Accounting Methods Configuration

Use this feature to specify how an agency will realize income, pay brokers, and pay producers. The accounting month selected will be the month in which the changes become effective. You can install the accounting methods at a later date; however, the modifications you make will require manual entries/tracking. Researching your decision carefully before installing the accounting methods for your agency is highly recommended, so that modifications are not needed later.

WARNING: Making changes to these agencies might require you to make some manual entries. For this reason, please contact Applied Systems's Support department for assistance if you need to make changes to existing settings for an agency.

1. From the Home screen, do one of the following:
    
   • Click Configure on the navigation panel.
   • Click Areas > Configure on the menubar.
   • Click the down arrow next to Home on the options bar and select Configure.

From any other area of the program, do one of the following:

1. • Click the down arrow to the right of the Home options bar button and select Configure.
   • Click Home > Configure on the menubar.

2. Click Accounting on the navigation panel or Areas > Accounting on the menubar.
3. Click Accounting Methods on the navigation panel.

A list of agencies in your system displays. To change the sort order, click the column heading by which you want to sort.

You can do the following from here:

1. • Edit Accounting Methods
     1. Click to highlight the agency for which you are adding or editing accounting methods and then do one of the following:
        • Click the Edit button to the left of the list.
        • Click File > Open on the menubar.
        • Double click the agency in the list.
        • Press [Enter].
     2. Read the warning message and click OK.
     3. Applied Epic allows you to define the accounting methods by time period. For example, your organization can opt to recognize revenue on an accrual basis for 2017, and then modify it to recognize revenue on a cash basis in 2018. You can modify the Accounting Methods at a later date, but the modifications you make will require manual entries/tracking.
        
        In the Agency frame, select the appropriate Accounting month effective month and year (i.e., the month in which the changes become effective). These fields are required.
     4. Optionally select the System generated journal entries checkbox if you want to generate month-end journal entries for the agency in question.
        
        This checkbox option allows you to have month-end automatically post journal entries to the General Ledger based on your organization’s accounting methods. If this option is not turned on, your organization must enter manual journal entries to post to the General Ledger for all transactions entered into the system.
     5. Make a selection in the Income posting breakdown dropdown menu.
        • No Breakdown: Post revenue to the premium revenue title account.
        • Policy Status: Post revenue to the premium revenue based on the policy status, as defined in Policy Status Configuration.
          
          For example, your organization might want to use only a NEW policy status, REN policy status, and CAN policy status to track NEW and REN business, or your organization might want to track the policy status further. For example, your organization might want to track a policy’s status based on NEWE (New – Existing Client), NEWN (New – New Client), RENE (Renewal – Existing Client), or RENN (Renewal – New Client) statuses. Once your organization determines the policy statuses you will use, you can configure Applied Epic to post premium revenue by policy status. This option breaks down the premium revenue on the Income Statement based on the user-defined policy statuses.
        • Policy Type Class: Post revenue to the premium revenue based on the user-defined policy type classifications in Policy Type Classification Configuration. These classes categorize policy types according to your organization’s needs.
          
          You can use the policy type classifications to group policy types, for example to classify the type of coverage for each policy type. Personal auto, business auto, and truckers policies are all AUTO policies. In addition, some organizations might use the policy type classification to group policies by department (e.g., Personal, Commercial, Financial) instead of using a separate structure level within the organization to categorize this information. If security is not needed for these departments, your organization might decide to add them as policy type classifications.
        • Premium Payable: Post revenue to the premium revenue billing company or premium payable broker subaccount. This option allows you to review the amount of revenue bought into the organization per billing company or premium payable broker on the Income Statement.  
        • Producer/Broker Commission: Post revenue to the premium revenue based on the producer/broker subaccount. This option allows you to review the amount of revenue that is brought into the organization per producer/broker on the Income Statement.
     6. To determine whether your organization should post income breakdown by premium payable, producer/broker commission, policy type class, or policy status, determine whether your organization wants premium revenue to be broken down on the Income Statement. When you select an income posting breakdown option, the program automatically posts the premium revenue based on that option via general ledger subaccounts. If you are posting revenue by policy status, for example, a NEW, REN, etc. premium revenue subaccount is posted instead of the title account.
        
        Your organization can still obtain these totals using the production reports, but if the organization is not installed to post income breakdown, you will not see it on the Income Statement. If your organization does not need to see it broken out on the Income Statement, select No Breakdown.
     7. Optionally select the Recognize installment revenue immediately checkbox.
        
        If an agency is installed to recognize installment revenue immediately, revenue for the entire installment plan is recognized based on the production month rather than the accounting month. The production month for each installment is the same as the accounting month for the first installment in the plan. Although revenue is recognized immediately, payables and receivables are deferred. As each individual installment's accounting month is posted, Month-End moves the deferred payables/receivables to current payables/receivables.
        
