Establishing Real Estate Management Business Units and Accounting Rules

This chapter provides an overview of Real Estate Management business units and accounting rules and discusses how to:

Create a new Real Estate Management business unit.
Establish accounting rules.

Understanding Real Estate Management Business Units

To define Real Estate Management business units, use the LA Business Unit Definition component (RE_BUS_UNIT).

PeopleSoft defines a business unit as an operational subset of your organization that enables you to plan your operations around the way that you work. You can use a business unit to define regional or departmental units in an organization.

Before you begin the day-to-day operation of your Real Estate Management system, you must create a Real Estate Management business unit–the backbone of your Real Estate Management system. Each lease that you create is assigned a Real Estate Management business unit, and many lease attributes are automatically populated from the values that you define for that business unit.

As you plan the optimal structure for your Real Estate Management system, keep in mind its position in the PeopleSoft suite of applications. A Real Estate Management business unit reads property data from the Asset Repository based on the Asset Management business unit and supplies payment data to Payables based on the Payable business unit, invoice data through the Transaction Billing Processor to Billing based on the Contracts business unit, and accounting information to the General Ledger based on General Ledger business unit. Therefore, you must establish Asset Management, Payables, Contracts, and General Ledger business units before you establish your Real Estate Management business units.

Once you establish the other PeopleSoft business units, Real Estate Management can map to the applications. It is important to be careful when selecting the appropriate business units. Make sure that all of the mappings make sense within the suite and that the other products map to the same business units in their respective setup components. For example, if you establish a Real Estate Management business unit of US001 and map it to the General Ledger business unit of US001 (for straightline accounting entries), most likely the Payables and Billing business unit matches the same General Ledger business unit of US001 because those respective applications also post accounting entries to General Ledger for lease commitments in Lease Administration.

Note. To avoid performance degradation, create setIDs and business units that are no longer than five characters.

Note. When mapping Real Estate Management business units to the other PeopleSoft business units, be sure that all the other business units map to the same General Ledger business unit that Real Estate Management is using.

See Understanding Asset Management Business and Cash Generating Units.

See Defining General Ledger Business Units.

See Understanding Payables Business Units.

Understanding Real Estate Management Accounting Rules

Accounting rules for Real Estate Management are essential for providing lease transactions with appropriate accounting entries sent to Payables, Billing, and the General Ledger. Payables and Billing provide the offsetting entries to the expense or revenue accounting passed over. You must specify default accounting rules for each transaction destination with an option of providing defaults for each transaction group. You can further define accounting for specific transaction codes within a transaction group that requires its own set of accounting rules. For example, you can set up a standard accounting rule for the transaction group of operating expenses with a transaction destination of Payables. When operating expense transactions are generated and are sent to Payables the defined standard accounting rule for those transactions are applied and sent as well. If a specific operating expense such as janitorial services has a unique account requirement, you can set up an accounting rule for the transaction destination of AP, transaction group of operating expenses, and a transaction routing code for janitorial services with the accounting specific to janitorial services.

There are three sets of debit/credit pairs defined in the Lease Administration accounting rules for Real Estate Management:

Transactions sent to the Billing (BI) destination contain accounting rules that credit the revenue. The offset of Accounts Receivable is determined in Billing setup.
Transactions sent to the Payables (AP) destination contain the debit to expenses. The offset

of Payable is determined in Payables setup.
Transactions sent to the General Ledger (GL) destination contain both the debit and credit accounts as these are the straightline accounting entries generated from Real Estate Management.

The following table shows the valid/invalid combinations that can exist in the accounting rules for Real Estate Management. Edit checking is added to the Lease Administration Accounting Rules (LA Accounting Rules) page to ensure that only valid combinations are saved:

Transaction Destination	Transaction Group	Valid Combination?
AP	Base Rent	Yes
BI	Base Rent	Yes
GL	Base Rent	No
AP	Security Deposit	Yes
BI	Security Deposit	Yes
GL	Security Deposit	No
AP	Straightline Accounting	No
BI	Straightline Accounting	No
GL	Straightline Accounting	Yes
AP	Operating Expense	Yes
BI	Operating Expense	Yes
GL	Operating Expense	No
AP	Percent Rent	Yes
BI	Percent Rent	Yes
GL	Percent Rent	No
AP	Miscellaneous Rent	Yes
BI	Miscellaneous Rent	Yes
GL	Miscellaneous Rent	No
AP	Manual Fee	Yes
BI	Manual Fee	Yes
GL	Manual Fee	No

Creating a Real Estate Management Business Unit

After you determine how many business units that you use and how to organize them, you must define Real Estate Management specific business unit definitions. A business unit definition specifies the transaction processing defaults and configuration options associated with the business unit. There are two pages used to define a Real Estate Management business unit:

The Business Unit Definition General page.
The Business Unit Definition Transaction Settings page.

