Note X – Deposits and Investments

Note X – Deposits and Investments

Investments are reported at (amortized cost/face value/fair value). [1] Deposits and investments by type at December 31, 20XX are as follows:

Also see Instructions 2, Instructions 3 and Instructions 4.

It is the (city/county/district’s) policy to invest all temporary cash surpluses. The interest on these investments is prorated to the various funds (or if not prorated, explain your unique circumstances). [5]

Investments in the State Local Government Investment Pool (LGIP)

The (city/county/district) is a voluntary participant in the Local Government Investment Pool, an external investment pool operated by the Washington State Treasurer. The pool is not rated and not registered with the SEC. Rather, oversight is provided by the State Finance Committee in accordance with Chapter 43.250 RCW. Investments in the LGIP are reported at amortized cost, which is the same as the value of the pool per share. The LGIP does not impose any restrictions on participant withdrawals.

The Office of the State Treasurer prepares a stand-alone financial report for the pool. A copy of the report is available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington 98504-0200, online at www.tre.wa.gov.

Investments in (county investment pool) [6]

The (city/county/district) is a (voluntary/involuntary) participant in the (county investment pool), an external investment pool operated by the County Treasurer. The pool is not rated or registered with the SEC. Rather, oversight is provided by the County Finance Committee in accordance with RCW 36.48.070. The (city/county/district) reports its investment in the pool at (amortized cost/fair value), which is (the same as the value of the pool per share/or disclose the difference between the reported amount and the value of pool shares). (The pool does not impose liquidity fees or redemption gates on participant withdrawals/disclose any liquidity fees or redemption gates).

Custodial Credit Risk [7]

Custodial credit risk for deposits is the risk that, in event of a failure of a depository financial institution, the (city/county/district) would not be able to recover deposits or would not be able to recover collateral securities that are in possession of an outside party. The (city/county/district’s) deposits and certificates of deposit are mostly covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC).

All investments are insured, registered or held by the (city/county/district) or its agent in the government’s name.

Other Disclosures [8]

Instructions to preparer

[1] Investments may be presented at amortized cost, face value or fair market value. With amortized cost, interest earnings are recorded when earned. With face value, interest earnings are recorded only when received. With fair value, unrealized changes in fair value are recorded as interest revenue. If presentation varies by investment type or fund, these differences must be described.
Return to Reference 1

[2] If cash on hand is not significant, governments may report it as part of the “Bank Deposits” category.
Return to Reference 2

[3] The total deposits and investments disclosed in this column should equal total ending cash and investments reported on the Statement C4.
Return to Reference 3

[4] The total deposits and investments disclosed in this column should equal total ending cash and investments reported on the Statement C5. If the government does not report any fiduciary funds, then this column should be deleted.
Return to Reference 4

[5] Disclose any income from investments associated with one fund that is assigned to another fund. See Sweeping Interest and Investment Returns into General Fund for legal requirements related to interest diversion.
Return to Reference 5

[6] Participants in external investment pools must disclose:

• For pools that are not SEC-registered, a brief description of any regulatory oversight for the pool and whether fair value of the position in the pool is the same as the value of the pool shares. • Whether participation is voluntary or involuntary.

• Whether investments in the pool are reported at amortized cost or fair value.

• For pools reported at amortized cost, any limitations or restrictions on withdrawals from external investment pools (such as redemption notice periods, maximum transaction amounts, and the external investment pool’s authority to impose liquidity fees or redemption gates).

• If the government cannot obtain information from a pool sponsor to make one or more disclosures, the government’s understanding of the pool should be disclosed along with the fact that the government was unable to obtain confirmation from the pool about this understanding.
  Return to Reference 6

[7] If the city/county/district deposits are not entirely insured, disclose the amount that is uncollateralized. If investments are uninsured, unregistered and held by the counterparty’s trust department or agency in the government’s name, disclose the circumstances.
Return to Reference 7

[8] Additional disclosures are needed if the government holds any of the following types of deposits or investments:

If the government participated in any securities lending transactions during the period, disclose the type of securities lent and collateral received, the amount by which the value of the collateral provided is required to exceed the value of underlying securities, any loss indemnification, whether the maturities of the investments made with cash collateral generally match the maturities of their securities loans, amount of credit risk, if any, related to the securities lending transactions and any losses resulting from defaults.

• If the government used, held, or sold any derivatives or similar instruments during the period covered by the financial statements, it must disclose the nature of transactions, objective for entering into transactions, the notional amount, effective date and other significant terms and the fair market value of the derivatives as of fiscal year end.

• If the government has any compensating balance agreements (See BARS Manual 3.2.5, Compensating Balances) with banks in lieu of payments for services rendered, disclose the average compensating balances maintained during the year.

• If the government has any deposits or investments denominated in foreign currency, disclose the US dollar value, organized by each different foreign currency denomination and type of investment.
  Return to Reference 8