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Cash Management, Systemwide Accounting, Investments Austin Davis, Kelly Cox, Colleen Zenger. CSU 101 Tuesday, March 10, 2009. Overview Cash Management Systemwide Accounting Investments. Money Flow. Cash Management. Cash Management. Austin Davis Assistant Cash Mgmt Operations Officer

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cash management systemwide accounting investments austin davis kelly cox colleen zenger

Cash Management,Systemwide Accounting, InvestmentsAustin Davis, Kelly Cox, Colleen Zenger

CSU 101Tuesday, March 10, 2009

slide2
Overview
  • Cash Management
  • Systemwide Accounting
  • Investments
slide4

Cash Management

Cash Management

Austin Davis

Assistant Cash Mgmt Operations Officer

(562) 951 4674

adavis@calstate.edu

https://www.calstate.edu/financialservices/rmo

topics

Cash Management

Topics
  • Following The Money
  • Wells Fargo Bank (WFB)
  • Cash Positioning
  • Our Cash Management Roles
  • Cash Forecasting
  • Campus Investment Earnings
slide6

Cash Management

Following The Money

  • The campus’ cash management is centralized by using one bank
    • Wells Fargo Bank (WFB)
  • The surplus cash at the bank is invested
    • Systemwide Investment Fund – Trust (SWIFT)
  • Campuses benefit from the availability of better banking and investment services
    • Lower Fees
    • Safety: Wells Fargo: Aa1/AA+ credit rating
    • Consistent reporting & service across all campuses
slide7

Cash Management

Following The Money

wells fargo bank

Cash Management

Wells Fargo Bank
  • Each Campus has been assigned 3 WFB accounts
    • Deposit account
      • Checks, Currency, Coin
      • Wires
      • ACH
    • Electronic Disbursement account
      • Wires
      • ACH
    • Paper Disbursement account
      • Checks
slide9

Cash Management

Wells Fargo Bank

  • Deposit Account
    • A Campus may create sub-accounts to facilitate reporting and reconciliation
    • Campuses deposit currency and coin at local WFB Cash Vaults
    • Campuses are encouraged to use ACH debit blocks to restrict unauthorized account access
wells fargo bank1

Cash Management

Wells Fargo Bank
  • Disbursement Accounts
    • Electronic
      • Wires
      • ACH (Automated Clearing House)
    • Paper
      • Positive Pay File
      • Controlled Disbursement
      • Perfect Presentment
      • Full Account Reconcilement
      • Image Retrieval

14

slide11

Consolidation to the CSU the Concentration Account

Bakersfield

Channel Islands

Chico

Dominguez Hills

East Bay

Fresno

Fullerton

Humboldt

Long Beach

Los Angeles

Maritime

Monterey Bay

Northridge

Chancellor’s Office

Pomona

Sacramento

San Bernardino

San Diego

San Francisco

San Jose

San Luis Obispo

San Marcos

Sonoma

Stanislaus

Systemwide

CSURMA

Bakersfield

Channel Islands

Chico

Dominguez Hills

East Bay

Fresno

Fullerton

Humboldt

Long Beach

Los Angeles

Maritime

Monterey Bay

Northridge

Chancellor’s Office

Pomona

Sacramento

San Bernardino

San Diego

San Francisco

San Jose

San Luis Obispo

San Marcos

Sonoma

Stanislaus

Systemwide

CSURMA

Bakersfield

Channel Islands

Chico

Dominguez Hills

East Bay

Fresno

Fullerton

Humboldt

Long Beach

Los Angeles

Maritime

Monterey Bay

Northridge

Chancellor’s Office

Pomona

Sacramento

San Bernardino

San Diego

San Francisco

San Jose

San Luis Obispo

San Marcos

Sonoma

Stanislaus

Systemwide

CSURMA

California State University

Master Depository Account

XXXX-XXXXXXX

California State University

Master ACH Disbursement Account

XXXX-XXXXXXX

California State University

Master Paper Disbursement Account

XXXX-XXXXXXX

ZBA

ZBA

ZBA

California State University

Concentration Account

XXXX-XXXXXXX

slide12

Cash Management

Cash Positioning

  • Calculation of Surplus or Shortage of available money
      • WFB
        • Prior day closing balance
        • Intraday check presentment
      • Net system wide cash needs
      • Shortage Redemption from U.S. Bank
      • Surplus Investment to U.S. Bank
      • Daily communication RMO – Treasury – U.S. Bank
      • Target balance should provide safety cushion while maximizing invested funds for the CSU
our cash management roles

Cash Management

Our Cash Management Roles
  • Cash Management at the Campus
    • Campus Cash Management Agents
      • Depository Agent
      • Disbursement Agent
  • Cash Management at the CO
    • Management of banking operations
    • Daily cash positioning
    • Calculating quarterly SWIFT earnings to campuses
    • Forecasting short term & long term cash requirements
cash forecasting

