Transcript Kuali Project Update IUB Symposium 11/2/04

Kuali Endowment Module (KEM)
November 18, 2008
Marlene Moldenhauer
University of Arizona
Norman Peacock
Indiana University Foundation
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KEM Presentation Agenda
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Why Endowments?
Project Summary
KEM Overview
KEM Features
Note: Reference and additional materials available in the back of
presentation.
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Why Endowments?
Significant Institutional Resource
• 2007 NACUBO Endowment Study
– 785 respondents
– Over $411 Billion total value
• From $571,000 to $34,634,906,000 in assets
“…an increase of more than $71 billion from NACUBO’s 2006
study. As a result, according to NACUBO estimates, this oneyear increase in endowment assets being managed by colleges
and universities will generate approximately $3.25 billion in
additional revenue during the current fiscal year to pay for
institutional programs and initiatives.”
NACUBO, January 24, 2008
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Why Endowments?
Increased Public Awareness and Scrutiny
• Excerpt from letter to 136 college and university
presidents from US Senate Committee on
Finance, January 25, 2008:
“We would appreciate additional information about tuition costs and
your institution’s endowment. University endowments receive very
generous tax breaks under the Internal Revenue Code. We want
to better understand how these tax benefits for higher education
endowments are improving education and making undergraduate
studies more affordable for low and middle income families today.”
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Why Endowments?
Increased Legislation
• Uniform Prudent Management of Institutional
Funds Act of 2006 (UPMIFA)
– Updates principles established by UMIFA (1972)
– requires investment “in good faith and with the care an ordinarily
prudent person in a like position would exercise under similar
circumstances.”
– states that the institution “may appropriate for expenditure or
accumulate so much of an endowment fund as the institution
determines to be prudent for the uses, benefits, purposes and
duration for which the endowment fund is established.”
– Enacted by 20 states, pending in 12 others
National Conference of Commissioners on Uniform State Laws
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Why Endowments?
Increased Regulations
• Proposed FASB FSP 117-a
Endowments of Not-for-Profit Organizations: Net Asset Classification of
Funds Subject to an Enacted Version of the Uniform Prudent Management of
Institutional Funds Act, and Enhanced Disclosures
– Guidance on the net asset classification of donor-restricted
endowment funds
– Additional financial statement disclosures:
• governing board’s interpretation of the law that underlies the net asset classification of
donor-restricted endowment funds
• description of endowment spending policies
• description of endowment investment policies
• reconciliation by financial statement net asset class that shows cumulative investment
returns (“roll-forward”)
• composition of an organization’s endowment by financial statement net asset
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classification (donor vs board designated endowment funds)
Project Summary
History of KEM project
• Kuali Financial System (KFS) based on Indiana
University’s existing FIS system
– Endowment management not part of FIS so not
considered part of the core scope
• Interested Kuali partners reviewed existing
applications
– Selected IU Foundation’s Endowment and Trust
Accounting System (ETA) to be the base
• Determined KEM should be a stand-alone system
(could be implemented without KFS)
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Project Summary
KEM Subject Matter Experts
• Indiana University Foundation
– Norman Peacock, Lead SME
• Cornell University
– Gail Thayer, Kim Yeoh, Ming Bengtsson
• Indiana University
– Bill Buskirk, Amoret Heise
• NACUBO
– David Lyons
• San Joaquin Delta College
– Shelley Pierce
• University of Arizona
– Marlene Moldenhauer, Marilyn Overpeck, Lindsey Lee
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Project Summary
Current Status of KEM project
• Completing the development of functional
specifications
• Programming scheduled to begin in first
quarter 2009
• Target completion date July 2010
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KEM Overview
Endowment System
Daily Transfer
of gift totals
by account
Transaction Processing
Account Maintenance
Automated Cash Investment
Automated Income Distribution
Asset Management
Investment Management Reporting
Donor Statements
Transaction and Balance Statements
Gift System
Donor Database
Gift Processing
Daily Summary
of Transaction
Totals
General Ledger
Pool Pricing and
Underlying Asset /
Income Allocation
Database
Custodian
Bank Asset
Data
General Ledger
Budget Accounting
Accounts Payable
Enterprise Funds
Fixed Assets
Financial Management Reports
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KEM Overview
• KUALI Features
– Kuali standard architecture
– Web-based technology utilizing electronic
documents
– Integrated workflow for transaction generation
and approval
– Flexible, robust data structures; facilitates
data warehousing for decision support
– Institutionally defined custom attributes
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KEM Overview
• Productivity Features
– Consolidates endowment accounting
functions in a single application
– Defined interfaces to external systems
– Enhanced access to donor documents
– Includes ticklers to serve as task reminders
– Automated and recurring transactions
– Group and report endowments based on
user-defined criteria
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KEM Overview
• System Features
– Stand-alone application
– Inquiry with drill-down capabilities
– Supports UMIFA requirement to track
underwater endowments
– Supports donor due diligence and
stewardship
– Supports trust accounting
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KEM Overview
Modular Data Design
KEMID
RECURRING
TRANSACTIONS
SECURITIES,
HOLDINGS AND
CASH
INDIVIDUAL
TRANSACTIONS
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KEM Overview
• Common Kuali document components
– Document header information
• Doc number, Status, Initiator, Created
– Tabs
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•
•
•
Document Overview
Notes and Attachments
Ad Hoc Recipient