Prerequisites

You must establish at least one Assets, Billing, Contracts, Payables, and General Ledger business unit in each of those respective applications to map to the Real Estate Management business unit when it is created.

Pages Used to Establish Real Estate Management Business Units

Page Name	Object Name	Navigation	Usage
Lease Administration Business Unit Definition - General	RE_BU_CFG1	Set Up Financials/Supply Chain, Business Unit Related, Lease Administration, LA Business Unit Definition, General	Create or update a Lease Administration business unit definition. This page enables you to set various configuration options such as the mappings to other business units, the auto-straightline option and the general limits and measures.
Lease Administration Business Unit Definition - Transaction Settings	RE_BU_CFG2	Set Up Financials/Supply Chain, Business Unit Related, Lease Administration, LA Business Unit Definition, Transaction Settings	Define transaction processing options, such as processing lead time and default transaction routing codes. Note. If settings are updated after the business unit is referenced on an active lease, those previously activated leases may not be impacted by changes made to the business unit setup

Page Name

Object Name

Navigation

Usage

Lease Administration Business Unit Definition - General

RE_BU_CFG1

Set Up Financials/Supply Chain, Business Unit Related, Lease Administration, LA Business Unit Definition, General

Create or update a Lease Administration business unit definition. This page enables you to set various configuration options such as the mappings to other business units, the auto-straightline option and the general limits and measures.

Lease Administration Business Unit Definition - Transaction Settings

RE_BU_CFG2

Set Up Financials/Supply Chain, Business Unit Related, Lease Administration, LA Business Unit Definition, Transaction Settings

Define transaction processing options, such as processing lead time and default transaction routing codes.

Note. If settings are updated after the business unit is referenced on an active lease, those previously activated leases may not be impacted by changes made to the business unit setup

Defining Real Estate Management Business Unit General

Access the Lease Administration Business Unit Definition - General page.

Business Unit

When you add a business unit, you must provide a description and specify a value in the Default SetID field.

Business Units

General Ledger	Select a General Ledger business unit. This General Ledger business unit defines the accounting processing for the associated Real Estate Management business unit for straightline accounting entries. All leases created for this Real Estate Management business unit will have their straightline accounting entries posted to the General Ledger business unit specified here. In each of remaining product to product business unit mappings, each business unit must be mapped to the same General Ledger business unit within their respective product configuration. For example, if the Real Estate business unit RE001 is mapped to the General Ledger business unit GL001 and RE001 is mapped to the Contracts business unit CA001 then CA001 must also be mapped to the General Ledger business unit GL001. Note. Transactions generated through the Payables and Billing interface are posted through those respective applications.
Asset Management	Select an Asset Management business unit. Properties are considered assets and are contained within the master asset repository. The Asset Management business unit (AMBU) defines the property asset information associated with this Real Estate Management business unit. All leases created use the Asset Management property information to manage the life cycle of the lease for the property specified on the lease from the AMBU. Because Asset Management might post accounting entries to the general ledger for its own purposes (such as capitalization), properties selected on leases under this Real Estate Management business unit are restricted to only the property assets under the business unit mapped here.
Accounts Payable	Select a Payables business unit. All payments made for leases under a Real Estate Management business unit are sent to Payables for processing using this business unit.
Contracts	Select a Contracts business unit. When creating a lease in the Real Estate Management business unit, a contract header and line is also created in the Contracts business unit. This initiates the transaction billing processor within the Contracts business unit to determine the routing of the rent to be billed.

Journal Template

General Ledger

Select the General Ledger template to be associated with the Real Estate Management business unit. Accounting entries created for this Real Estate Management business unit use this General Ledger accounting template to generate the journal into General Ledger.

