Greg works with organizations in the private and public sectors to help them automate their investment accounting and reporting processes by finding solutions that the Clearwater platform provides. He has consulted extensively with corporations starting their investment portfolios through IPO’s or funding rounds as well as with other organizations that have had longstanding investment portfolios to allow technology to revolutionize investment operations.
Greg has a bachelor’s degree from Weber State University in Business Administration with an emphasis in Finance.
In his spare time, Greg enjoys watching the Utah Jazz, going to Disneyland, and playing putt-putt golf.
I recently had the pleasure of moderating a panel on investment policy compliance at the annual conference of the Oregon Association of County Treasurers and Finance Officers (OACTFO) in Klamath Falls, Oregon. It was a great event; thanks to the OACTFO for having us!
Monitoring compliance with an investment policy shouldn’t take up too much of treasury professionals’ already limited time. That being said, compliance monitoring is important and should not be neglected. We had a great discussion on these matters during the OACTFO panel. Jason Link, Treasurer and CFO, Klamath County, and Shannon Bell, Treasurer, Jackson County, shared what they’ve learned about using technology to monitor and report on compliance to their counties’ investment policies.
The following is a recap of three best practices we talked about in our discussion.
The four guiding principles of an investment policy, outlined below, are a good illustration of a government entity’s priorities.
From GASB filings to regulations at the state, county, and city levels, government entities have a lot to keep up with. Their main priority remains to stay within statutory requirements when compiling or reviewing an investment policy.
PRESERVATION OF CAPITAL
Since public funds are being invested, compliance policies often veer to the conservative strategy of choosing investments that have a more secure promise of return of principal.
For a government, investing in liquid assets is paramount. Though they come with a lower return, they offer the promise of immediate liquidity should any emergency situation occur.
There tends to be a gap between the first three principles and the fourth: returns. This is true not only in the public sector but also in the private sector. Governments especially face scrutiny from the public and have a heightened responsibility because they invest public money. Treasurers and finance officers are primarily tasked with safeguarding assets. Consequently, returns (and yields) are seen as more of an added benefit, rather than a primary goal.
Ensure you have the proper technological tools so you have the necessary information at your fingertips.
Jason Link, with Klamath County, pointed out that if something occurs that puts his county out of compliance, he is able to download the specific information from his reporting system and discuss the issue with his county’s investment manager. If a security were downgraded, as was the case the day of our presentation at OACTFO, he would decide whether to hold or to sell. Then, he would document the decision on his system for future audit reference.
Shannon Bell, with Jackson County, doesn’t have an investment manager, so she relies more heavily on her reporting system. She said she monitors the portfolio on her own and uses her reporting system to monitor all underlying risk (unrealized gains and losses, yield, maturity date, etc.) to decide whether to hold or sell. She also then notes resolutions in her system to keep track of what her decision was, and why she arrived at that decision.
Both Jason and Shannon also mentioned that their reporting systems allow them to stay on top of compliance violations because they get an automatic email notification, allowing them to be proactive rather than reactive to an error.
How often does a government need to report on its investments?
Oregon statute, like many other states, requires governments and their entities to provide a monthly investment report and an annual audit. Most provide inter-period reporting only as needed, such as when someone wants to know more about their county’s investments.
We asked how many county treasurers at OACTFO perform inter-period reporting, and very few people in attendance said they do so. This is in line with the results from Clearwater’s 2017 Government and Institutional Investment Survey Report, in which we asked government and institutional treasury professionals about their processes.
Transparency and reporting are topics that go hand in hand. During the panel, we discussed how because public transparency is so key for governments, it is important that a government entity provides a complete picture of its investments, not just returns. The public is more interested in the types of securities that are being invested in, where the assets are safely kept, etc. Being able to provide information on holdings improves the public’s trust in government treasuries.
Another way to increase transparency is to post your monthly compliance report online. For instance, Shannon said she downloads her monthly report and posts it on the county’s website for the public to view. She also provides all of her internal audit and stakeholder access to her reporting system to achieve as much transparency as possible.
Speaking at the OACTFO annual conference was a great experience. Special thanks to Shannon and Jason for participating in the panel, and to our audience for the great feedback!