Route Log
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KEM Features
Sample KEMID Maintenance Document Screen
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KEM Features
KEMID Features
• KEMID Maintenance
– Stores long title
– Identifies organization responsible for
administering endowment/trust
– Tracks date KEMID was established
– Captures purpose
– Allows for restriction of certain transactions
– Tracks status of KEMID
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KEM Features
KEMID Features (cont’d)
• Agreement Description
– Identifies type of agreement
– Tracks status of agreement and changes to
the agreement
– Place to list other documents on file
– Can include other comments and unique
donor instructions
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KEM Features
KEMID Features (cont’d)
• Benefitting Organization(s)
– Identifies the organization(s) that will benefit
from the endowment/trust
– If multiple benefitting organizations, allows
tracking by percentage or dollar amount
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KEM Features
KEMID Features (cont’d)
• Account Responsibility
– Identifies individual(s) responsible for
monitoring KEMID
– Assigned with date parameters
– Can be incorporated into the document
workflow by the organization
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KEM Features
KEMID Features (cont’d)
• Use Restriction
– Categorizes donor imposed restrictions
– Allows for additional, more detailed
instructions
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KEM Features
KEMID Features (cont’d)
• Source of Funds
– Identifies original source and date of funds
– Tracks original gift value
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KEM Features
KEMID Features (cont’d)
• Investment Instructions
– Assign “models” for investing income cash
and investing principal cash
– Automate movement of funds in and out of
investment vehicles
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KEM Features
KEMID Features (cont’d)
• Fee Instructions
– Identifies what type of fees should be charged
– Allows allocation to income or principal
– Provides date parameters
– Indicates whether fees should be accrued
– Allows for waiver of fees
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KEM Features
KEMID Features (cont’d)
• Payout Instructions
– Provides instructions for endowment payout
– Allows payout to be split by percentage or by
dollar amount
– Can link payout to multiple KEMIDs or general
ledger accounts
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KEM Features
KEMID Features (cont’d)
• Reporting Codes
– Links KEMID to the Council for Aid to
Education (CAE) standard reporting codes
– Organization may create additional reporting
criteria according to need
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KEM Features
KEMID Features (cont’d)
• Ticklers
– Enables date driven ticklers
– Can establish frequency and end date
– Identifies who should receive tickler
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KEM Features
Securities, Holdings and Cash (SHC)
• Securities
– Tracks separately invested securities and investment
pools
– Current Values
• Units, Carry Value, Unit Value, Market Value
– Interest rates and dividend per share, payment
schedule
– Track by CUSIP, registration code, class code,
subclass code, reporting group
– Standard income accrual methods
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KEM Features
SHC Features (cont’d)
• Holdings Balances
– By security
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•
•
Current Position
Share Price
Income information
All Holders List by security
– By KEMID
• Current and Historical
• Tax Lots
• Holding Detail
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KEM Features
SHC Features (cont’d)
• Investment Pools
– Can establish dummy security representing
investment pool
• Endowments use cash to purchase units of the investment
pool security
– Control KEMID holds all investment pool activity
– Set and schedule distributions per unit
– Tracks current and historical unit values and
distribution amounts
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KEM Features
SHC Features (cont’d)
• Investment Models
– Can establish multiple models with
instructions for how and when to invest
income cash and principal cash
– Examples of models might include:
• Uninvested cash may purchase shares of a money
market pool nightly as a cash sweep
• Cash and money market pool funds may be used
to purchase shares of a long term pool monthly
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KEM Features
Transaction Processing Features
• Securities Transactions
– Purchases and Sales
– Free Receipts
– Corporate Actions
– Adjustements
– Accrued Income Calculations
– Income Distributions
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KEM Features
Transaction Processing Features (cont’d)
• Unique transaction types
– Cash, Asset and Liability
• Purchases, Sales, Deposits, Disbursements
• Increase, Decrease or Transfer
– Special types
• Original Gift Value Adjustment
• Holding Unit Adjustment
• Trust Asset Transfer
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KEM Features
Transaction Processing Features (cont’d)
• Multiple methods for transaction
generation
– Imported Transactions
• Gift Transactions interface
• Spreadsheets
– Daily Processes
– Recurring transactions
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KEM Features
Transaction Processing Features (cont’d)
• Recurring transactions
– Investment Models
• Cash Sweeps
• Pooled Funds
– Scheduled Transactions
• Income Distribution
• Transfers
• Disbursements
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KEM Features
Transaction Processing Features (cont’d)
• Automated Processes
– Interfaces
– Scheduled processing
• Nightly
• Monthly and Year-end
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KEM Features
Reporting Features
• Standard Reports
– Statement of Activity
– Balance Statement
• Institutionally defined ad hoc reporting
KEM Features
Special Trust Accounting Features
• Tracking by tax lots
• Flexible gain/loss calculations (FIFO, LIFO or
Average Balance)
• Beneficiary disbursements and tax reporting
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KEM Features
Other Features
• Name and Address records
– Home, Business, Campus, Seasonal
• 1099 reporting
– Independent Contractor, NRA
• Bank Depository
– ACH or Wire Transfer
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Opportunity!
