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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Resources

Agency Fiscal Year-End USAS Adjustments and AFR Checklist
Step 8 – Notes to the Financial Statements

Note 3 – Deposits, Investments & Repurchase Agreements (Submitted Through the DINSS web application)

Disclose deposits and investments details, including the legal and contractual provisions that governs investments, including any significant violations of the provisions that occurred during the reporting period (if applicable).

  1. Provide a detailed description of the disclosures for cash and investments (current or non-current).
  2. Disclose the legal and contractual provisions that govern cash deposits with financial institutions.
  3. Disclose the agency’s policies (if any) regarding custodial credit risk and foreign currency risk associated with deposits. If no such policies exist, explicitly state their absence.
  4. Verify that cash in bank per the AFR balance sheet/statement of net position agrees to the cash in bank carrying amount disclosed in Note 3, with separate disclosure for discrete component units (if applicable).
  5. Disclose the amounts of bank deposit balances subject to custodial credit risk, classified within the following categories:
    1. Uncollateralized
    2. Collateralized with securities held by the pledging financial institution
    3. Collateralized with securities held by the pledging financial institution’s trust department or agent, but not in the name of the depositor agency
  6. Disclose the amounts of bank deposit balances exposed to foreign currency risk (presented in U.S. dollars and organized by the respective currency denominations).
  7. If the agency participates in an external investment pool that is not registered with the Securities and Exchange Commission, disclose the nature of any regulatory oversight applicable to the pool and indicate if the fair value of the agency’s position in the pool is equivalent to the value of the pool shares.
  8. If the agency elected to separately disclose realized and unrealized gains and losses on investments in the notes, indicate the:
    1. Calculation of realized gains and losses is independent of the calculation of changes in the fair value of investments.
    2. Realized gains and losses reported for the current year include amounts that were recognized as unrealized gains or losses in prior years.
  9. Disclose the agency’s investment policies (if any) related to the following risks:
    1. Credit risk
    2. Custodial credit risk
    3. Concentration of credit risk
    4. Interest rate risk
    5. Foreign currency risk (if applicable)

    If the agency has not established policies for one or more of these risks, explicitly state the absence of such policies.

  10. Disclose the credit ratings for investments in debt securities (other than those issued by or explicitly guaranteed by the U.S. government), as well as for positions in external investment pools, money market funds, bond mutual funds and other pooled investments in fixed-income securities. If credit ratings are not available, provide an explanation for their unavailability.
  11. Disclose information regarding custodial credit risk and any investments that are exposed to such risk evidenced by securities at year-end that are neither insured nor registered and are held by either:
    1. The counterparty
       OR 
    2. The counterparty’s trust department or agent, but not in the system’s (pool’s) name, the notes must disclose the amount of investments exposed to custodial credit risk, specify that they are neither insured nor registered and explain the nature of the custodial credit risk exposure.
  12. Disclose concentrations of five percent or more of the agency’s net investments in securities of a single organization, excluding those issued or explicitly guaranteed by the U.S. government, as well as investments in mutual funds, external investment pools and other pooled investments.
  13. Disclose interest rate risk for positions in fixed-rate debt securities using one of the following five approved methods:
    1. Segment time distribution
    2. Specific identification
    3. Weighted average maturity
    4. Duration
    5. Simulation model
  14. Disclose the fair value of investments as of the end of the reporting year by fair value hierarchy (level 1, 2 or 3) and include a description of the valuation techniques used. Also disclose if there has been a change in valuation techniques that had a significant impact during the year.
  15. Provide additional disclosures regarding the nature and risks of these investments, and indicated whether it is probable that the investments will be sold at amounts different from the NAV for investments in entities that:
    1. Calculate the NAV per share
    2. Do not have a readily determinable fair value
       AND 
    3. Are measured at fair value on a recurring or nonrecurring basis (alternative investments
  16. Verify that the investment portion of Note 3 includes the fair value in total and by level of input (as required by GASB 72).
  17. Verify the total of current and non-current investments per the AFR balance sheet/statement of net position agree to the total of the investments table in Note 3 with separate disclosure for discrete component units, if applicable.
  18. If there are investments to which GASB 31 applies, include a line item on the statement of revenues, expenses and changes in fund balance titled net increase/decrease in fair value of investments for all fund types.
  19. The following must be entered in DINSS in addition to being disclosed in the AFR Note 3:
    1. Cash in bank carry amount
    2. Cash in bank balance
    3. Deposit custodial credit risk
    4. Deposit foreign currency risk
    5. Investment fair value in total and by level of input (as required by GASB 72)
    6. Investment custodial credit risk
    7. Investment foreign currency risk
    8. Investment credit risk S&P
    9. Investment securities lending collateral pool fair value in total and by level of input (as required by GASB 72)
    10. Investments recorded at net asset value summarized by strategy with associated redemption period, redemption frequency and unfunded commitments (as required by GASB 72).
  20. After reconciling Note 3 to the respective data entered in DINSS, submit a copy of the agency’s Note 3 from its published AFR through the DINSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note number/name. If Note 3 does not apply, do NOT submit a note to indicate “not applicable.”