Auto Straightline

Real Estate Management provides the ability to support the accounting and reporting for operating leases by allowing you to enable or disable the straightline processing at the BU level. For example, let's say that a tenant agrees to rent a space from the landlord. Under FASB-13 Operating Lease provisions, if the rent amount or recurring expense amount for the rented space is not evenly termed across periods, or free rent (zero rent) is applicable for certain periods, those amounts must be reported in the General Ledger on a straightline basis (an even distribution).

See Understanding Straightline Accounting.

Rent & Miscellaneous Rent

Select to enable base rent and miscellaneous rent transactions to automatically default the straightline accounting process for this Real Estate Management business unit. This is a defaulting mechanism to assist with lease entry. When a new lease or recurring rent term is added, the straightline check box defaults either on or off based on the setting defined here. You can clear the check box on the lease from the default value defined on the business unit to enable or disable straightlining on specific financial terms on a specific lease.

Operating Expenses

Select to enable operating expense transactions to automatically perform straightline accounting processing for this Real Estate Management business unit. When a new lease or an operating expense is added, the straightline check box defaults either on or off based on the setting defined here. You can clear the check box on the lease from the default value defined on the business unit to enable or disable straightlining on specific financial terms on a specific lease.

Limits and Measures

Unit of Measure	Select the default unit of measure for referencing the space measurement of a property in a lease for this Real Estate Management business unit. Values are: Square Feet and Square Meters .
Base Currency	Select the default base currency for this Real Estate Management business unit. Lease transactions created in this Real Estate Management business automatically inherit this base currency, although you can override the base currency on the lease. The currency specified on the lease is the currency used for invoicing or payment by Billing and Payables, respectively.
Percent Rent Calendar ID	Select the detail calendar ID. Percent rent sales reporting uses a specific calendar with distinct periods and start and end dates. The detail calendar that you select provides the system with the appropriate information to understand the frequency with which you report or receive sales reports. In addition, this calendar structure enables the system to search for and determine when sales reports are missing, as well as to prevent duplicate sales reports for the same period. See Defining Detail Calendars.
Rate Type	Select the currency exchange rate type to be used when the system must perform currency translations for this business unit. Note. The most commonly used rate type is CRRNT (current).
Percent Rent	Define the percentage tolerances for a sales category amount for this Real Estate Management business unit. This value is used for visual purposes on the sales report only. If a sales report category amount has changed significantly over the prior month, the system displays an icon on the sales reporting entry worksheet to indicate that it has exceeded the tolerance. No further processing takes place.
Operating Expenses	Define the percentage tolerance for operating expense amounts for this Real Estate Management business unit. This value is used for visual purposes on the operating expense audit page only. If an operating expense category amount has changed significantly over the prior year, the system displays an icon on the operating expense audit/reconciliation worksheet to indicate that it has exceeded the tolerance. No further processing takes place.
Proration Method	Defines the rule that the system uses to determine how much to apportion to the recurring rent based on the schedule and frequency that you define in a lease. For example, if base rent starts on 1/1/2000, but the payment schedule is monthly (starting on the 15th each month), the first payment must be a proration of the amount for the time frame of 1/1 through 1/14. As another example, at the end of the total time span for that recurring rent, if the end date does not correspond with the schedule, it also must be prorated (end date is 12/31/2000, proration for 12/15 through 12/31). Depending upon the value setup here, for each recurring rent setup on a lease, the system calculates a prorated transaction to be processed just as with normal recurring rent transactions. The selection drives the default only when setting up the recurring rent on a lease. You can override the default. This applies only to leases with a defaulted proration method. Available methods are: No Proration: Select if you do not want to default the proration method for the rent. You can define the proration method at the lease level. 365 Days: Select to prorate according to a standard 365 day Gregorian calendar using each of the 12 months as the start and end dates (31 days in January, 28 or 29 days in February, 31 days in March, and so on).

Lease Expiration Notification

The Transaction Generator Application Engine (RE_GENTRANS) includes a process that automates lease expiration. The automated lease expiry process sets the status of any active lease to 'expired' where the lease end date is prior to the execution date of the transaction generator. The Lease Expiration Notification option determines how the automated lease expiry process treats leases attached to the current business unit.

