TSPR Higher Education Protocols- Chapter 6

Chapter 6
Asset and Risk Management - Institutional Support

Managing the assets of a college or university, including both the cash and physical assets, is an ongoing challenge. Cash must be accounted for and invested in a prudent manner that ensures its safety while maximizing interest earnings and complying with the Public Funds Investment Act. Physical assets must be tracked and inventoried and fixed asset capitalization policies and procedures should mirror recommendations made by the National Association of Colleges and University Business Officers (NACUBO) and be in compliance with Governmental Accounting Stands Board (GASB) statements 34 and 36.
Further, institutions are required to report certain key information to Federal, State and private organizations. For example, colleges and universities are required to track certain assets through the State Property Accounting (SPA) system and to follow guidelines for disposal of assets tracked through that system.
While there is considerable crossover between the financial management and asset and risk management functions, this module looks at the asset and risk function of the institution in the following sections:
Part 1
6.A. Organization and Management
6.B. Cash Management, Cash Flow Forecasting and Petty Cash Funds
6.C. Investment Management, Investment Strategies and Public Funds Investment Act
6.D. Endowments
6.E. Fixed Asset Management, Tracking and Counting, Reporting and Surplus Property
Part 2
6.F. Insurance Coverage, Risk Management, Safety and Workers Comp
6.G. Bonded Indebtedness and Issuance
6.H. Accounts Receivable, Tuition and Fee Collection Process
6.I. Review and Evaluation of Contracting Process

PART 1
The material in this section should be considered a guide, rather than a complete list of requirements.
6.A. Organization and Management
Asset and risk management is most effective when an institution properly aligns its asset and risk functions, establishes strong systems of internal control and properly allocates staff resources to achieve the best results.
Data Needs

Organization chart(s) for the asset and risk functions
Listing of the number and type of employees for each section of the asset and risk function
Summary of functions/activities/job descriptions for each asset and risk function
Budget for the institution's asset and risk functions

Possible People to Interview
System officials (if appropriate)
President
Board members (as appropriate)
Vice president with assigned responsibility
Risk manager
Investment Officer
Legislative staff
Internal Auditor
Activities to Perform

6.A.1. Review the method of organizing the asset and risk of the institution; compare to a best practice institution's organization; compare to peer institutions.
6.A.2. Review and compare to peer institutions the number and type of staff dedicated to specific asset and risk functions.
6.A.3. Analyze the budget of the asset and risk functions and determine where and why significant budget changes have occurred within the organization.

Questions to Ask
How are the asset and risk functions organized? Is the management span of control appropriate? Is the reporting relationship with the system offices, president and board clearly defined? Is the chain of command followed?
How is the departmental budget tied to the institution's strategic plan? What is the process for assuring that departmental funds are budgeted in accordance with the institution's strategic plan?
Are there one or more financial standing committees of the board that regularly reviews the work of the asset and risk functions of the institution? Who represents the administration on these committees? Is the administrative representation on the committee adequate and appropriate?
Has the organizational structure changed recently? Over the last five years? Is the organization the most effective way to carry out the functions? Are staff dedicated to specific business functions?
Are staff cross-trained to perform different tasks? Are staff shared in different functions during peak operating times? Is there any overlap among functions being performed by one or more units? Are there any asset and risk functions that are better aligned with another institution department? Are there any functions that are centralized in the business office that would be better handled in the campuses and/or departments?
Are there any functions in the campuses and/or departments that would be better centralized in the asset and/or risk offices? Are there centralized functions that should be decentralized? Do the positions and titles of staff accurately describe their functions and responsibilities? How many levels of supervision exist and what is the reporting structure?
6.B. Cash Management, Cash Flow Forecasting and Petty Cash Funds
Developing an effective cash management program can provide an institution with additional revenues to fund essential programs and operations. Maximizing the return on invested funds while ensuring the safety and liquidity of investments has become a high priority. Effective cash management programs:

provide market rates of return through the use of various investment instruments;
are based on a comprehensive written investment policy approved by the board; and
allow personnel to become skilled in investment procedures and techniques and stay abreast of current money markets.