Cash Management

Cash Forecasting
  • Deposits
    • Generally occur on a scheduled basis
      • Student fees
      • Financial aid drawdowns
cash forecasting1

Cash Management

Cash Forecasting
  • Disbursements
    • Are generally known in advance
      • Vendor payments
      • Financial aid refunds
      • Payroll – April, May, June
campus investment earnings

Cash Management

Campus Investment Earnings
  • Distribution
    • Each quarter, SWIFT investment earnings are allocated to each campus based on the campus’ share of SWIFT’s average daily balance
      • The earnings are net of fees such as investment services , indirect costs, and banking fees
    • Each campus’ allocation of earnings is posted to their SWIFT account via a Cash Posting Order
    • Campus’ then allocate earnings to individual funds based on local rules
slide21

Systemwide Accounting

Systemwide Accounting

Kelly Cox

Manager, Systemwide Accounting

(562) 951 4611

kcox@calstate.edu

http://www.calstate.edu/acct/

topics1

Systemwide Accounting

Topics
  • Money Flow
  • Cash Posting Order (CPO)
  • Accounting for Investment Earnings
  • Year-End Reporting
  • Bank of CSU Statement
  • Bank of CSU Website
cash posting order cpo

Systemwide Accounting

Cash Posting Order (CPO)
  • Mechanism to move SWIFT dollars between campuses and the CO
      • Examples:
        • Redemption/Investment in SWIFT (Cash Positioning)
        • Charge for a product or service
        • Reimbursement of expenditures
        • Systemwide Allocation Transfer (SWAT)
        • Request for Cash Transfer Order (RCTO)
cash posting order cpo1

Systemwide Accounting

Cash Posting Order (CPO)
  • CPO Document
    • Memo
      • Accounting entry or entries to be posted in the campus ledgers
      • CO contact for questions / issues
    • Transfer Amount Schedule
      • Shows the amount of the increase (decrease) to the campus SWIFT account
    • Charge Detail
      • Shows the detail of the charges being assessed
    • Campus Contacts
      • Campus personnel contacts who are affected by the transaction
cash posting order cpo2

Systemwide Accounting

Cash Posting Order (CPO)
  • Systemwide Allocation Transfer(SWAT)
    • Supplemental campus funding from the Priority Fund
    • SWATs may only be used for Operating Funds (CSU Fund 485)
  • Request for Cash Transfer Order (RCTO)
    • CO department (e.g. Academic Senate) transfers funds to a campus for additional support or reimbursement
    • RCTO may only be used for Lottery Funds (CSU Funds 481) and Operating Funds (CSU Fund 485)
    • RCTO replaces the Charge Detail and Campus Contacts pages in the CPO document
accounting for investment earnings

Systemwide Accounting

Accounting for Investment Earnings
  • Investment Earnings are allocated to the SWIFT campus accounts
    • Allocated on quarterly basis
    • Campus records allocation in Pooled Investment Fund (CSU Fund 541) based on the CPO instructions
    • Income is allocated internally within campus funds according to that campus’ allocation policy
    • Net Income in the Pooled Investment Fund is zero at end of fiscal year
      • “no fund balance”
    • GAAP entry will be made to record June earnings and classify appropriately
accounting for investment earnings1

Systemwide Accounting

Accounting for Investment Earnings
  • Quarters are:
    • First Quarter = Jun, Jul, Aug
    • Second Quarter = Sep, Oct, Nov
    • Third Quarter = Dec, Jan, Feb
    • Fourth Quarter = Mar, Apr, May
      • Note: Campuses will receive an ADNOAT to record June earnings for GAAP adjustment purposes.
  • Benefits:
    • To record all investment earnings consistently across all campuses
    • To record in a timely manner for legal basis close
accounting for investment earnings2

Systemwide Accounting

Accounting for Investment Earnings
  • Campus investment earnings allocation are net of charges
    • Allowable Charges in the Pooled Investment Fund (CSU Fund 541)
      • Wells Fargo Bank charges
      • Investment Services
      • Chancellor’s Office Indirect support
accounting for investment earnings3

Systemwide Accounting

Accounting for Investment Earnings
  • Campus Quarterly Earnings Accounting Entries
  • SWIFT allocation to Campus of $1,500,000
    • Credit Fund 541, Acct 508001, Income from External Investments $1,500,000
    • Debit Fund 541, Acct 108090, Investments $1,500,000
  • Wells Fargo Bank (WFB) charges to campus of $2,500
    • Debit Fund 541, Acct 660046, WFB Charges $2,500
    • Credit Fund 541, Acct 108090, Investments $2,500
  • CO Indirect Support charges to campus of $2,500
    • Debit Fund 541, Acct 660047, CO Indirect Support $2,500
    • Credit Fund 541, Acct 108090, Investments $2,500
  • Investment Services charges to campus of $10,000
    • Debit Fund 541, Acct 660049, Investment Services $10,000
    • Credit Fund 541, Acct 108090, Investments $10,000
accounting for investment earnings4