Notify Only

Select to have the lease expiry process send an E-mail notification when a lease is due to expire. The status of the lease is not changed. The notification E-mail is sent to the Lease Administrator and Portfolio Manager named on the lease.

Update Only

Select to automatically set the status of a lease to Expired when the lease end date has passed. No notifications are issued, however, a system generated note is added to the lease to record the expiration.

Notify and Update

Select this option to automatically set the status of a lease to Expired when the lease end date has passed. A notification E-mail is sent to the Lease Administrator and Portfolio Manager named on the lease. In addition, a system generated note is added to the lease to record the expiration.

See Defining Option Notifications.

Defining Real Estate Management Business Unit Transaction Settings

Access the Lease Administration Business Unit - Transaction Settings page.

Billing Options

Lead Time (Days)

Specify the Billing default transaction lead time for automatically generated transactions for this Real Estate Management business unit. The date specified determines the number of days prior to the billing date that you want the automatically generate process to occur. If the invoice due date is the end of the month, and it takes your organization approximately 10 days to process the invoice, then set the lead time to 10. This is used to compensate for processing times needed for invoices to reach the tenant before the due date. Then, on each lease, the Transaction Generator picks up any recurring transactions based on the lease due date, less the lead time established here. Each recurring rent page includes a lists Anticipated Process Date field, which takes this setting into account.

Auto Approve

Select to automatically approve transactions in the transaction queue. The system sets the transactions to Pending status if nothing is selected. You need to approve each transaction before the transactions can be processed.

Accounts Payable Options

Lead Time (Days)

Specify the Payables default transaction lead time for auto-generated transactions for this Real Estate Management business unit. The date specified determines the number of days prior to the due date that you want the auto-generate process to occur. If the due date is the end of the month, and it takes your organization approximately 10 days to process (from vouchering to mailing), then set the lead time to 10. This is used to compensate for processing times needed to ensure that a payment reaches the landlord by the due date. Then, on each lease, the Transaction Generator picks up any recurring transactions based on the lease due date, less the lead time established here. Each recurring rent page includes a Anticipated Process Datefield, which takes this setting into account.

Auto Approve

Item Routing Codes

Base Rent

Select the routing code for base rent transactions for this Real Estate Management business unit. All rent transactions generated for this Real Estate Management business unit use this routing code to generate entries that are interfaced into the general ledger.

See Understanding Transaction Routing Codes.

Security Deposit

Issue	Enter the routing code to be used for standard security deposit transactions.
Deduction	Select the routing code for security deposit deductions. Security deposit deduction transactions that you create use this default to generate entries that are interfaced into the general ledger. Deductions are used only in the security deposit refund process. Any deductions for damages also use this code.
Interest	Select the routing code for security deposit interest. Security deposit transactions that you create use this routing code to generate entries that are interfaced into the general ledger. Interest is used only in the security deposit refund process. Any interest earned on security deposits held use this code.
Refund	Select the routing code for security deposit refunds. Security deposit refund transactions that you create use this default to determine processing in the general ledger. Refund is used only in the security deposit refund process to reverse the initial issue amount.

Straightline Accounting

Accrual	Select the routing code for straight line accruals in this Real Estate Management business unit. The routing code for accruals determines the processing in the general ledger.
Deferral	Select the routing code for straight line deferrals in this Real Estate Management business unit. The routing code for deferrals determines the processing in the general ledger.
Adjustment	Select the routing code for straight line adjustments in this Real Estate Management business unit. The routing code for adjustments determines the processing in the general ledger.

Group Routing Codes

The Real Estate Management application uses transaction groups to link certain classes of transaction. The transaction groups — Operating Expense, Percentage Rent, Manual Fees and Miscellaneous Rent are collections of transaction categories. The Group Routing Codes enables you to define the default routing code for each transaction group if you elect not to specify a routing code at the transaction category level. For example, let's say that you have defined an Operating Expense category called Garbage Removal and you choose not to provide a specific routing code for Garbage Removal. When an Operating Expense transaction is generated for Garbage Removal, the transaction generator attempts to locate the category's routing code. Since the routing code is not specified at the category level, the transaction generator looks for a routing code specified at the transaction group level — the system picks up the default routing code for Operating Expenses.

Note. Transaction Group default routing codes are all required fields. A transaction cannot be processed unless there is routing code and the transaction group is the top level of the defaulting chain.