This module allows review of all facets of the cash management program. Key elements include the investment policy, depository bank relationship, controls over cash disbursements, use of cash flow forecasting and use of automated tools for sound management.
Data Needs

Policies and procedures
Depository contract
Bank account analysis
Investment portfolio
Cash flow forecasts
Organization charts
Job descriptions

Possible People to Interview
President
Vice president with assigned responsibility
Finance director
Director of information services
Administrative staff with assigned responsibility
Activities to Perform

6.B.1. Examine the organization and staffing charts and job descriptions for the cash management functions and interview staff to determine reporting arrangements, whether the organizational structure depicted on the chart reflects the actual organization of the department and document if it has been changed recently or repeatedly in the recent past or is anticipated to change in the near future and explain the background for changes. Include any contracted individuals or services or committees that oversee cash management in the organization chart and show the reporting relationship and who is responsible for monitoring the contracts.
6.B.2. Examine the staffing and budget of the cash management function. Determine whether or not the budget and staffing level compare favorably to industry standards. (within budget considerations).
6.B.3. Examine the depository contract and the related request for proposal and prepare a list of all of the major terms and conditions as they pertain to each bank account maintained by the institution.
6.B.4. Prepare a chart listing the institution's bank accounts, whether they are interest bearing and the rate of interest paid, the average daily balance in each account for the last year and the balance in the account at a point in time. In addition, list any accounts held with investment pools or other money market accounts that are also liquid.
6.B.5. Examine cash flow forecasts for the last year and review any documented procedures for creating the cash flow forecasts. Note the frequency of the forecasts, the level of detail captured by the forecasts and compare a sample of the forecasts with actual data to determine the degree of accuracy.
6.B.6. Examine bank reconciliation procedures and a sample of recent bank reconciliations for all institution accounts and determine whether reconciliations are done in a timely fashion and whether the accounts are then reconciled to the accounting records of the institution.

Questions to Ask
Does the institution have a defined and formalized cash management department or function? Do cash management staff have detailed job descriptions that outline responsibilities, set up a system of accountability and clearly define performance measures? Do key cash management staff possesses necessary background, experience and knowledge for performing cash management activities?
Do appropriate staff have the opportunity to attend cash management related continuing education programs and be involved in professional organizations (e.g., local cash management groups, TASSCUBO, Government Finance Officers Association)?
Does the organization structure allow for proper segregation of duties regarding executing, accounting and reviewing cash, debt and investment transactions? Are cash management personnel bonded or covered by an errors and omissions policy to protect the institution against losses? If so, what is the amount of the coverage?
Has the institution complied with relevant laws on placing its primary banking relationships out for competitive bid on a scheduled basis? When does the depository contract expire? Are banking relationships managed centrally and reviewed regularly? Is the number of bank accounts used by the institution limited to minimize idle balances and facilitate monitoring and control?
Are the institution's policies and procedures for petty cash funds sufficient to ensure the safety of the cash in those funds? What controls are in place to hold individuals accountable for the funds? Are petty cash funds for individual campuses consolidated into one master account or are they maintained individually? Who has access to these accounts? Who reconciles these accounts and are reconciliations current?
Are all bank accounts reconciled on a monthly basis? Who has central control over the opening and closing of bank accounts? Do written depository contract(s) exist with the institution's bank(s) that meet statutory requirements, including collateral required? What are the terms and conditions of the existing depository contract? When was it last bid? Are there other depository institutions in the area that offer additional services? Are all fees and other stipulations of the contract in the best interest of the institution?
Does the institution perform periodic analysis of bank relationships for performance and cost? How does the institution evaluate which payment method for bank services is most cost-effective (i.e., compensating balances, direct fee payments, net credit to institution if justified by average balances on hand, or a combination)?
Because the Federal Deposit Insurance Corporation only insures most bank accounts up to $100,000, how does the institution ensure that sufficient collateral is pledged to cover the balances kept in the depository bank or in investment accounts, where applicable? Who is responsible for regular monitoring of the quality of pledged securities? Is there regular monitoring to ensure that the amount of pledged securities is adequate? Review to assure that pledged an independent, third party safekeeping agent holds securities?
Who has access to cash in the central office? At the campuses? How does the institution ensure that cash taken in at the campuses is accurately reported and delivered to the central office or the bank? What other control mechanisms are in place to ensure that cash is not mishandled? Do couriers or armored car services pick up and deliver large cash deposits? Does the institution have a safe in which to lock all cash and negotiable securities? Does the institution have documented cash handling procedures for campus staff? For other groups that use petty cash funds including Dean petty cash funds? What procedures are used to ensure that all cash receipts are deposited daily, including cafeteria receipts? What processes ensure that the institution is meeting all current day bank deposit deadlines?
Who is responsible for performing cashflow forecasting? Does the institution do daily, weekly, monthly, quarterly, semi-annual, or annual cash flow forecasting and is the frequency sufficient to accurately project needs while providing the board and administration good management data such as early warnings if borrowing is required in the future? Does the institution attempt to match the amount and maturity of investments to the cashflow needs of the institution? Does cash flow forecasting provide a systematic approach for determining and coordinating the cash needs of the institution? How is the cash flow forecasting process tied to an overall financing/investment plan? Is the cash flow forecasting system automated?
How does the institution evaluate variances between actual cash flow and forecast cash flow and use this information to revise subsequent forecasts? Does the budget, key departments, board and faculty provide information for preparation of the forecasts as appropriate? What external sources of information are used to develop cash flow forecasts (e.g., interest rate assumptions, economic forecasts and governmental regulations)? Are short-term and long-term forecasts prepared to cover various time frames?
To improve cash flows, does the process and procedure for the payment of bills ensure that bills are paid on the latest possible date to still qualify for available discounts? Does the institution have controls in place to prevent unauthorized, improper or early cash disbursements including:

Assuring accounts payable disbursements are made according to the due date of the obligation?
Use of zero-balance accounts to fund disbursements for accounting reconciliation?
Safeguarding unused check stock with access available only to designated personnel?
Providing control procedures over outgoing wire transfers which include:
Use of passwords?
Limited number of authorized personnel?
Dual check authorization required?
Bank call back procedures?
Dollar amount limitations on transfers?
Confirmation of transfers performed by someone other than the initiator?
Requiring authorization by top administrative personnel for all significant cash transfers?

Are the institution's financing arrangements planned based on budgets and forecasts? Does all financing or borrowing comply with statutory and accounting requirements regarding borrowing or financing transactions? Are all indirect costs such as fees, compensating balance requirements, restrictions, etc., included in the determination of the true cost of debt? Are financing instruments selected based on availability, cost and legal concerns?
Do cash management hardware and software systems meet needs of the institution? Can the institution rapidly determine how much cash is on hand (cash position)? Does the system aid the institution in preparing cash flow forecasts?
6.C. Investment Management, Investment Strategies and Public Funds Investment Act
Data Needs

Policies and procedures
Summary of investment transactions, interest earnings and balances
Pertinent internal audit reports

Possible People to Interview
System staff with assigned responsibility, if applicable
President
Vice president with assigned responsibility
Administrative staff with assigned responsibility
External investment counselors or managers
Internal Auditor
Activities to Perform

6.C.1. Compile all investment policies, procedures and/or strategies and determine whether they are in compliance with VTCS Government Code �2256.005, whether internal operating procedures mirror board policy and whether internal procedures provide a level of detail to ensure that investment processes would continue in the event of staff turnover or sustained absences.
6.C.2. Prepare a list of board-approved investments and determine, to the extent possible, how these strategies positively or negatively impact risk or the yield on investments.

Questions to Ask
Does the institution have board approved written cash management policies, procedures and practices that meet current legal requirements mandated by Chapters 2256 and 2257, Government Code regarding investments, liquidity, safety of principal, diversity, marketability and internal accounting controls?
Has the board or designated investment committee adopted policies and strategies for the investment of cash? Does the board or designated investment committee review and revise strategies at least annually? How does the committee monitor investment activities to ensure that they comply with adopted policies or procedures?
Does policy or procedures provide for documentation of all relationships with banks, dealers, brokers and others financial institutions? Are copies of all contracts or agreements on file? Are they maintained in a safe, fireproof location in the event of disaster?
Do policies or procedures prevent the payment of significant or normal obligations out of petty cash funds?
Does board policy or internal procedure provide for control on issuance of manual checks?
What internal control procedures exist to ensure adequate adherence to formal investment policies and procedures?
Does the institution's governing board review the investment policy and investment strategy at least annually? Does the board adopt a written instrument stating that it has reviewed the policy and strategy? (as required by VTCS Government Code �2256.005 (e)).
Does the institution's investment policy recognize the restrictions/qualifications imposed by the Public Funds Investment Act, if applicable?
Does the institution routinely present a written copy of the board approved investment policy to every business organization offering to engage in an investment transaction with the entity, including investment pools, banks and investment management firms? Has a written instrument from each business organization been received acknowledging that the investment policy has been received and reviewed and that procedures and controls have been implemented to preclude unauthorized transactions? Has a qualified representative of each business organization signed the written instrument? (as defined in VTCS Government Code � 2256.002 (10) and �2256.005(k).
Did the board adopt a written investment strategy for each fund or group of funds under its control? Does the strategy describe the objectives for the fund using the priorities of suitability, preservation and safety of principal, liquidity, marketability, diversification and yield in that order, if applicable, or standard set by statute (VTCS Government Code � 2256.005 (d))
In addition to the statutory requirements, does the investment strategy define:

Acceptable risk?
Allowable issuers and instruments?
Percentage of portfolio that can be invested in each allowable investment type and issuer?
Diversification of risk?
Measurement of performance?
Authority and limitations for investments?
Selection of maturities?
Safekeeping accounts and/or acceptable collateralization of investments?
Reporting and documentation?
Formal adoption and periodic revision of the policy?

Has the institution designated one or more officers or employees as Investment Officers? Does the institution require its Investment Officer to disclose a personal business relationship with a business organization offering to sell investments to the organization? Does the institution require its Investment Officer to disclose any family relationships to an individual seeking to sell an investment to the entity? (VTCS Government Code �2256.005 (f)).
What training has the designated investment officer, treasurer and/or chief investment officer received in the last year? Does the training meet statutory guidelines of at least 10 hours of instruction relating to investment responsibilities within 12 months after assuming duties and 10 hours of training every two years? (VTCS Government Code �2256.008)
Has the board authorized the creation of a designated investment committee? How does the committee interact with the investment officer? What is the role of the committee?
Does the institution use sound investment techniques while adhering to the investment policy and providing adequate controls? Is excess cash always invested? Are competitive quotes obtained for investment purchases? Does the institution invest in longer-term securities when the cash flows indicate that money will not be needed for a longer period of time in order to achieve a market rate of return on the dollars?
Do personnel responsible for the investment function fully understand investment instruments? Have they attended training on investments? How do personnel making investment decisions stay in contact with the money market to keep up-to-date on market conditions? Is the investment portfolio distributed among various issuers and vehicles to diversify risks (spreading investments over a large number of securities in order to reduce financial risk or investing in different securities and with different maturities to reduce market and credit risk - not putting all your eggs in one basket.)?
Is monthly reporting of investment activity distributed to appropriate management? Are quarterly reports made to the board in compliance with the Public Funds Investment Act?
Among staff, is there proper segregation of duties regarding placing, holding, accounting and reviewing of investment transactions?
Does the computer system support investment portfolio management activities and allow the institution to readily produce the required reports to the board or administration? Does the system aid the institution in managing its debt portfolio, particularly when bonds are involved? How is security access to the system ensured?
Is investment performance monitored and reported to the president and board on a regular basis? Are internal reviews to improve cash collections, control disbursements, enhance investment returns and reduce debt costs performed on a regular basis?
6.D. Endowments
Fiscal year 1999 capped off a successful decade for college and university endowments due largely to investments made in a robust economy. A recent study found that colleges and universities hold more than $195 billion in endowment assets. Endowments include stocks, bonds, cash and real estate that colleges and universities receive as gifts. Colleges or universities receiving endowments may not spend the principal gift, only investment income derived from the principal. Earnings from these investment pools are essential to higher education institutions because they generate funds for such expenses as financial aid and operating costs. Many endowments are set up outside of the financial operations and reporting of the institution as a foundation, but exist for the sole purpose of supporting the institution (SEE UNIVERSITY RELATIONS AND ALUMNI SUPPORT CHAPTER).
Data Needs

Policies and procedures regarding endowments
Summary of endowments or endowment-like accounts
Copies of charters for major endowments
Pertinent internal audit reports

Possible People to Interview
System office staff with assigned responsibility
President
Vice president with assigned responsibility
Administrative staff with assigned responsibility
Officers or administrators of the endowments
Internal Auditor
Activities to Perform

6.D.1. Prepare a list of endowments or similar funds. Obtain copies of charters for all major endowments and sample smaller endowments and determine how the endowments are organized and give a brief explanation of the purpose, restrictions and list the officers and how they are elected or appointed. List the dollar value of the endowment as applicable, the investments and if a trust exists, list the depository and/or executor of each trust.
6.D.2. Examine board policy and other internal documents to prepare a narrative on how and when an endowment is established by the institution and how the institution ensures that the funds are used according to the intended purpose.

