Closing Entries with New I/A System

[JudyW-BCBSMI]

We are in the process of replacing our Investment Accounting system for 2018 and transferring to a new system for 2019. I want to check on the entries that we will be booking into the old system's general ledger to be inline with the new system.

We can do the entry between Unrealized and OCI since they offset each other, but for the Book Value variance do you think we would book this to Amortization / Accretion even though it would effect income or is there another account that we would use like a year-end closing type account?

Thank you!

[SujathaP-SF]

Hi Judy,
We recently converted to a new I/A system and booked all the entries resulting from system conversion to their respective line item on the financial stmts. For example, a change in BV was offset by a change in amortization, change in MV was offset to AOCI for AFS securities.

[Russ]

SSAP 5R outlines the Statutory accounting treatment for change in estimates or correction of errors. A change is estimate (paragraph 7) should be an income adjustment in the period in which the change becomes known. A correction of an error (paragraph 10) should be reported as adjustments to unassigned funds (surplus) in the period an error is detected.

You should review the definition of "change in estimates" and "correction of errors" in paragraphs 6 and 9, respectively, in SSAP 5R. I believe that your company has a correction of errors based upon the information you provided.

[JudyW-BCBSMI]

With the differences in our book value between our old I/A software and the new software we are going to make the adjustment to the old system, which means we will be adjusting our annual statement schedules.

However, it seems like trying to adjust the various schedules could cause a bigger issue and making sure you have changed all the schedules that need to be updated.

I thought in the past instead of adjusting the individual securities on the various schedules isn't there a place in the annual statement where we can just list the difference between the systems and state the reason why?

Thank you!