Systemwide Accounting

Accounting for Investment Earnings
  • Accounting Entries for campus allocation of interest to other funds
  • Campus investment earnings allocation to other funds

$1,500,000 - $2,500 - $2,500-$10,000 = $1,485,000

    • Debit Fund 541, Acct 508001, Income from

External Investments $1,485,000

    • Credit Fund 541, Acct 108090, Investments $1,485,000

Important! Fund Balance in CSU Fund 541 should be zero at year end

    • Debit balance in 508001 will equal the combined balance in 660046, 660047 & 660049 so fund balance will net zero.
    • No due to or due from entries are required
accounting for investment earnings5

Systemwide Accounting

Accounting for Investment Earnings
  • Accounting Entries for campus allocation of interest to other funds –con’t
  • In CSU Fund 485, CSU Operating Fund
    • Debit Fund 485, Acct 108090, Investments $700,000
    • Credit Fund 485, Acct 508001, Income from

External Investments$ 700,000

  • Other CSU Funds in 0948
    • Debit to CSU funds, Acct 108090, Investments $ 785,000
    • Credit to CSU funds, Acct 508001, Income from Ext Investments $ 785,000

Important! Must record in special FNAT Key (127942) using FIRMS Project: INTAC RMP-Interest Income Activity

year end

Systemwide Accounting

Year-End
  • GAAP entry to record June earnings and classify appropriately
  • Campuses receive an ADNOAT July 27th for their June net earnings
  • Balance in CSU Fund 541 should be zero
  • The CO will provide an Audited Investment Rollforward schedule to KPMG campus audit teams by August 19th
bank of csu statement

Systemwide Accounting

Bank of CSU Statement
  • Campus WFB Balance and SWIFT Activity
    • For WFB Reconciliation
      • The WFB Statement is used for transactions reconciliation
      • The Bank of CSU is used for balance verification
    • For SWIFT Reconciliation
      • The Bank of CSU statement is used for both transaction and balance verification.
    • Distribution
      • CMO emails each campus their Bank of CSU statements by the 5th business day of the following month
bank of csu website

Systemwide Accounting

Bank of CSU Website
  • Your Campus SWIFT Balance
  • CSU Bank Statements
  • CPOs
  • ADNOATs
  • Allocation Orders
  • SWATs
  • SWIFT Earnings Report
bank of csu website2

Systemwide Accounting

Bank of CSU Website
  • CPO Detail
  • Save or Print Options
slide38

Investments

Investments

Colleen Zenger

Financial Manager

Financing & Treasury

(562) 951 4521

czenger@calstate.edu

http://www.calstate.edu/FT/

slide39

Investments

Topics

  • SWIFT (Systemwide Investment Fund – Trust)
    • Money Flow
    • Purpose and Background
    • Actors
    • Size and Performance
    • Portfolio Characteristics
slide40

Investments

SWIFT

  • Money Flow
slide41

Investments

SWIFT

  • Purpose
    • Priority of objectives:
    • Safety of Principal
    • Liquidity
    • Earnings / Return
  • Background
    • Established in July 2007
    • Invest in securities allowed by State government code
    • Investments further guided by the CSU SWIFT Investment Policy
slide42

Investments

SWIFT

  • Actors / Roles
    • Custody Bank - US Bank
        • Hold assets in safekeeping
        • Manage deposits to and redemptions from SWIFT
        • Collects interest income from assets
        • Arranges settlement of buys and sells
        • Reports on assets
slide43

Investments

SWIFT

  • Actors / Roles
    • Investment Managers - FAF Advisors and Evergreen
    • Manage assets
      • per Investment Policy
      • per ongoing communication with CSU
slide44

Investments

SWIFT

  • Actors / Roles
    • Financing and Treasury - Chancellor’s Office
        • Review Investment Managers’ performance
        • Review SWIFT portfolio alignment with Investment Policy
        • Quarterly SWIFT Performance Report
swift

Investments

SWIFT
  • Size and Performance
    • 1.6 Billion as of June 2008
    • 2.6 Billion as of January 2009
    • 4.54% return -12 months ended June 30, 2008
    • 2.69% return -12 months ended January 31, 2009
swift1

Investments

SWIFT
  • Portfolio Characteristics – January 2009
    • Highly Liquid
      • 39% of portfolio matures in 3 months
      • 74% of portfolio matures in one year or less
    • Quality / Safety
      • 80% of securities are rated at the highest possible level: AAA/Aaa or A-1+ / P-1
      • 55% invested in cash, U.S. Government or U.S. Agency securities
      • 45% invested in high –grade corporate securities