Securities Servicing
Fund
Securities Operations Accounting
101
Book of Records
ABOR IBOR TBOR
The Accounting Book of The IBOR (Investment The TBOR (Trading Book
Record (ABOR) is the Book of Records) is a of Records) is the book of
investment book that single source of records for the executed
supports the back office consolidated data that trades and is maintained
operations. ABOR is combines start-of-day on the OMS and is used
typically maintained by an and end-of-day positions. for Intraday Investment
outsourced provider and It provides an up-to-date live Positions PnL Trades
is the official book of view of Cash &
record that is the basis for Securities positions to
NAV, financial statements, help support the
and is audited annually. investment decision-
making process.
Definition
A system of accounting used to manage the
book of records of an investment fund.
Card Fund Accounting
It is the official book of record that is the
basis for NAV, financial statements, and is
audited annually.
Assets
Anything of monetary value in the portfolio, E.g. –
Cash, deposits, Securities, income receivable etc.
Liabilities
Any obligations that requires portfolio to disburse
money in future E.g –investment payable, Tax
Accounting Basics withheld, distribution payable, accrued expenses etc
Capital
Shareholders equity in the portfolio.
Income
Any money earned on investment, E.g. Dividend
income, interest income.
Expenses
Any cost incurred for generating revenue
1 Accounting Equation
Assets – Liabilities = Capital ( Income – Expenses)
Accounting Basics 2 Rules
• Every accounting entry affects a minimum of two
accounts
• Double entry system - Regardless of number of
accounts affected, the sum of credits will be equal to
sum of debits
# Debit Credit
1 Debit entry increases Increases Income, Liabilities and
Assets and Expenses Capital
2 Decreases to Income, Decreases Assets and
Liabilities and Capital Expenses
Impact of Debit Credit on NAV
S.No Account Normal Increases Decreases Effect on NAV with
Type Balance with with increase
Accounting Basics 1 Asset Debit Debit Credit Increases NAV
2 Liability Credit Credit Debit Decreases NAV
3 Income Credit Credit Debit Increases NAV
4 Expenses Debit Debit Credit Decreases NAV
5 Capital Credit Credit Debit Increases NAV
Task
• Record securities transactions (Journal entries), such as
buys and sells for the portfolio
• Amortize the discount or premium on bond purchases.
• Project and Record
• All income, such as dividends and interest.
Fund Accounting • accrued interest on bonds and fixed income
securities
• Recording all realized capital gains, both short-term, and
long-term
• Recording all inflows and outflows of funds
• Records of the shares owned, and transactions
• Distributions of income and capital gains made to
shareholders in the fund.