Questions to Ask
How many types of endowment and similar funds does the institution manage or have access to? How are the endowments' principal and earnings maintained? Who decides when and how disbursements from the fund are made?
What types of investment planning are undertaken for the funds? How does the institution or trustees of the fund identify investable funds? What is the role of the trustees in investment management? What is the role of the investment committee? If an investment committee does not exist, why not? Are there provisions in place to reduce the likelihood of conflicts of interest? How are the endowment funds reported in the financial statements of the institution? How are funds accounted for? A subsidiary ledger? Who is responsible for maintaining the financial records of the fund?
Are there investment policies in place to govern the investment of endowment funds? Are they in compliance with the Texas Public Funds Investment Act, if applicable? What are the return objectives of the investment strategy? What is the timeline for investments - long or short term in nature? What kinds of long-term asset allocation guidelines exist for the fund? How has the investment vehicles of the endowment evolved over time? What kinds of short-term asset allocation guidelines exist for the fund?
How is a fund manager selected? What evaluation criteria is used when hiring a manager? Are conditions such that multi-manager strategies are needed? What is the philosophy underlying the manager's approach?
What provisions are in place to regularly evaluate the performance of the fund manager? What controls are in place to ensure that the manager is operating in the best interest of the institution? Who is responsible for reviewing manager actions? When is an investment consultant used?
Who is responsible for setting endowment spending rates? Are rules clearly written and communicated? What is the rationale behind the spending rules? What provisions are in place to stabilize the reserves and ensure the continuity of the fund? Are there alternative spending rules?
How are gifts accounted for and reported? What mechanisms are in place to ensure compliance with fund restrictions? Are records kept in enough detail to allow:

The determination of original gift amount, restrictions on original gift, net appreciation and income
Information to facilitate meeting donor restrictions and accounting requirements for classification of net assets and release of restrictions

What processes are in place to maintain donor relations? Does the institution have standard a donor agreement? How does the institution treat non-cash gifts?
Is the institution enhancing endowment returns through securities lending and other innovations? Does the institution measure total fund results? How are these results reported?
Does the institution use custodial, safekeeping and execution services? How does the institution meet recordkeeping and tax filing requirements?
Does the institution use a planned giving program? What is the relationship between the business and development office? How can each support the other?
6.E. Fixed Asset Management, Tracking and Counting, Reporting and Surplus Property
Capital asset expenditure planning and control are critical to the long-term financial health of any campus institution. Generally, expenditures for capital assets require significant financial resources; decisions are difficult to reverse and the investment affects institution financial performance over a long period of time.
Data Needs

Policies and procedures
Insurance policies or documentation on self-funded programs
Summary of fixed asset transactions and balances
SPA reports or access to SPA system data
Fixed asset inventory printout from internal accounting systems
Pertinent internal audit reports

Possible People to Interview
System staff with assigned responsibility
President
Vice president with assigned responsibility
Administrative staff with assigned responsibility
Campus-based personnel
Internal Auditor
Activities to Perform

6.E.1. Examine the fixed asset capitalization policies and procedures and determine whether policies mirror recommendations made by NACUBO and are in compliance with GASB 34 and 36.
6.E.2. Using the institution's most recent fixed asset ledger, test the inventory by selecting a sample number of assets from the list and attempting to locate them in the institution and by physically identifying a select sample of fixed assets and matching them back to the fixed asset ledger. Note discrepancies and attempt to locate the reason for the differences.
6.E.3. Examine the most recent inventory of the institution and determine the results, how overages or shortages were handled, how employees were held accountable for losses and whether known thefts were reported to the proper authorities.
6.E.4. Examine the external audit reports and management letters for the last few years and note any references to fixed assets as well as any institution responses and corrective actions that resulted.
6.E.5. Examine SPA reconciliation procedures and a sample of recent reconciliations for all applicable fixed asset accounts and determine whether reconciliations are done in a timely fashion.

