Allocation of Cash in Demand Accounts and Short term and Intermediate Fund Investments to Fund Groups
At the aggregate University level, the Financial Records System Claim on Cash object code "11XX" determines the value of cash in the three Demand bank accounts as listed below:
|Bank Account 1||Bank of America|
|Bank Account 2||Bank of America Payroll|
|Bank Account 3||Bank of America NDSL|
The demand bank accounts seldom have any cash balance. Cash is transferred to the bank demand accounts from the short term money market investment account right before checks are presented for payment. This is the reason why the claim on cash is usually a negative amount. The negative amount represents checks written that have not been paid.
Cash and Investment Accounts
Cash and investments are maintained in short term investment account (Designated fund account 316312-1211), Intermediate Term Fund (Designated fund account 316312-1223-1224) and in the State Treasury account (Educational & General fund account 118XX-1250-1261). The short term and intermediate term fund investments are managed by UTIMCO.
"Due To/Due From" Account Balances
There are instances where the university chooses to finance one fundís activities with cash accumulated in other funds. This is a situation where one fund borrows cash from another fund. This financial transaction is recorded in object codes 19XX (due from other funds) and 29XX due to other funds. The amount of the due to/due from transaction is determined by the negative combined claim on cash balance in a given fund. It is the universityís practice to use the Designated Fund cash balance to pre-finance cash transactions in other funds.
Claim on Cash and Investments at Fund Level
Both of the investment accounts as well as the Cash in State Treasury account are recorded in non cash object codes. The Cash in State Treasury account belongs to the Education and General fund where it is recorded, however, the investments are recorded in the Designated Fund but belong to the various other funds. This causes the claim on cash in the Designated Fund to be negative. The actual cash resources in a given fund group are determined by summarizing the claim on cash (11XX) balances, the cash in State Treasury (1250-1261) balances, the short term and the intermediate fund investments and the due to (19XX) due from (29XX) balances.
Allocation of Short Term and Intermediate Fund Investments to Fund Groups
As indicated above, the investment accounts are recorded in the Designated Fund and need to be distributed to the individual fund groups to which these investments belong. The distribution entries are performed once a year, after all the financial transactions have been recorded. The distributions are recorded in unique objects codes. The distribution process is as follows: the balance in the claim on cash in a given find group is allocated between cash in demand accounts, short term investments (cash equivalent) and intermediate fund (investments). The allocation percentage is determined by the ratios of the short term and intermediate term investments to the total of both investments. Please refer to sample illustration in Attachment I. There are exceptions to this method where a predetermined allocation would produce a misleading reporting result, such as allocating the claim on cash balance in the Guaranteed Student Loan accounts in the Agency fund to Investments. These funds are flow through funds and are never invested. A predetermined allocation percentage would always show a balance.
Last Updated: February 17, 2012