internship presentation - open accruals
TRANSCRIPT
Corporate Reorganizationand
Portfolio Accounting
Hetal PatelOperations Intern
April 6, 2009
Overview
Risks
Background: Open Accruals
Open Accruals: Why they exist
Current Process
Proposal A- Process
Proposal B- Report
Internship
Q&A
APPENDIX
Brandes Investment Partners
Risks
Corporate Reorganization Portfolio Accounting
Corporate actions miscommunication Cash balance discrepancies
Holdings discrepancies
Brandes Investment Partners
Focus: Open Accruals
Background: Open Accruals
What are open accruals? Pending transactions to be settled for cash after confirmation of receipt
Consequences Inflated market value Overbilling of client Inaccuracy
Brandes Investment Partners
Brandes Investment Partners
Bloomberg Reports
• Active Securities Report fed into Bloomberg
• Morning Report• 10-Day Report• New or Change Report
• Active spreadsheet – constantly updated
• Checked for dividends going ex today
Eagle STAR
• Final step – posted onto STAR• Pushed into the Recon application
Creating an Open Accrual
Corporate Reorganization
Open Accruals
Why they exist
Forecasted pay date
Long gaps between ex date and pay date
Company cancels the dividend
Some firms do not credit for very small dividend amounts
Data entry error
Multiple dividends grouped together by firm or PA
Brandes Investment Partners
Open Accruals ReportCurrent Report
Brandes Investment Partners
Original Goal:Generate a list of all open accruals so Portfolio Accounting can settle them
Features: TickerAccount TypeTransaction TypeMarket Value SettledAccounting DateSettlement DateLast Recon date
Open Accruals ReportCurrent Report
Brandes Investment Partners
Inefficiencies:
Uselessly comprehensive
Includes closed & SMA accounts, duplicates, some that are already settled
No active process to settle open accruals
Used when someone has time
Infrequent Requests
27, 126
Proposal A (Process)
Brandes Investment Partners
Project Objective: Design process to settle large amounts of open accruals in a timely and efficient manner :
Phase I: Immediately
Include an additional step to the reconciliation process to research and settle open accruals that are older than 1 month
Research Checklist Dividends Tab – check to see if these open accruals are exceptions Transaction Poster – check to see if the dividend was posted as MI Log Notes – check to see if account transferred
Time Required 2-3 months to clear out majority of open accruals
Research Flow Chart (Phase I)
Brandes Investment Partners
Dividends Tab – Check to see if the open accrual is an
exception STOP – Leave as open accrual
Transaction Poster- Check if the dividend was posted as MI/Sec or MI/Other for open
accrual amt
STOP – Settle Open Accrual
Log Notes- Check to see if
account transferred
YN
Y
N
STOP – Settle Open Accrual
Y
NSTOP –
Leave as open accrual
Proposal A (Process)
Brandes Investment Partners
Project Objective: Design process to settle large amounts of open accruals in a timely and efficient manner :
Phase II: After 3-4 Months
Request Systems to generate a report monthly of all open accruals
Time Required Less than 1 day to request and generate report
Proposal A (Process)
Brandes Investment Partners
Pros Cons
Shorter, more manageable list after Phase II Length of time
More open accruals settled in an organized process
Human error with researching open accruals
Improves accuracy of market value and billing
Proposal B (Open Accruals Report)
Brandes Investment Partners
Exclude Closed & SMA/WRAP Accounts
Include Market Value of Account
Include Open Accrual Value % of the Market Value Prioritize those open accruals that are .2% of the Market Value
Pros Cons
Excludes irrelevant information Length of time to have systems generate the report
Prioritizing open accruals that have more impact on market value of an account
Shorter, more manageable & useful report
Internship
Brandes Investment Partners
Exposure to different tasks – multitasking
Further exposure to Excel, PowerPoint
Teamwork
Presentation skills
Meeting deadlines
BIGGER PICTURE
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Q & A
APPENDIX- The Morning Report
Brandes Investment Partners
APPENDIX- The New or Change Report
Brandes Investment Partners