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Transfer - Internal Investment Program

Distribution

Director of Accounting Services

GL Administrator

GL Accounting Manager

GL Accountant

GL Specialist

GL Viewer

Related Procedures

Journals - Processing Manual Journal Entries

Ownership

The Director of Accounting Services is responsible for ensuring that this document is necessary, reflects actual practice, and supports University policy.

Background

The Internal Investment Program (IIP) is a short-term investment vehicle with short-term returns that has the advantage of full liquidity.  The following are the steps necessary to invest.  

The source of funds has to be an allowable source.  This is determined by the award purpose code of the project or the nature of the deposit entry if the project does not have an award.  The following Fund Sources are allowable in IIP:

Calculating Funds Available

Run the Cash Balance by Project report from the Discoverer Database.  The available balance is the “Project to Date without Commitments” column sum at the bottom of the report.  A number with a dash in front indicates that cash is available.  If the project is linked to a Revenue Parent, run the cash balance report for the parent.  

Cash Balance = Project-to-Date Revenues – Project-to-Date Expenditures +/- Transfers – Investments

Investment Pools

Pool 1 (object code 1215) has a threshold of $10,000 and a minimum deposit period of 1 year. 

Pool 2 (object code 1216) has a threshold of $500,000 and a minimum deposit period of 2 years.

Pool 3 (object code 1217) has a threshold of $1,000,000 and a minimum deposit period of 3 years. 

Pool 1 pays the market base interest rate.

Pool 2 pays ½% more than Pool 1 annually.

Pool 3 pays ¾% more than Pool 1 annually. 

The penalty for not meeting the time or minimum investment balance criteria is typically the loss of one quarter’s interest.  This information will be available in more detail once the UVA Treasury Operations website is available (expected Fiscal Year 2009).

The thresholds indicate the minimum balance to maintain in the account.  You can always invest MORE than the minimum and divest that excess as needed.  This concept applies to all 3 pools.

Internal Investment Program Entries

The category for all Internal Investment Program entries is "UVA Transfer."

You are required to create journal entries to:

• Invest in the Internal Investment Program
• Divest from the Internal Investment Program

For steps on completing a Journal Entry see Journals - Creating

Note:  It is the responsibility of the department to initiate the journals to invest and divest funds.  Revenues are not automatically invested, except for IIP interest allocations.

Investing Funds:

Interest is allocated in the month after quarter-end based on the project’s quarterly average balance in the IIP.  This rate is based on short-term investment market performance.  The rate may vary slightly from quarter to quarter, but in general, the Annual Rate will be somewhere between 3.5 and 4.5% depending on the market performance and what pool the project is in.

This interest allocation is automatically reinvested on the day of allocation.  These are the only entries made centrally. If additional revenue is received, the department has the option to create another journal to invest those funds.

Divesting Funds:

If your project has a cash deficit or anticipated expenditures exceeding your existing cash balance, you will need to make a divestment entry.  The divestment entry will reduce the investment balance and increase the cash balance in your project. 

Effective: 05/03/08

Revision: 3 10/18/10 ybm6f

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