Procedures

Cash Management - Procedures

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1. Purpose and Objectives

The purpose of these procedures is to outline the way in which cash, in particular surplus operating cash funds, is managed and invested by the University.

2. Definitions, Terms, Acronyms

At Call - Cash funds that the University may, without penalty, obtain all amounts under the investment:

a) immediately upon providing notice to the entity in which the funds/investments are held; or

b) within 30 days after the notice is given to the entity in which the funds/investments are held.

3. Procedures Scope/Coverage

These procedures apply to the general cash management practices of the University. In particular, they address the manner in which surplus operating funds can be invested so as to maximise return.

The management of expense payment reimbursements, petty cash and cashier operations are not within the scope of these procedures. Information concerning those topics is located in PPL 9.45.03 Reimbursements, PPL 9.45.04 Petty Cash, and PPL 9.35.03 Receipting and Banking.

4. Procedures Statement

The University must ensure that there is sufficient liquidity in its cash investments so that cash is available to meet both planned and unforeseen requirements, and to maximise the return on funds commensurate with a conservative cash management strategy. The controls developed within these procedures acknowledge the conservative environment within which the University operates, and the restrictions imposed by the University of Queensland Act 1998, the Financial Accountability Act 2009 and the Statutory Bodies Financial Arrangements Act 1982.

The University may invest funds in accordance with the powers conferred in Part 6 of the Statutory Bodies Financial Arrangements Act 1982.

5. Cash Management

5.1 General provisions

Surplus operating funds may be invested in accordance with the Statutory Body Financial Arrangements Act 1982 so as to maximise return on funds.

Investment of surplus operating funds is the responsibility of the Treasury Unit within FBS.

An appropriate level of liquidity will be maintained so as to ensure funds are available to cover the payment of all expenses on any given day.

5.2 Available and at-call cash reserves

The University’s cash reserves, comprising a combination of cash and/or available drawdown facilities, should not fall below $120 million.

Available and at call cash reserves shall not fall below $60 million.

5.3 Cash flow management

A rolling, Cash Flow Forecast will be maintained. It is expected that a rolling monthly Cash Flow Forecast will be maintained for the next five to ten years.

5.4 Approved cash investments

Funds may be invested with multiple institutions; however investments must be made in accordance with counterparty limits specified within these procedures.

Approved cash management instruments include:

  • deposits with registered banks;
  • negotiable instruments;
  • term deposits with registered banks;
  • accredited cash management funds.

The use of interest rate options on cash balances is not permitted.

5.5 Maturity profile

The maturity profile of cash investments will be based on the operating cash requirements of the University as defined by the Cash Flow Forecast.

The value of investments maturing on a single day cannot exceed 20% of the total portfolio value, except when funds are required to match known commitments on the day.

Investments beyond twelve months must not exceed 20% of the portfolio. Any proposal to invest funds for a period exceeding twelve months must be approved by the Chief Financial Officer.

5.6 Counterparty transactions and limits

The University may buy and sell financial securities via registered banks and fixed interest brokers.

The University is prohibited from dealing with brokers as a principle i.e. the University is not allowed to accept a broker’s cheque, however, a broker settling with a bank cheque is permissible.

Appropriate records of all securities transactions will be maintained by the Treasury Unit within FBS.

All transactions will be made in the name of “The University of Queensland”. This also applies where securities are held on behalf of the University by a bank on trust.

Except for investment arrangements secured or issued by the Commonwealth or a State, the maximum amount that may be invested, at the time of placement, with individual financial institutions or cash funds are as follows:

As at 30 September, 2014

Rating Range

Long Term S&P

Rating Range

Short Term S&P

Limit

% of Operating Funds Portfolio

Limit

($ Value)

QTC or QIC

 

50%

$150 million

AAA

A1+

50%

$120 million

AA- to AA+

A1+

30%

$105 million

A- to A+

A1+, A1 & A2

25%

$90 million

BBB+ to BBB-

A2 & A3

20%

$60 million

Less than BBB- or unrated

B, C, &D

0%

Nil

In determining the limit that can be placed with individual financial institutions or cash funds, it is the lesser of the percentage and dollar limit.

Custodians
Chief Financial Officer
Mr Andrew Betts
Custodians
Chief Financial Officer
Mr Andrew Betts