Reviewing the Sample Events

Introduction

You’ve now loaded the :simple-test event set.

But, what’s in it?

Simply, it’s a list of events (in a particular format) that can be understood and processed by the Timpson Gray Allocation Accounting system.

In this section, in plain language, it will be explained what these constituents events are. Afterwards, you’ll learn how to process these events through the system.

The Sample Events

Below, with some notes are expanded explanations of the events contained in the event set. Where appropriate explanations of the terms used, and alternative approaches are discussed.

Each event’s internal name is only listed to allow you to locate the event in the UI & Reports after we’ve run the processing steps. There is nothing privileged about the names, but each combination of name and entry date must be unique. This is to prevent a user from mistakenly re-booking a previously processed event. It also allows the system to unambiguously identify an event.

Sample Event 1

A Capital Call is made on 2018-01-01 for a total amount of $100,000 (representing 10% of each partner’s initial commitment). The partners’ payments are requested to be received by 2018-01-15, and are payable to the main investing entity :fund. No partner is excluded (opted-out) from the call and each partner’s call amount will be calculated using the default investment structure, which is :fund.
(event’s internal name: call-00005-2020-01-05)

This is the capital call associated with the fund’s initial closing. In the general case, the amounts called are in proportions to each partner’s remaining commitment amounts. Specific amounts are not part of the event’s data, only the total amount of the call.

However, it is possible to indicate that a partner (or partners) will not participate in a call by listing them as “excluded” (or opted-out) from the call. In this case each partner’s call amount is calculated in proportion to the remaining commitment amounts of the participating partners only.

An investment structure is also specified as part of the event’s data.

The structure is not directly used in the calculation of the called amounts, but rather indicates into which investing entity each partner’s payment should be expected. This ensures that the correct entity’s appropriate receivables accounts are debited.

Sample Event 2

Some partners’ Call Payments are received on 2018-01-01 with details as follows:
$50,000 is received from :p-001 (Interdem Associates)
$50,000 is received from :p-002 (Robutenia Limited).
The payments are received by the main investing entity (:fund).
(event’s internal name: payment-00017-2020-01-05)

The amounts paid are the amounts calculated and called during the processing of Event 1. There are methods available accommodate under-payments. For example, where an under-payment is “absorbed” by the GP. These will be discussed later.

Sample Event 3

An initial Investment of $50,000 is made in company :pc-001 (TG Accounting JV) on 2018-01-01 with no partner opting out. The investment is made in order to acquire 50,000 equity units of :ax-m01 (Comm - Series A). The investment structure to use is the default investment structure :fund.
(event’s internal name: investment-01)

As with a call, and independently of it, a partner may be “excluded” (opted-out) of an investment. In that case, the partner’s (or partners’) economic interest is set to $0 and they will be excluded from all P&L and Balance Sheet allocations due to the investment. The economic interest of the partners participating in the investment will calculated in proportion to the partners’ capital available to be deployed.

Sample Event 4

A Capital Call is made on 2018-02-01 for a total amount of $200,000 (representing 20% of each partner’s original commitment). The partners’s payments are requested to be paid by 2018-02-15. No partner is excluded (opted-out) from the call, and each partner’s call amount is to be calculated using the default investment structure :fund.
(event’s internal name: call-00028-2020-01-05)

Sample Event 5

A Fund Expense is recorded on 2018-02-02 for the payment of $5,000 for a ‘General Fund Administration’ fee (:fund-administration-fee). The allocation method uses the default investment structure (:fund). No investment or company is specified as this is a fund expense and not attributable to a particular investment or portfolio company.
(event’s internal name: general-fund-expense-00029-2020-01-05)

A Fund Expense is incurred by the whole fund, and not associated with a particular investment. By default, the allocations of P&L to the partners is in proportion to their cost basis in the fund, although the method can be specified differently (e.g. by commitment, by remaining commitment etc.)

Sample Event 6

Some Fund Income is recorded on 2018-02-02 for the receipt of $1,000 of deposit account interest (:bank-interest). The income is allocated to the partners using the default investment structure (:fund).
(event’s internal name: fund-income-01-00029-2020-01-05)

Similarly to a Fund Expense, Fund Income is attributed to the whole fund, and not associated with a particular investment.

Sample Event 7

A Portfolio Company Expense of $10,000 for a registration fee (:registration-fee) is paid on 2018-02-03 and attributable to the investment in :pc-001 (TG Accounting JV). The expense is allocated to the partners in proportion to their economic interest in the investment using the default investment structure (:fund).
(event’s internal name: portco-expense-00029-2020-01-05)

A Portfolio Company Expense is an expense directly attributable to a particular investment. Its allocation to the partners is according to their economic interest in that investment, in one or more investment vehicles. This last phrase is important. In general a portfolio expense is allocated to each investment vehicle (entity), and then to the partners holding interests within that vehicle in proportion to the partners’ economic interest in that vehicle. However, it is possible to allocate the expense to a particular entity (or entities). In that case, the allocations are within the participating entity (or entities) only. This is analogous to an opt-out of a vehicle.

