Transfers of Interest

Introduction

In this section you will process two Transfers of Interest, :transfer-00174-2020-01-07 and :transfer-00175-2020-01-07 from the sample events set.

Although occurring on different dates both these transfers will be processed at the same time

1. the first (with a transfer effective date of 2018-03-31) transfers $600,000 of :p-001's (Interdem Associates) commitment to partner :p-005 (Interdem Inc.);
2. the second (with a transfer effective date of 2018-04-15) transfers $300,000 of :p-001's (Interdem Associates) commitment to partner :p-006 (Datastore Company).

Process the Two Transfer Events

Navigate to the event processing page using the Process Previously Saved Events link located in the top panel of the Home page, and select the simple-test event set in the dropdown to display its events.

Scroll down to the :transfer-00174-2020-01-07 event and select it and the second transfer event :transfer-00175-2020-01-07 by clicking the checkbox in the first column of both rows.

The :transfer-00174-2020-01-07 event should be the first event without a green check-mark icon in the first column indicating that is the first event in the event set that hasn’t yet been processed and posted.

If this is not the case, please make sure that you posted the results of :closing-02, the last event you processed.

Scroll up to the top of the events page and click the Process button.

Review the Results

If you now view the Commitment report in the :pending environment you can see the changes.

The correct proportions of Interdem Associates commitment balances were transferred to the new partners. This includes any call payments, or credit balances in the Receivable accounts.

Difference from a Closing Event

This is in contrast to the effects of :closing-02 which you processed in the previous step. A Transfer of Interest assumes that the recipient partner(s) step into the shoes of the donor partner from the date of inception of the fund. The recipient partner is treated as if he/she were always present in the fund at whatever particular commitment level the transfer represents.

Of course, history cannot be changed. The effects are synthesized by posting the appropriate adjustments as necessary to the financial, portfolio and commitment ledgers to achieve the desired result.

Financials

If you now use the Comparison report to review the Transfers’ effects on the fund’s portfolio and financial balances you will see no net effect.

Similarly to a Closing, a Transfer merely reallocates existing Balance Sheet and P&L items between partners.

For example, if you drill-down into the :Investment, :pc-001 account you can see the changes that occurred at the partner level.

Before the transfer, partner :p-001's (Interdem Associates) interest was $15,000, representing 25% of the fund’s interest in the investment.

After the transfer, partner :p-001's (Interdem Associates) interest in the investment was reduced to $4,500 dollars, while those of the new partners :p-005 and :p-006 became $9,000 and $1,500 respectively.

The details of these changes for partner :p-005 can be seen by examining the registers of that account.

Here you can see an allocation to the recipient partner of a proportion of every entry related to the donor partner, along with the final balance. You should note that the date of each entry remains the same, but that its active date is the effective date of the transfer. This allows before and after reporting, point-in-time reporting, and internally provides the system with the ability to deal with out of order events correctly i.e. inserting events with a transaction date that is before the transaction date of the system’s most recently processed event.

For example, given the current starting point of the :pending environment, it would be possible to record (and allocate) an Expense incurred on say, 2018-02-04, correctly.

This is an extremely important feature. No fund manager, or administrator, will ever know material events at the correct time or in the correct sequence. The world is just too messy for that.

Portfolio

If you now review the Financial report in the :pending environment for partner :p-005 (Interdem Inc.) only you will see the transfers’ effects on the fund’s portfolio.

As you saw during the review of the :Investment account balances and register above, a proportion of all of Interdem Associates’ portfolio transactions were transferred to the recipient, establishing the correct portfolio position for that partner, as of the effective transfer date of the transfer.

Post the Results

You should return to the Environment Control Panel from the link on the Home page (or by clicking the Environments item in the main slide-out menu).

Click on the Post Pending button to post your results to the :current environment.