Interested in KEM?!
• Will still consider new development partners
• Major benefits:
– Participate in decisions regarding functionality
– Develop local resource who is fluent in JAVA and
the ins and out of Kuali programming
• Implementation
• Customization
• On-going local support
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Thank you!
Questions?
For progress updates
http://www.kuali.org/
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Additional References
KEM Presentation
Supporting Materials
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Kuali Endowment Module
The Scope of the KEM includes
– Investment tracking and basic reporting
– Investment participation management and
standard reporting
– Budgeted payout and income projections
– Access to donor instructions
– Searchable data elements
– Beneficiary disbursement process and tax
reporting
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KEM Scope
• Investment tracking and basic 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.
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KEM Scope
• Investment participation management and standard
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.
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KEM Scope
• Budgeted payout and income projection
– Project the budgeted payout (based on pooled units
and an approved spending policy)
– Project the anticipated income based on declared
dividends, bond holdings, etc.
– Update current year income projections
– Create spending policy reports by fund, KEMID,
college, dept, etc.
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KEM Scope
• 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
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KEM Scope
• Beneficiary disbursement process and tax
reporting
– Disburse payments to beneficiaries (including
“split interest agreements”)
– Provide data for annual tax reporting
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KEM Interface Diagram
Outside KEM
Kuali Endowment Module (KEM) Conceptual Diagram (3/15/2006)
Gift
Processing
Transaction
Interface
Miscellaneous
transactions
(spreadsheets)
External
Pricing
Service
Pool
Valuation
Student
Information
System
Custodial
Bank
Tax
Reporting
Service
KEM Security and
Holdings Data
KEM
Transaction
Import
Income
Distributions
Automated
Investments
Fee
Transactions
Pool
Management
Automated
Disbursements
and Transfers
Manual
Transactions
E-DOCS
(WORKFLOW)
Updates
KEM Account
Data
Balance Data
Instructions
Security Totals
KEM Account totals
Donor Compliance
Imaged
Documents
KEM Individual
Data
Payees, Trust
Beneficiaries,
Account Authority,
Users
Ownership
Cash
Investments
GL Relationship
Daily
Historical
Validates
KEM Transactions
Donor
Relations
Database
Multiple Addresses
and Relevant data
for contact or
payment
Actuarial
Values
Reporting
Environment/
Data
Warehouse
KEM Recurring
Transaction
Information
Automated
Investments
Automated Income
Distribution
Transfers and
Disbursements
Institution Financial
Information System
Interface
Kuali Chart of
Accounts
Purchase
Orders/
Accounts
Payable
E-Docs
Payment
Disbursement
Processing
Accounts
Receivable
Relates
to
Kuali Budgets
Validates
GL Pending
Entries
Validates
Scrubber
Poster
General Ledger
Transaction Module
Ouside Kuali
FIS
General Ledger Module
Check
Printing
ACH file
Generation
External Systems
Bursar, Payroll,
Independent
Billings etc.
Decision
Support
System
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Baseline System of KEM
• Endowment Trust Accounting (ETA)
System used by Indiana University
Foundation is the baseline system of KEM.
• ETA will be “kuali-fied” – look-and-feel will
be Kuali but core design and functionality
will be based on ETA.
• On the next few pages are displayed some
of the KEM docs in progress and selected
ETA screens yet to be re-designed.
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What is a KEMID?
• KEMID – represents monies held and
invested for the benefit of a specific area
and to be used for a specific purpose.
One KEMID may be related to one or
many GL accounts.
• The unique name was developed so as
not to confuse it with the GL account
concept.