Questions to Ask
Does the institution have a recorded fixed assets inventory outside of the state's SPA system? What is the institution's process for its fixed asset inventory? How does the institution value the fixed assets? Are all the fixed asset acquisitions recorded in the inventory?
Do the fixed asset expenditures comply with budgetary, legal, grantor and contractual requirements? Did the institution eliminate the assets from the inventory that were disposed of? Did the institution record the sale proceeds properly? How does the institution account for the assets that were acquired through lease purchase agreements? Did the institution present the fixed assets properly in the financial statements?
How does the institution take the inventory of its fixed assets? Manual? Automated? How often does the institution take the inventory? How does the institution ensure the accuracy of its fixed asset inventory? What is the institution's capitalization threshold of its fixed assets inventory? What is the institution's depreciation methodology for its fixed assets? How is the institution preparing for GASB 34 and the reporting of depreciation on assets?
How does the institution handle donations? Are donors notified of the institution's standards? Are donations declined when the items do not meet standards? What mechanisms are in place to ensure that donated hardware or software are timely recorded in the institution's inventory?
How are inventories outside of the state's SPA system maintained? Are there separate policies and procedures for these other inventories? If so, how do those policies differ from the SPA system inventories? How are the two inventories reconciled?
What standards are in place to ensure that all acquisitions or donations can be supported, once installed? How are user divisions notified of these standards? What mechanisms are in place to ensure that purchases of non-standard items are kept to a minimum? When non-standard items are purchased or donated, how does the technical staff notify the departments of its inability to support the equipment or software?
How does the institution control hardware inventories? Is each piece of hardware tagged with an inventory number? Are computers and other items of technology included in the fixed asset inventory or are they kept on a control ledger for inventory purposes? Is an annual inventory conducted? How does the institution deal with discrepancies in the inventory? Are individuals held accountable for lost or stolen items? Are individuals assigned responsibility for every item of inventory? Are the police or proper authorities notified when equipment is missing? Are insurance claims filed for stolen equipment? Are insurance coverages adjusted to reflect the current inventory?
How does the institution remove an item from inventory when it becomes obsolete or damaged? How does the institution dispose of obsolete equipment?

6.A.1.	Review the method of organizing the asset and risk of the institution; compare to a best practice institution's organization; compare to peer institutions.
6.A.2.	Review and compare to peer institutions the number and type of staff dedicated to specific asset and risk functions.
6.A.3.	Analyze the budget of the asset and risk functions and determine where and why significant budget changes have occurred within the organization.

6.B.1.	Examine the organization and staffing charts and job descriptions for the cash management functions and interview staff to determine reporting arrangements, whether the organizational structure depicted on the chart reflects the actual organization of the department and document if it has been changed recently or repeatedly in the recent past or is anticipated to change in the near future and explain the background for changes. Include any contracted individuals or services or committees that oversee cash management in the organization chart and show the reporting relationship and who is responsible for monitoring the contracts.
6.B.2.	Examine the staffing and budget of the cash management function. Determine whether or not the budget and staffing level compare favorably to industry standards. (within budget considerations).
6.B.3.	Examine the depository contract and the related request for proposal and prepare a list of all of the major terms and conditions as they pertain to each bank account maintained by the institution.
6.B.4.	Prepare a chart listing the institution's bank accounts, whether they are interest bearing and the rate of interest paid, the average daily balance in each account for the last year and the balance in the account at a point in time. In addition, list any accounts held with investment pools or other money market accounts that are also liquid.
6.B.5.	Examine cash flow forecasts for the last year and review any documented procedures for creating the cash flow forecasts. Note the frequency of the forecasts, the level of detail captured by the forecasts and compare a sample of the forecasts with actual data to determine the degree of accuracy.
6.B.6.	Examine bank reconciliation procedures and a sample of recent bank reconciliations for all institution accounts and determine whether reconciliations are done in a timely fashion and whether the accounts are then reconciled to the accounting records of the institution.

6.C.1.	Compile all investment policies, procedures and/or strategies and determine whether they are in compliance with VTCS Government Code �2256.005, whether internal operating procedures mirror board policy and whether internal procedures provide a level of detail to ensure that investment processes would continue in the event of staff turnover or sustained absences.
6.C.2.	Prepare a list of board-approved investments and determine, to the extent possible, how these strategies positively or negatively impact risk or the yield on investments.

6.E.1.	Examine the fixed asset capitalization policies and procedures and determine whether policies mirror recommendations made by NACUBO and are in compliance with GASB 34 and 36.
6.E.2.	Using the institution's most recent fixed asset ledger, test the inventory by selecting a sample number of assets from the list and attempting to locate them in the institution and by physically identifying a select sample of fixed assets and matching them back to the fixed asset ledger. Note discrepancies and attempt to locate the reason for the differences.
6.E.3.	Examine the most recent inventory of the institution and determine the results, how overages or shortages were handled, how employees were held accountable for losses and whether known thefts were reported to the proper authorities.
6.E.4.	Examine the external audit reports and management letters for the last few years and note any references to fixed assets as well as any institution responses and corrective actions that resulted.
6.E.5.	Examine SPA reconciliation procedures and a sample of recent reconciliations for all applicable fixed asset accounts and determine whether reconciliations are done in a timely fashion.