Cash and Investment Accounting for Year-End Presented by Lily Wang May 21, 2007

1. Cash and Investment Accounting for Year-End Presented by Lily Wang May 21, 2007

2. Agenda • Interim Guideline • Bank and Investment Reconciliation • Investment Earnings and Earnings Distribution • GAAP Impact

3. Interim Guideline • Cash in State Treasury • Un-remitted Cash held in state treasury must be recorded in object code 101001-General Cash. • Monthly balance in this object code should be reconciled to the state treasury bank statement. • Prior day activity inquiry on this account is available through the SCO terminal • SCO instructions describing this tool available here • Note: Remaining outstanding checks will continue to be honored, however campuses experiencing lengthy deficits in this account may be charged bank fees.

4. Interim Guideline • Wells Fargo Bank (WFB) • Per RMP interim guideline, all campuses must operate and invest out of object code 108090-Investments Other, as of June 30, 2007. • For those campuses currently operating out of 101006 and 108090, the recommended implementation of the guideline is to run a one-time allocation process at year-end to move the balance from 101006 to 108090. See attached below. • Note: There are some setup changes involved, so workload must be evaluated before proceeding. • As an interim step, campuses may accomplish the reporting requirement by changing the AAT key connected to the campus local Peoplesoft account established to represent WFB. • Campus will still want to make a change later under this approach to eliminate training issues with systemwide materials and local chart of accounts.

5. Interim Guideline • Year-End Balance before Allocation Process

6. Interim Guideline • Year-End Balance after Allocation Process

7. Bank and Investment Reconciliation • Through 06/30/07 - Third party documentations used to perform the monthly reconciliation of object code 108090 include: WFB statements, monthly CMO report, and Wachovia statement. • Effective 07/01/07 - Third party documentations to perform the monthly reconciliation of object code 108090 include: WFB statements, and the monthly “Bank of CSU” report that recap SWIFT activities.

8. Sample Bank and Investment Reconciliation at 6/30/07

9. Sample Bank and Investment Reconciliation at 7/31/07

10. Investment Earnings and Earnings Distribution • Interim Guideline requires investment earnings in SCO fund 0948 to be recorded in CSU fund 499

11. Annual GAAP Adjustment • For GAAP reporting, the cash and outstanding checks within the investments-other object code 108090 must be reclassified. • This reclassification entry needs to be reversed in the following year. • To determine the amount and account to reclassify to, a calculation must be performed to find the net cash balance (cash less outstanding checks).

12. Annual GAAP Adjustment • If the net cash is positive, then • Debit Cash • Credit Investments To properly reclassify cash and restore the investment balance. • If the net cash is negative, then • Debit Investments • Credit Accounts Payable (this is the net outstanding checks owed to WFB under the overdraft protection) To reclassify net outstanding checks and restore the investment balance.

13. Annual GAAP Adjustment • GAAP Adjustment to Reclassify Net Cash

14. Excel File of Illustrations • To view the entire illustrations used in this presentation, click on the Excel file below.