Internship Presentation - Open Accruals

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


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



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


Open Accruals ReportCurrent Report


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


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)


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)


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



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



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)


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


Exposure to different tasks – multitasking

Further exposure to Excel, PowerPoint

Teamwork

Presentation skills

Meeting deadlines

BIGGER PICTURE


Q & A

APPENDIX- The Morning Report


APPENDIX- The New or Change Report


Documents

Internship Presentation - Open Accruals