Operating Expense	Select the default routing code for all operating expenses. The system defaults this routing code when a specific routing code is not defined for an operating expense.
Percent Rent	Select the default routing code for all percent rent transactions. The system defaults this routing code when a specific percent rent routing code is not defined for percent rent transactions.
Miscellaneous Rent	Select the default routing code for all miscellaneous rent. The system defaults this routing code when a specific routing code is not defined for miscellaneous rent transactions.
Manual Fees	Select the default routing code for all manual fees. The system defaults this routing code when a specific routing code is not defined for manual fee transactions.

Billing Defaults

Bill Type	Select a default bill type for leases created under this Real Estate Management business unit. The bill type represents a category of activity being billed.
Bill Source	Select the default billing source. The Billing Source is used to identify where the billing activity came from and to then associate default billing information with that billing activity.
Bill By	Select a default bill by for leases created under this Real Estate Management business unit. The bill by enables you to group bill lines on invoices.

Establishing Real Estate Management Accounting Rules for Lease Administration

This section discusses how to establish Real Estate Management accounting rules.

Page Used to Establish Accounting Rules

Page Name	Object Name	Navigation	Usage
Accounting Rules for Lease Administration	CA_ACCT_RULES	Set Up Financials/Supply Chain, Business Unit Related, Lease Administration, LA Accounting Rules	Define accounting rules for transaction destinations and transaction groups for lease transactions.

Defining Real Estate Management Accounting Rules for Lease Administration

Access the Accounting Rules for Lease Administration page.

Transaction Destination

Enter the destination where the transaction is sent. The value that you enter determines the accounting rules for an expense or revenue transaction. Values are:

AP (Payables): If the transaction destination is AP, then Payables uses the accounting rule that you define. When the transaction goes to Payables, the accounting rule specifies the expense debit side of the accounting entry.

BI (Billing): If the transaction destination is BI, then Billing uses the accounting rule that you define. When the transaction goes to Billing, the accounting rule specifies the revenue credit side of the accounting entry that the transaction needs to offset the AR (Receivables) side of the entry that they create.

GL (General Ledger): If the transaction destination is GL, then General Ledger uses the accounting rule that you define. When the transaction goes to General Ledger, the accounting rule specifies the expense debit side of the accounting entry.

Transaction Group

Select the transaction group to define the type of transactions being sent to create the proper journal entries. Possible values for this field: Base Rent, Security Deposit, Straightline Accounting, Operating Expense, Miscellaneous Expense, Manual Fee and Percent Rent.

Transaction Routing Code

Select the transaction routing code. You can define unique accounting rules by specifying the transaction routing code for a specific transaction group.

Copy Account Entries To

Click to copy accounting rules to create a new accounting rule.

Accounting Entries

Use the fields in this group box to define your accounting entries for your lease transactions. By using the % (wildcard), the system accepts the default entries for that field.

Debit/Credit	Displays whether the accounting entry is a debit or credit. This field corresponds with the value that you selected in the Account Type field.
Account Type	Select the account type for this accounting entry.
Account	Enter the account number for the account type.

Transaction Destination	Enter the destination where the transaction is sent. The value that you enter determines the accounting rules for an expense or revenue transaction. Values are: AP (Payables): If the transaction destination is AP, then Payables uses the accounting rule that you define. When the transaction goes to Payables, the accounting rule specifies the expense debit side of the accounting entry. BI (Billing): If the transaction destination is BI, then Billing uses the accounting rule that you define. When the transaction goes to Billing, the accounting rule specifies the revenue credit side of the accounting entry that the transaction needs to offset the AR (Receivables) side of the entry that they create. GL (General Ledger): If the transaction destination is GL, then General Ledger uses the accounting rule that you define. When the transaction goes to General Ledger, the accounting rule specifies the expense debit side of the accounting entry.
Transaction Group	Select the transaction group to define the type of transactions being sent to create the proper journal entries. Possible values for this field: Base Rent, Security Deposit, Straightline Accounting, Operating Expense, Miscellaneous Expense, Manual Fee and Percent Rent.
Transaction Routing Code	Select the transaction routing code. You can define unique accounting rules by specifying the transaction routing code for a specific transaction group.
Copy Account Entries To	Click to copy accounting rules to create a new accounting rule.