The Debt Management module allows sites to manage bond issues, including allocating, tracking, and accounting for the use of bond funds. The system enables accounting and budget control agencies to meet their obligations with respect to the use of bond funds by handling the management and accounting for all different types of bonds such as revenue and general obligation along with other types of similar debt such as commercial paper.
Bond functionality starts with the seven sub types of bonds available in the Major Type of Bond field, which are shown in the table below. A Debt Type code is delivered with setup for each (parenthetical codes below). These seven can be cloned to create variants of each to satisfy reporting, workflow, or accounting control needs.
Sub Type (Debt Type) |
Description |
Capital Appreciation (CAB) |
A bond issued at a substantial discount, which accretes in value through the compounding of interest over the life of the bond, so that discount is not amortized. Interest is paid out at maturity with the full amount of principal. The bond authorization is only reduced by par value minus the amount of discount as a Capital Appreciation bond is entered with the un-accreted amount as Principal. The discount is not entered. Instead, the amount entered as Principal results from the following calculation: (Number of Bonds Issued * Denomination) – Discount. |
Convertible Capital Appreciation (CCAB) |
A bond that starts off as Capital Appreciation but then later converts to a form that pays interest out instead of compounding. |
Coupon (CPN) |
A bond issued where only interest is paid on a rate or fixed amount basis with all principal being paid at maturity. |
Zero Coupon (ZCPN) |
A bond issued that is much like the Capital Appreciation bond in that it has a discounted amount that is not amortized, but is made up through the compounding of interest. The difference is that the full amount of Principal is entered for a Zero Coupon bond to reduce the Authorized Amount rather than an amount of Principal that is less by the true amount of Discount. Any additional discount that was not accounted for by compounding interest can be entered and amortized. |
Variable Rate (VRB) |
A bond issued where the interest rate will vary over the life of the issue. |
Self Amortizing (SAB) |
A bond issued where coupon payments pay interest in a decreasing schedule and principal in an increasing schedule. |
Unspecified (UNSP) |
A bond issued that is not completely one of the previous sub types. |
When creating a Bond Setup (BONDS) or Bond Modification (BONDM) transaction, the bond sub types do not determine which tabs of the transactions are required and which are prohibited. Unlike loans and leases, the transaction tab rules do not vary based on the sub type. When required, the system will automatically insert a line on the setup transaction and (if creating a new bond) on a modification transaction.
The following table shows what transaction tabs are required when defining a bond debt instrument.
Transaction Tab |
Required/Optional |
Debt Instrument |
Required |
Paying Agent/Lender Information |
Required |
Bond Proceeds/Lender COA |
Required |
Borrower Information |
Required but information is optional |
Bond Payments/Borrower COA |
Required |
Schedule |
Required |
Schedule Details |
Required |
Call/Put Schedule |
Optional |
Debt Costs |
Optional |
Debt Instrument Alerts |
Optional |
Although bonds do not involve two parties on CGI Advantage Financial, they do require records on both the Lender and Borrower transaction tabs.
The Paying Agent for the bond issue is a vendor recorded on the Paying Agent/Lender Information tab.
One or more Bond Proceeds/Lender COA records are required to record where the bond proceeds are initially recorded and how amortizations are recorded.
One or more Bond Payments/Borrower COA records are required to record how all bond payments are made: Principal, Interest, Other Amount Payments, and Prepaid Interest.
Bonds have several features and restrictions that are not applicable to Leases or Loans.
For a full explanation of the delivered accounting events for bonds, please see the "Bonds" topic under Accounting Model Delivered Configuration > Debt - Accounting Model in the Financial Administration User Guide.