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KEMID Maintenance Tab
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KEMID Agreement
Description Tab
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KEMID Benefitting
Organizations Tab
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KEMID Account
Responsibility Tab
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KEMID Use Restriction Tab
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KEMID Source of Funds Tab
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KEMID Investment Instructions
Tab
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Automated Investment Flow
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KEMID
Fee Instructions Tab
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KEMID Payout Instructions Tab
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KEMID Reporting Codes Tab
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KEMID Ticklers Tab
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Create a New Security
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Accrued Income Calculations
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Income Accrual Methods
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–
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–
–
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Automated Cash Management – This is the accrual mechanism for “money
market” type KEMIDs. It will calculate daily based on the holdings of each
date and add the amount to the total interest due to the KEMID 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
KEMID 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
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KEMID Current Balance Lookup
This e-form allows the user to find the total market values for cash, assets and liabilities held by the
KEMID. The results will be only the totals broken down by values held as spendable (income) and
principal amounts along with a total for the entire KEMID. Additional detail is provided through the
drilldown functionality.
Next
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KEMID Balance Inquiry Tree
KEMID Current Balance Inquiry Showing Drill Down Path to Holding Lot Detail
Inquiry Criteria
Inquiry Results
KEMID and Codes Detail Results
Holdings by Group
Security Detail
Tax Lot Detail
(multiple rows in a grid)
(one record)
(One row for each Security #)
(One Record)
(One record)
KEMID Detail
Benef. Org. Detail
KEMID
Security Detail
(See Security
Inquiry)
Purpose Detail
KEMID Short Title
Tax Lot Holding Detail
Status Detail
Benefitting Organization
And Percent
KEMID
Balance Detail Results
KEMID Purpose Code
Tax Lots by Holding
(one row for each security type held)
(One row for each lot held)
Security Number
Security Description
Registration Code
Income Holdings
KEMID
KEMID Status Code
Benefitting Organization
Income Market Value
KEMID Purpose
(None Required)
(Search available on all)
Principal Market Value
Total Market Value
At Market
Cash and Equivalents
Market Value
Stocks
Holdings
(for the selected group)
Registration Description
Tax Lots
KEMID
KEMID
Market Value
Security Number
Security Number
Bonds
Market Value
Security Description
Security Description
Pooled Funds
Market Value
Registration Code
Registration Code
Registration Description
Registration Description
Alternative Investments
Market Value
I/P Indicator
I/P Indicator
Other Assets
Market Value
Units owned
Lot Number
Liabilities
Market Value
Carry Value
Date Acquired
Units owned
Market Value
Carry Value
Principal Holdings
Estimated Income
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At Market
Cash and Equivalents
Market Value
Stocks
Market Value
Bonds
Market Value
Pooled Funds
Market Value
Alternative Investments
Market Value
Other Assets
Market Value
Liabilities
Market Value
Estimated Income
I/P Indicator
Lot Number
Date Acquired
Units owned
Carry Value
Market Value
Estimated Income
Current Accrual
Prior Accrual
Last Transaction Date
Market Value
Estimated Income
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Investment Pools
This document enables the user to create a new pooled fund for internal investment by the endowments.
Specific criteria for the valuation and generation of offsets and general ledger values regarding the
Pooled Fund daily activity are included in the data record. The fields in this record will instruct the
system regarding the criteria for automated transaction generation and maintenance of the pool control
record in the KEM.
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Investment Models in ETA
Used to establish the investment options for the endowment and
when the automated investment will take place.
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ETA Asset Sale Transaction
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KEM Cash TransferTransaction
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ETA Recurring Transfer
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Automated Processes
• Interfaces
– Importing Gift Transactions
– Security Pricing
– Exporting General Ledger Entries
– Updating Database used for Web Inquiries
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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
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Nightly Batch Processes
• Monthly
– Cash Balance Archive
– Holding Balance Archive
– Seasonal Address Update
– Fee Assessment Transaction Process
• Year-End
– Update Original Gift Values
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KEM Standard Reports
The following seven reports will be delivered with the KEM module:
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–
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–
–
–
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Endowment Asset Statement
Endowment Transaction Statement
Endowment Transaction Summary
Non-Endowed Asset Statement
Non-Endowment Transaction Statement
Non-Endowment Transaction Summary
Trial Balance
Notes:
– Trial Balance – will include columns for available expendable cash and
estimated income for the balance of the fiscal year.
– All reports should have the capability to be run for organizational entities
or sequences including: department, division, school and campus, etc.
The trial balance report should also have the capability to be run by
endowment or account type.
– Additional internal and other reports needed by a KEM institution will be
run at the school using a reporting tool of each school’s choice.
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ETA Individual Record
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KEM Resource Estimates
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End of Additional Resources
Thank you for your continued support!
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