 10% of its nominal price, the LAC method must be used. If it is more than 10%, the SAC method must be used.

To enable you to switch between these methods, you can assign an alternative position management procedure to the Customizing records created for the assignment of the default position management procedure. You also define a threshold that the system uses to determine which position management procedure is required. A consolidated assignment check enables you to keep track of the records created for the default position management procedure and to update the assignment of the alternative position management procedure accordingly.

Capitalization Reserves

You can use this feature to meet the French GAAP requirement for capitalization reserves. It enables you to post capital gains or losses from the sale of debt securities to a separate balance account for capitalization reserves, instead of to the profit and loss account. This feature meets the following requirements:

  • The posting amount is the difference between the sale amount and the amortized book value, which is calculated using the scientific amortized cost (SAC) method. For debt securities that have already been amortized using the linear amortized cost (LAC) method, the system recalculates amortization using the SAC method.

  • Capital gains increase the account balance and capital losses decrease it, but the account balance cannot be negative. If an account balance of zero is reached, any remaining capital loss is posted to the profit and loss account.

You can adapt the calculation of the capitalization reserve account balance to your requirements using the Business Add-In (BAdI) BAdI: Calculate Balance for Capitalization Reserve Account (IDCFM_FRCR_CALCULATE). The Reconciliation Report (IDCFM_FRCR_1) enables you to identify financial transactions that have been incorrectly posted to the capitalization reserves account, and to branch directly to the Manual Posting (FWBS) transaction to correct the account balance.

FIFO Reevaluation

You can use this feature to perform tax accounting and financial accounting for the same assets by organizing them in parallel portfolio structures. It enables you to do the following:

  • Perform financial accounting according to French GAAP for separate portfolios using the first in first out method (for example, for nonregulated portfolios that are created for each product class in the life insurance section of an insurance company).

  • Perform tax accounting according to French tax GAAP by consolidating the positions in the separate, nonregulated portfolios into one tax portfolio in an additional valuation area, and reevaluating the positions using the FIFO method.

You activate FIFO reevaluation for a company code. When business transactions are performed in this company code, the system assigns the business transactions to the additional valuation area being used for FIFO reevaluation and copies the business transactions from the nonregulated portfolios to the tax portfolio. It also maps the relevant security accounts to a separate security account assigned to the additional valuation area. You define the additional valuation area and map the portfolios using the country-specific Customizing activities for this feature.

Impairment

This feature enables you to carry out the impairment of securities and bonds according to the requirements of French GAAP. Instead of the existing transaction Reference Report for Impairment (TPM75), you can use a new Record Impairment (IDCFM_FRIM_CREATE) transaction. It enables you to differentiate between securities and bonds when selecting which positions need to be impaired, and it allows you to use an expert value or an expected value for the impairment calculation. As in transaction TPM75, you transfer positions to the Price Maintenance for Special Security Valuation (TPM73) transaction to post the impairment. A new Display Impairment (IDCFM_FRIM_DISPLAY) transaction enables you to display impairment runs that have already been carried out.

You can adapt the selection process and the impairment calculation to your own requirements using the country-specific Customizing activities for this feature. You can define custom selection parameters for securities and bonds in the Customizing activity Define Selection Parameters for Impairment Report, and modify the selection process and the impairment calculation in the Business Add-In BAdI: Calculation of Impairment (IDCFM_FRIM_CALCULATE).