Sample Event 8

Some Partners’ Call Payments are received on 2018-02-05 with details as follows:
$100,000 is received from :p-001 (Interdem Associates)
$100,000 is received from p-002 (Robutenia Limited),
The payments are made to the main investing entity (:fund).
(event’s internal name: payment-00030-2020-01-05)

Sample Event 9

A Capital Call is issued to the partners on 2018-03-01 for a total amount of $ 150,000. The partner’s payments are requested to be paid by 2018-03-15. No partner is excluded (opted-out) from the call, and the each partner’s call amount is to be calculated using the default investment structure (:fund).
(event’s internal name: call-00031-2020-01-05)

Sample Event 10

A Valuation Adjustment is made on 2018-03-03 for the portfolio company :pc-001 (TG Accounting JV). The value of :ax-m01 (Comm - Series A) is written up by $10,000 i.e. from $50,000 to $60,000.
(event’s internal name: val-00031-2020-01-05)

The value of an asset can be adjusted either up or down, and is always associated with a particular asset held by the investment. The impact on the financial ledgers will be seen in the unrealized gain/loss accounts of the partner participating in the investment. The adjustment is also recorded in the portfolio ledger.

Sample Event 11

A Dividend of $10,000 is received on 2018-03-04 because of the fund’s holdings of :ax-m01 (Comm - Series A) in the portfolio company :pc-001 (TG Accounting JV).
(event’s internal name: dividend-00031-2020-01-05)

A dividend differs from Portfolio Company Income in that it can impact the cost basis of the investment. It does not necessarily do so. This is a configuration.

Sample Event 12

A number of Partners’ Call Payments are received on 2018-03-05 with details as follows:
$75,000 is received from :p-001 (Interdem Associates)
$75,000 is received from :p-002 (Robutenia Limited)
The payments are made to the main investment vehicle :fund.
(event’s internal name: payment-00032-2020-01-05)

Sample Event 13

A Portfolio Conversion of certain assets belonging to investment pc-001 (TG Accounting JV) occurs on 2018-03-06. During the conversion, 30,000 units of :ax-m01 (Comm - Series A) is converted to 60,000 equity units of :ax-m01-a (Comm - Series A1) without any adjustment of value. This leaves 20,000 units of :ax-m01 (Comm - Series A) and 60,000 units of :ax-m01-a (Comm - Series A1) in the portfolio at cost and value bases of $20,000/$20,000 and $30,000/$30,000 respectively. Check This
(event’s internal name: conversion-00032-2020-01-05)

A conversion “swaps” assets within the portfolio. There is no requirement that it is a one-for-one swap. It’s possible to convert some number of units of an asset to units of more than one other asset. For example, 10 Units of Asset A could be converted to 20 units of Asset B and 30 units of Asset C. It is possible to perform a valuation adjustment at the time of the conversion. However, it is a restriction that the cost basis of both sides must match i.e. it’s not possible to do a cost adjustment during a conversion.

Sample Event 14

A Secondary Closing for a total amount of $2,000,000 occurs on 2018-03-10, doubling the fund’s size. The two new partners :p-003 (Klein Industries) and :p-004 (Gualas LLC) enter the fund with commitments of $1,000,000 each.
(event’s internal name: closing-02)

A secondary (or follow-on) closing will “unwind” and “rewind” the fund using previously processed events to calculate the new partners’ positions. All internal P&L, Balance Sheet and Portfolio entries will be reallocated as if the new partners had been present in the fund since inception. All external items will remain unaffected.

External items are associated with events that cause specific transfers of economic interest across the boundary of the fund such as payments, refunds, distributions etc. These events happened as recorded and won’t be changed automatically. However, a user can make manual changes if that’s required by booking true-up events.

Note that previously booked events are not changed in place, new entries are made in the various ledgers to ensure that the net results are correct as of the date of the secondary closing.

Therefore, it’s always possible to view the state of the fund at any prior point in time without the adjusting entries.

It’s always possible to provide a what-did-it-look-like-then view.

Sample Event 15

A Transfer of Interest occurs on 2018-03-31 transferring $600,000 of partner :p-001's (Interdem Associates) commitment to a new partner :p-005 (Interdem Inc.)
(event’s internal name: transfer-00174-2020-01-07)

A Transfer of Interest moves a proportion of a partner’s commitment ledger to another partner (or partners). The recipient may be a new partner, or an existing partner. The event also transfers the appropriate proportions of the donor’s P&L, Balance Sheet and Portfolio interest in the fund to the recipient.

In contrast to a Secondary Closing event, a transfer impacts both internal and external items. It’s as if the recipient “steps into the shoes” of the donor at a particular proportion for each previously processed event.

Similarly to a Secondary Closing, previously booked events are not changed in place, only new (additive) entries are made in the various ledgers to ensure that the net results are correct as of the date of the transfer.

Sample Event 16

Another Transfer of Interest occurs on 2018-04-15 transferring another $100,000 of partner :p-001's (Interdem Associates) commitment to a new partner :p-006 (Datastore Company).
(event’s internal name: transfer-00175-2020-01-07)