ctcLink Accounting Manual | 40.30.20 Accounting for Investments

40.30.20 Accounting for Investments

2022-06-30

40.30.20.1 Investment Authority

RCW 28B.10.928 authorizes the following types of investments for colleges and universities:

1. Bonds of any government in the state of Washington (dependent on credit rating):
2. General obligation bonds of any state or local government (dependent on credit rating).
3. Registered warrants of a local government in the same county as the institution of higher education making the investment.
4. Certificates, notes, or bonds of the United States, its agencies or corporations owned in majority by a US government agency.
5. Federal home loan bank notes and bonds, or government sponsored corporation.
6. Bankers' acceptances purchased on the secondary market.
7. Commercial paper purchased in the secondary market, subject to the investment policies and procedures adopted by the state investment board; and
8. Corporate notes purchased on the secondary market, subject to the investment policies and procedures adopted by the state investment board.
9. Local Government Investment Pool (LGIP) is a voluntary investment vehicle operated by the State Treasurer. The LGIP provides a safe, competitive investment option that allows for colleges and universities to utilize the LGIP’s resources to safely invest while achieving a competitive rate of return while allowing immediate access to cash. For additional information see the Washington State Treasurer’s (please link) website.

40.30.20.2 Internal Controls over Investments

State accounting rules require a subsidiary ledger balanced against the general ledger at least monthly and at fiscal year-end.

The subsidiary ledger must, at a minimum, include the following elements:

• Description of the item
• Identification number
• Location of security or collateral
• Date purchased (trade date)
• Interest rate (fixed income only)
• Interest dates (fixed income only)
• Issue date (fixed income only)
• Maturity date (fixed income only)
• Par or face value
• Cost
• Unamortized premium or discount (updated at least quarterly) (fixed income only, if applicable)
• Carrying value
• Fair value (updated at least quarterly)
• Date of sale (trade date) and sales amount

Each college must establish internal control policies that address, at a minimum, the following:

• The authority to purchase, exchange or sell investments and securities is to be clearly defined by the agency.
• Custody of securities is to be separate from the individual who is authorized to purchase, exchange or sell securities. Securities maintained by the agency shall be kept in a safe deposit box or locked vault with no one person having complete control over the combination or keys. Separation of duties is also achieved if securities are maintained by an outside agent.
• Subsidiary ledgers are to be maintained to record the details of each investment. Subsidiary ledgers are to be balanced to the general ledger at least monthly and at fiscal year-end.
• A schedule of maturities and interest payment dates is to be maintained and closely monitored to assure that all income due has been received.
• Periodic reviews of the investments are to be made and documented by authorized personnel.

 

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40.30.10.10 Internal Cash (1000199) <<  40.30.20.2 >>  40.30.20.3 Cash Equivalent Investments