        Selecting this option means that the Defer Payables checkboxes for producer commission and broker commission default as selected to follow the logic of deferring commission payables for future installments.
        
        If you do not select this option, installment revenue is recognized based on accounting month rather than production month.
     8. In the Agency Commission frame, make a selection in the Agency dropdown menu:
        • Accrual: Select this option if revenue should be recognized at the later of the bill date or effective date.
        • Cash - Fully Paid: Select this option if revenue should be recognized when the receivable is fully paid by your client.
        • Cash - Partially Paid: Select this option if revenue should be recognized when the receivable is partially paid by your client.
     9. Select the Post by premium payable entity payment checkbox if applicable.
        
        As stated above, the Cash – Partially and Cash – Fully paid options are based on recognizing revenue when the client pays your organization. If the Post by premium payable entity payment option is selected, revenue is recognized when the premium payable entity (billing company or premium payable broker) is paid.
        
        Note: If your system is installed to share revenue (see System Settings), you cannot select Post by premium payable entity payment.
     10. Choose Accrual or Cash in the Direct dropdown menu.
     11. If you select Accrual, optionally select the Post receivable by company checkbox. If you select this checkbox, the required direct bill receivable general ledger account is posted by carrier subaccount.
     12. Optionally select the Post cash on account by entity checkbox. Note that this option is active whether your setup for Direct Bill is Accrual or Cash.
         
         Selecting this checkbox allows you to post cash on account (direct bill commissions, premium payables, or commission payables) by entity. When receipts from carriers or brokers are deposited in the system, the accounting personnel can offset the cash on account required accounts. These are designated as holding GL accounts for deposited funds. Once the receipts are applied to particular items, Month-End moves the balances from the cash on account required accounts to and posts them accordingly.
         
         If you do select Post cash on account by entity, the cash on account funds are posted to subaccounts defined per company/broker.
         
         If you do not select Post cash on account by entity, the cash on account funds are posted to a title account (Direct Bill Cash On Account, Premium Payable Cash On Account, or Commission Payable Cash On Account, depending on the type of receipt entry).
     13. In the Producer Commission frame, optionally select the Post commission based on individual producer setting checkbox. This means that the system will post according to the setting established in employee detail for each producer.
     14. Optionally select the Defer Payables checkbox. If you opt to defer payables, you can recognize producer expense immediately (later of the bill date or effective date) and defer the payables.
     15. Make a selection in the Agency dropdown menu.
         • Accrual: Recognize the payable and expense at the time the item is entered in the system using the later of the bill date or effective date.
         • Fully Paid: Recognize the payable and expense at the time the receivable is fully paid by your client.
         • Partially Paid: Recognize the payable and expense at the time the receivable is partially paid by the client.
     16. Make a selection in the Direct dropdown menu.
         • Accrual: Recognize the payable and expense at the time the direct bill item is entered in the system using the later of the bill date or effective date.
         • Fully Paid: Recognize the payable and expense at the time the direct bill commission check is fully applied to the direct bill transactions.
         • Partially Paid: Recognize the payable and expense at the time the direct bill commission check is partially applied to the direct bill transactions.
     17. In the Broker Commission frame, optionally select the Post commission based on individual broker setting checkbox. This means that the system will post according to the setting established in broker detail for each broker.
     18. Optionally select the Defer payables checkbox. Choosing this option allows you to recognize producer expense immediately (later of the bill date or effective date) and defer the payables.
     19. Choose an Agency option:
         • Accrual: Recognize the payable and expense at the time the item is entered in the system using the later of the bill date or effective date.
         • Fully Paid: Recognize the payable and expense at the time the receivable is fully paid by your client.
         • Partially Paid: Recognize the payable and expense at the time the receivable is partially paid by the client.
     20. Select an option in the Direct dropdown menu.
         • Accrual: Recognize the payable and expense at the time the direct bill item is entered in the system using the later of the bill date or effective date.
         • Fully paid: Recognize the payable and expense at the time the direct bill commission check is fully applied to the direct bill transactions.
         • Partially Paid: Recognize the payable and expense at the time the direct bill commission check is partially applied to the direct bill transactions.
     21. Click Finish or press [Enter].
         
         Click Cancel or press [Esc] to exit the workflow without saving the new record.
   • Print a List of Agencies
     1. To print a list of the agencies in your system, do one of the following:
        • Click the Print button to the left of the list.
        • Click Print > Listview on the options bar.
        • Click File > Print > Listview on the menubar.
     2. The Print window displays. Print this list as you would any other document.

Note: For instructions on adding an agency to the system, see Agency Configuration.