Clearing balances in P&L accounts down to zero at year end

You can close or lock a period and specify that balances in particular accounts be transferred to other accounts.

This feature is designed to set P&L accounts to zero at year end so LUSID can calculate accurate year-to-date P&L figures for the next year.

To do this, you must:

  1. Add a cleardown module to your chart of accounts (CoA) with at least one cleardown rule specifying the account(s) to transfer from and to.

  2. Specify the code of the cleardown module in your ABOR configuration module.

  3. Close or lock a period with the ApplyClearDown closing option.

Example

Imagine we have a GBP-denominated transaction portfolio holding UK equities, and an ABOR set up for this portfolio with the following general ledger accounts in its CoA:

We can call the GetCleardownModule API to see that the CoA has a single cleardown module with a single cleardown rule transfering balances in revenue, expense and income-type accounts to the 5-YearEnd account:

{
  "cleardownModuleCode": "Cleardown",
  "chartOfAccountsId": {
    "scope": "Abor",
    "code": "Standard"
  },
  "displayName": "CleardownModule",
  "rules": [
    {
      "ruleId": "Rule001",
      "generalLedgerAccountCode": "5-YearEnd",
      "ruleFilter": "Account.Type in 'Revenue','Expense','Income'"
    }
  ],
  ...
}

15 December 2023

Our first trade is a purchase of 100 BP shares @ £10 per share = £1,000, trading and settling on 15 December for simplicity. We can call the GetTrialBalance API from portfolio inception to 15 December to provide an accounting view of activity to date:

31 December 2023

There are no more transactions in December. When we call the GetTrialBalance API from portfolio inception to the end of December we see an unrealised gain of £100 has been posted to the 4-PnL account, reflecting a movement in the BP share price in our favor from £10 to £11 (highlighted in red below):

2 January 2024

At EOD on 2 January we call the ClosePeriod API to close the December 2023 period. Since the month of December incorporates year end, we apply the ApplyClearDown closing option:

curl -X POST 'https://<your-domain>.lusid.com/api/api/abor/Abor/Standard/accountingdiary/$closeperiod'
  -H 'Content-Type: application/json-patch+json'
  -H 'Authorization: Bearer <your-API-access-token>'
  -d '{
  "effectiveAt": "2023-12-31T23:59:59Z",
  "queryAsAt": "2024-01-02T17:00:00Z",
  "closingOptions": ["ApplyClearDown"]
}'

3 January 2024

At SOD on 3 January we call the GetTrialBalance API from 1 January to 3 January, using the unique code of the closed December 2023 period as the start date. 

Note: It is not possible to call this API from portfolio inception on 1 December through to 3 January. You can use the unique code of a closed or locked period with cleardown applied as the start or end date of a trial balance, but you cannot query across a cleared down period boundary.

We can see that:

  • The £100 balance in the 4-PnL account from 31 December has been transferred to the 5-YearEnd account (highlighted in green below).

  • The 4-PnL account has an opening balance on 1 January of zero, and a closing balance on 3 January of £50, reflecting a further movement in the BP share price in our favor from £11 to £11.50 (highlighted in red).

In other words, with cleardown applied the year-to-date P&L for 2024 is £50, not £150:

Note: LUSID does not currently generate journal entry lines for this transfer. This may change in future.

We can confirm that year-to-date P&L without cleardown applied would erroneously be £150 by calling the GetTrialBalance API for the same period with the excludeCleardownModule option set to True in the API request. The 5-YearEnd account, meanwhile, is empty and therefore unreported: