Post on 02-Feb-2016
description
Endowment Module
Norm Peacock, Assistant Director ITS Indiana University Foundation
Mary Wheeler, Kuali Project SpecialistCornell University
Kuali Endowment Module (KEM)
Based on the IU Foundation Endowment and Trust Accounting System (ETA)
The Scope of the KEM includes– transactions of the individual investments– managing the unitized investment “pools”– administering the funds that are the “owners” of
the investments
Out of Scope
• Gift Records System– fund raising activity - campaign goals and results
– donor contacts
– pledges- both conditional and unconditional
– gift payments
However, data elements that provide linkages between an external gift system and the Kuali Endowment Module
will be necessary.
Conceptual Diagram
Draft Gift / KEM / KGL Interfaces
All Gifts
Gift System
Optio
n 2
KEMInvestment PoolsDonor InstructionsInvestmentsFunds
Kuali GL
Investment Custodian
Option 1All Gifts
Invested Gifts
FFE andOther invested reserves
Non-Invested orSpendable Gifts
Investment Gift and Income Transactions
New Money Buys, Sells, Income,Gains, Losses
KualiNon-Kuali
Option 1
Option 2
LEGEND
General Requirements
• Accommodate security transactions at the individual security level or at the summary level
• Support both FASB and GASB reporting
• Capture and maintain donor restrictions and instructions for income/unspent funds
• Facilitate the management of “unitized” investment pool(s)
General Requirements
• Track “separately invested” securities, or non-pooled investments
• Maintain stewardship information for reporting to donors
• Route transactions for FYI/Approval
• Feed financial transactions to an institution’s General Ledger
KEM Features
• Investment tracking and reporting– number of shares, book, par and market values, CUSIP
number, investment category (stocks, bonds, real estate, etc.), and capital commitments.
– purchases and sales of investments; income earned, collected, accrued; management and custodial fees and commissions; and other investment related data.
– provide data to compare investment policy allocation targets to actual allocations and incorporate pending transactions (i.e. rebalancing).
– track investment commitments for limited partnerships and contributions made against these commitments.
KEM Features
• Investment participation management and reporting including unitized transactions– Investment pool data (number of units, market value per unit) for
all funds that participate in an institution's investment pool(s). – Quantify units purchased and sold, and calculate the gain or loss
on withdrawal. – Record investment income, realized gains, unrealized gains, and
fees to the various funds, either in the specific fund or in high level accumulation accounts.
– Track the net asset balance of a true endowment fund between its components of historical book value and accumulated earnings.
– Allocate either a budgeted payout to the income accounts affiliated with a principal account (based on pooled units), or actual income earned on separately invested endowment funds.
KEM Features
• Enable formula and/or actual income projections– Project the budgeted payout (based on pooled
units and an approved spending policy) – Project the anticipated actual income based on
declared dividends, bond holdings, etc. – Update current year income projections– Create spending policy reports by fund, account
#, college, dept, etc.
KEM Features
• Access to donor instructions– Capture and distribute the donor instructions
for a gift or endowment fund– link imaged document files to KEM accounts
and transactions
KEM Features
• Beneficiary disbursement process and tax reporting – For “split interest agreements” – disburse
payments to beneficiaries– Provide data for annual tax reporting– Update the actuarial calculation of the liability
for accounting adjustments.
Interface Diagram
Kuali Endowment Module (KEM) Conceptual Diagram (3/15/2006)
Inst
itutio
n F
inan
cial
In
form
atio
n S
yste
m
Transaction Module
KE
MO
usid
e K
uali
FIS
Out
side
KE
M Gift Processing Transaction
Interface
Transaction Import
Miscellaneous transactions
(spreadsheets)
Automated Investments
Income Distributions
Fee Transactions
Pool Management
Automated Disbursements and Transfers
Manual Transactions
E-DOCS(WORKFLOW)
Custodial Bank
Pool Valuation
KEM Transactions
KEM AccountData
Instructions
Donor Compliance
Ownership
GL Relationship
KEM Individual Data
Payees, Trust Beneficiaries,Account Authority,Users
Multiple Addresses and Relevant data for contact or payment
KEM Recurring Transaction Information
Automated Investments
Automated Income Distribution
Transfers and Disbursements
KEM Security and Holdings Data
Balance Data
Security TotalsKEM Account totals
CashInvestments
DailyHistorical
General Ledger Module
Scrubber PosterGeneral Ledger
Interface
GL Pending Entries
Payment Disbursement
Processing
Purchase Orders/
Accounts Payable
Accounts Receivable
Updates
Check PrintingACH file
Generation
External Pricing Service
E-Docs
Tax Reporting Service
Donor Relations Database
Kuali Chart of Accounts
Kuali Budgets
Relates to
Validates
Validates
Validates
Reporting Environment/
Data Warehouse
Actuarial Values
External SystemsBursar, Payroll,
Independent Billings etc.
Decision Support System
Imaged Documents
Student Information
System
Who is the Indiana University Foundation?
• Established in 1936– Not for Profit 501c3
• Generate private support for Indiana University (IU), a public university
• The majority of the monies generated are held and invested by the IUF for the benefit of IU.
• Financial information can be found at our website: www.iufoundation.iu.edu
The IUF Relationship with IU
• The IUF is independent of the university it serves.• Approximately 5000 individual accounts are
managed which benefit over 200 unique departments on 8 campuses.– Endowments– Expendable (Quasi) Endowments– Operating/Discretionary – Charitable Remainder Trusts and Charitable Gift
Annuities
• Invested assets under management total over $1.1 Billion dollars.
Business Functions of the IUF
• Development– Fund Raising
• Campaigns, Annual Gifts, Major Gifts, Planned Gifts
– Donor Relations• Reporting, Stewardship
• Investment Management– Cash and Non-Cash gifts
• Pooled Investments, Real Estate, Stocks, Bonds
– Charitable Trusts
• Account Administration– Account Management
• Payments from accounts, reporting
– Gift Administration
IUF Back Office Pre-1994
BROOKSIDE ASSET MANAGEMENT
ACCOUNT PORTFOLIO
LISTINGS
INVESTMENT ASSETS BOOK AND MARKET
INPUT ASSET TRANSACTIONS
INPUT MARKET VALUES
COLLEAGUE GENERAL LEDGER
CENTERPIECEMARKET
VALUATION
PRICING SERVICES
ACCOUNT TRANSACTION STATEMENTS
SPREADSHEETS
MANAGEMENT REPORTS
POOLED INCOME DISTRIBUTION
AUTOMATIC INVESTMENT
SWEEP
INPUT ACCOUNT
TRANSACTIONS
SWEEPS
SWEEPS AND DIVIDENDS
BOND DISCOUNT
AND PREMIUM
DISCOUNT AND
PREMIUM
ACCOUNTS PAYABLE
GIFT PROCESSING
CASH RECEIPTS
Operations at the IUF
• Trust Banking method of operation for 12 years.• Ability to receive deposits of cash or securities • Automated daily sweep of cash into and out of an
interest bearing (money market) fund.• Automated periodic investment of cash and money
market investments in long term investments.• Automated distribution of income• Ability to distribute income automatically or on
request. • Daily pricing of marketable securities.
IU Foundation Systems Overview
Donor DatabaseGift Processing(Both IU and IUF gifts)
Transaction ProcessingAccount Maintenance
Automated Cash Investment Automated Income Distribution
Asset ManagementInvestment Management Reports
Transaction and Balance Statements
Daily Transfer of IUF gift totals
by account
Daily Summary of Transaction
Totals (By Fund and Object Code)
Gift System
Endowment & Trust Accounting System
General LedgerBudget AccountingAccounts PayableEnterprise Funds
Fixed AssetsIUF Management Reports
General Ledger
Custodian Bank Asset
Data
Pool Pricing and Underlying Asset / Income Allocation
Database
IUF General System Requirements
• Flexible enough to change with our needs• Provide functionality to support our
business processes• Generate selected transactions
automatically• A single data source for endowment and
trust information • A fully relational database• Capable of interfacing to any gift or general
ledger system
Modular Design
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Accounts (Endowments and Trusts)
• All relevant account administration data– Open and close records– Ticklers– Account type– Associations with Fund and Unit
• Instructions– Transaction Restrictions
• Account Status, Agreement Documentation Status, Restrictions and authorizations
– Investment Instructions• Automated Investing, Daily and Periodic
– Fees
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Accounts
Accounts
Accounts
Accounts
Securities, Holdings and Cash
• Balances by Account– Current and historical– Cash– Securities
• Units, Carry Value, MarketValue, Accrued Income
• Securities Managed by the Organization– Current Values
• Units, Carry Value, Unit Value, Market Value• Security type• Interest rates and dividend per share, payment schedule
• Pooled Investment Fund Data – Current and historical unit values and distribution
amounts
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Balances by Account
Securities by Account
Securities Managed
Pooled Investment Funds
Transactions
• Unique transaction types– Cash, Asset and Liability
• Purchases, Sales, Deposits, Disbursements• Increase, Decrease or Transfer
– Special types• Original Gift Value Adjustment• Holding Unit Adjustment• Corporate Reorganization• Trust Asset Transfer
• Multiple entry methods– Recurring transactions– Imported Transactions
• Gift Transactions, Spreadsheets– Daily Processes
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Transactions
Transactions
Transactions
Recurring Transactions
• Investment Models– Cash Sweeps (Money Market Investments)– Pooled Funds
• Scheduled Transactions– Transfers– Disbursements
• Automated Processes– Interfaces– Batch
• Daily• Monthly• Annual
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Investment Models
Investment Models
Scheduled Transfer
Scheduled Disbursement
Automated Processes
• Interfaces– Importing Gift Transactions– Security Pricing– Exporting General Ledger Entries– Updating Database used for Web Inquiries
Daily Nightly Batch Processes
• Daily– Transaction Import– Large Batch Posting– Accrual Transactions – Accrual Calculations– Recurring Transactions– Pooled Fund Distributions– Automated Cash Investments– Cash Sweeps– Pooled Fund Control Accounts Summary Transactions– Change Reporting– Date Frequency Roll Process
Periodic Nightly Batch Processes
• Monthly– Cash Balance Archive– Holding Balance Archive– Seasonal Address Update– Fee Assessment Transaction Process
• Year-End– Update Original Gift Values
Individuals
• Payees, Account Signers, Users• Name and Address records
– Home, Business, Campus, Seasonal
• 1099 reporting– Independent Contractor,
NRA
• Bank Depository – ACH or Wire Transfer
• Associated Accounts
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
Individuals
User Security
• Screen level– Read, Write , Exclude
• Defined Groups
ACCOUNTSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
USER SECURITY
User Security
Investment Tracking and Reporting
• Tracking Managed Securities – Holdings by Security
• Current Position• Share Price• Income information
– Holdings by Endowment• Current and Historical• All Holders List• Holding Detail
• Securities Transactions– Purchases and Sales– Corporate Actions– Accrued Income Calculations– Income Distributions
Investment Tracking and Reporting
SECURITY
PK,FK1,FK3,U1,I2,I1 SECURITY_ID
SECURITY_DESCRIPTION SECURITY_TICKER_SYMBOL SECURITY_UNITS_HELD SECURITY_ISSUE_DATE SECURITY_MATURITY_DATE SECURITY_RATE SECURITY_DIV_RECORD_DATE SECURITY_EX_DIVIDEND_DATE SECURITY_DIV_PAY_DATE SECURITY_DIV_AMOUNT SECURITY_INCOME_CHG_DATE SECURITY_INCOME_PAY_FREQ SECURITY_INCOME_NEXT_PAY SECURITY_UNIT_VALUE SECURITY_VALUE_DATEFK2,U1 SECURITY_CLASS_CODE COMMITMENT_AMOUNT PREVIOUS_UNIT_VALUE PREVIOUS_UNIT_VALUE_DATE UNIT_VALUE_SOURCE SECURITY_CARRY_VALUE LAST_TRANSACTION_DATE FOREIGN_WITHOLDING_PCT
HOLDING_TAX_LOT
PK,I1 ACCOUNT_NUMBERPK,I1 SECURITY_IDPK REGISTRATION_CODEPK HOLDING_LOT_NUMBER
HOLDING_ACQUIRED_DATE HOLDING_UNITS HOLDING_COST HOLDING_PRIOR_ACCRUED_INC HOLDING_FOREIGN_TAX_WITHH HOLDING_MARKET_VALUE LAST_TRANSACTION_TS HOLDING_ACCRUED_INCOME_DU
CLASS_CODE1
PK,I1 SECURITY_CLASS_CODE
SECURITY_CLASS_CODE_DESC SECURITY_REPORTING_GROUP SECURITY_ACCRUAL_METHOD OBJECT_CODE SECURITY_INCOME_POST_CODE
HOLDING_HISTORY1
PK,I2 ACCOUNT_NUMBERPK SECURITY_IDPK REGISTRATION_CODEPK,I1,I2,I3 HOLDING_HISTORY_DATE
HOLDING_TOTAL_UNITS HOLDING_TOTAL_COST HOLDING_ANNUAL_INC_EST SECURITY_UNIT_VALUE HOLDING_MARKET_VALUE QTR_AVG_MARKET_VALUE
Managed Securities
Managed Securities
Current Holders
Historical Holders
Securities Transactions
TRANSACTION_SECURITY
PK,FK1 TRANSACTION_ID
SECURITY_UNITS SECURITY_ORIGINAL_COST SECURITY_PRICE_PER_SHARE SALE_SHT_TERM_GAIN_LOSS SALE_LNG_TERM_GAIN_LOSS SALE_PROCEEDS DONOR_ID REPRESENTATIVE DAILY_ACCRUAL_AMOUNT HOLDING_LOT_NUMBER OVERRIDDEN_CARRY_VALUE
TRANSACTIONS
PK,U4,U1,U2,U3,I1,I3 TRANSACTION_ID
U4,I10,I11,I1,I4 BATCH_IDU4,I10,I1,I4,I5 TRANSACTION_CREATED_DATEI9,U4,I10,I1,I4 TRANSACTION_TYPEU4,I10,I1,I4 TRANSACTION_ENTRY_STAFF_ID TRANSACTION_SUPER_STAFF_ID TRANSACTION_SOURCEI12,U3,I2 ACCOUNT_NUMBERI12,I6 TRANSACTION_POSTED_DATEI8 TRANSACTION_STATUSI12 OBJECT_CODE OGV_AMOUNT OGV_INDICATORI7 INCOME_CASH_AMOUNT PRINCIPAL_CASH_AMOUNT TRANSACTION_DESCRIPTION OLD_TAX_CODE TRANSACTION_REVERSED REVERSING_TRANSACTION_IDU1,U2 SECURITY_ID REGISTRATION_CODE OVERRIDE_EXPLANATION
SECURITY
PK,FK1,FK3,U1,I2,I1 SECURITY_ID
SECURITY_DESCRIPTION SECURITY_TICKER_SYMBOL SECURITY_UNITS_HELD SECURITY_ISSUE_DATE SECURITY_MATURITY_DATE SECURITY_RATE SECURITY_DIV_RECORD_DATE SECURITY_EX_DIVIDEND_DATE SECURITY_DIV_PAY_DATE SECURITY_DIV_AMOUNT SECURITY_INCOME_CHG_DATE SECURITY_INCOME_PAY_FREQ SECURITY_INCOME_NEXT_PAY SECURITY_UNIT_VALUE SECURITY_VALUE_DATEFK2,U1 SECURITY_CLASS_CODE COMMITMENT_AMOUNT PREVIOUS_UNIT_VALUE PREVIOUS_UNIT_VALUE_DATE UNIT_VALUE_SOURCE SECURITY_CARRY_VALUE LAST_TRANSACTION_DATE FOREIGN_WITHOLDING_PCT
HOLDING_TAX_LOT
PK,I1 ACCOUNT_NUMBERPK,I1 SECURITY_IDPK REGISTRATION_CODEPK HOLDING_LOT_NUMBER
HOLDING_ACQUIRED_DATE HOLDING_UNITS HOLDING_COST HOLDING_PRIOR_ACCRUED_INC HOLDING_FOREIGN_TAX_WITHH HOLDING_MARKET_VALUE LAST_TRANSACTION_TS HOLDING_ACCRUED_INCOME_DU
• Income Accrual Methods– Automated Cash Management – This is the accrual mechanism for “money
market” type accounts. It will calculate daily based on the holdings of each date and add the amount to the total interest due to the account holder.
– Dividend –The total dividend amount to be paid to the holder of a security based on the ex-dividend record date, units held, dividend amount and payment date. These accrual amounts will be calculated periodically, based on the ex-dividend date.
– Treasury Notes and Bonds – Daily accruals are calculated based on the number of days in the six months prior to the semiannual payment date.
– Discount Bonds – Accruals are calculated daily but will never be paid to the account holder until the security reaches maturity or is sold.
– Mortgage Pass-Through 30 –This is not a true daily accrual. The total income due is recomputed daily. It assumes that payments are made one month in arrears (30 days) on the 15th of the month.
– Mortgage Pass-Through 60 – Like the previous method except that it assumes that payments are made 2 months in arrears (60 days) on the 15th of the month.
– Time Deposits – Simple interest calculations, not compounded. Payment frequencies will vary depending upon the instrument
Accrued Income Calculations
Investment Participation Management
• Pool Control Account (Master Trust Account)
– Holder of all Pool Investment Assets• An endowment uses cash to purchase units of the pool,
increasing the principal cash asset of the control account.
• When an endowment sells units of the pool, the principal cash asset is reduced.
• Excess principal cash is transferred to a manager for investment in appropriate assets.
– Receives all investment income from the investments• Dividend and interest posted as income cash in the control
account
• Distributions to the endowments reduce income cash in the control account
Pool Control Accounts
Pooled Equity Fund
Investment Managers and Bank Custodial Accounts
Mutual Fund Index FundMulti-Strategy Equity Fund
Other Holdings Including
Real Estate Pooled Bond Fund
Accounts Holding Pooled Equity Fund
Accounts Holding Pooled Fixed Income Fund
572,704 UNITS
Accounts Holding Pooled Long-Term Fund (Income)
Accounts Holding Pooled Long-Term Fund (Principal)
Pooled Long-Term Fund (Income)
55,217,334 UNITS
4,333,684 UNITS 1,314,259 UNITS
Pooled Long-Term Fund (Principal)
651,694,378 UNITS
15,415,032 UNITS51,191,224 UNITS
2,714,442 UNITS
Manager 1 Assets at
Market Value
Manager 2 Assets at
Market Value
Manager 3 Assets at
Market Value
Manager 4 Assets at
Market Value
Manager 5 Assets at
Market Value
Manager 6 Assets at
Market Value
Bond Manager 1 Assets at
Market Value
Bond Manager 2 Assets at
Market Value
Bond Manager 2
Bond Manager 1
Manager1 Manager 2 Manager 3 Manager 4 Manager 5 Manager 6
POOLED FUND CONTROL ACCOUNTS
(MASTER TRUST ACCOUNTS)
ETA ACCOUNTS
Pooled Funds and Control Accounts
Pooled Fund Values
Pooled Fund Investment Models
Account Investment Models
Automated Purchase Transaction
Automated Sale Transaction
Investment Participation Management
Investment Participation Management
Endowment and Trust Accounting
• Account Management
• Investment Management
• Automated Functions
• Relational Database
• Multiple Reporting Options– ODBC – User-Designed Daily and On Demand Reports– Web Access
Endowment and Trust Accounting
Progress to Date
• Mapped the IUF-ETA Transaction screens to the KEM Transaction Flow
• Developed the Conceptual and Physical Data Models for the KEM, incorporating the approved enhancements
• Developed a resource estimate based on current IUF-ETA functionality and approved enhancements
Next Steps
• Begin populating physical data model with sample KEM data
• Develop basic reports
• Create functional specifications for each transaction screen
• Recruit development partners
• Establish detailed project plan
Programming scheduled to begin July 2006
Questions?
For progress updates
www.kuali.org