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Kuali Endowment Module (KEM)May 21, 2007
Kim Yeoh, Assistant ControllerCornell University
Norm Peacock, Assistant Director ITS Indiana University Foundation
KEM -1
KEM Presentation Agenda
• SME Members• General Overview• Project Scope/Out-of-Scope• General Requirements• Progress to date and Next Steps• Comparison of SME Institutions• High-level Review of KEM Modular Design
Note: Reference and additional materials available in the back of presentation handout.
KEM - 2
KEM SME Members
Norm Peacock, Lead SME, Indiana University Foundation
– Cornell University - Gail Thayer, Kim Yeoh, Ming Bengtsson
– Indiana University - Bill Buskirk, Joan Hagen
– Michigan State University - Nancy Carter
– NACUBO - David Lyons
– San Joaquin Delta College - Shelley Pierce
– University of Arizona - Mike Treiber, Cecilia Esguerra, Marlene Moldenhauer
KEM - 3
Endowments Comparison Among Participating Institutions
Institution Mkt. Value as of 6/30/06
# Accounts
# Campus IntegratedSystem?
Cornell University
$4.4 Billion 6,528 2 No, though GL manages shares
Indiana University
$174 Million
375 8 No
Indiana University Foundation
$1.4 Billion 5,200 8 Yes, but needs enhancements
Michigan State University
$1 Billion 1,850 1 No
San Joaquin Delta College
$1.7 Million
5 1 No
University of Arizona
$200 Million
670 2 NoKEM - 4
Kuali Endowment Module
Based on the IU Foundation Endowment and Trust Accounting System (ETA)
KEM is a stand-alone system (could be implemented without Kuali Financial System)
KEM outside the original scope of Kuali Financial System (KFS)
KEM seeking development partnersKEM - 5
Kuali Endowment Module
The Scope of the KEM includes– Investment tracking and basic reporting– Investment participation management and
standard reporting– Budgeted payout and income projections– Access to donor instructions– Searchable data elements– Beneficiary disbursement process and tax
reportingKEM - 6
Kuali Endowment Module
What’s Out-of-Scope?– Gift Records System
• fund raising activity - campaign goals and results
• donor contacts
• pledges- both conditional and unconditional
• gift payments
– Pool Valuation• market value of pool assets
• underlying asset distributionKEM - 7
KEM Conceptual Diagram
Draft Gift / KEM / KGL Interfaces
All Gifts
Gift System
Opt
ion
2
KEMInvestment PoolsDonor InstructionsInvestmentsFunds
Kuali GL
Investment Custodian
Op
tion
1A
ll Gifts
Inve
sted
Gifts
FFE andOther invested reserves
Non-Invested orSpendable Gifts
Investment Gift and Income Transactions
New MoneyMarket Value Changes
andIncome Distribution
KEMNon-KEM
Non
-KE
MK
EM
Option 1
Option 2
LEGEND
KE
M
Non
-KE
Mi
KEM - 8
KEM General Requirements
• Accommodate security transactions at the individual security level or at the summary level
• Support both FASB and GASB reporting
• Capture and maintain donor restrictions and instructions for income/unspent funds
• Facilitate the management of “unitized” investment pool(s)
KEM - 9
General Requirements
• Track “separately invested” securities, or non-pooled investments
• Maintain stewardship information for reporting to donors
• Feed financial transactions to an institution’s General Ledger
• Ability to manage electronic documents with an external workflow engine
KEM - 10
Progress to Date
• Developed the conceptual model for KEM• Developed the physical data model for
KEMID (aka KEM Account)• Developed a resource estimate based on
current IUF-ETA functionality and approved enhancements
• Defined KEM standard or basic reports
KEM - 11
Next Steps (In Process)
• Recruit development partners• Map IUF-ETA screens to KEM
eDocs
• Create functional specifications for each eDoc
• Complete KEM physical data model KEM - 12
IU Foundation Systems Overview
Donor DatabaseGift Processing(Both IU and IUF gifts)
Transaction ProcessingAccount Maintenance
Automated Cash Investment Automated Income Distribution
Asset ManagementInvestment Management Reports
Transaction and Balance Statements
Daily Transfer of IUF gift totals
by account
Daily Summary of Transaction
Totals (By Fund and Object Code)
Gift System
Endowment & Trust Accounting System
General LedgerBudget AccountingAccounts PayableEnterprise Funds
Fixed AssetsIUF Management Reports
General Ledger
Custodian Bank Asset
Data
Pool Pricing and Underlying Asset / Income Allocation
Database
KEM - 13
UofA Systems Overview
KEM - 14
KEM Modular Design
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 15
KEMID (Endowments and Trusts)
• All relevant KEMID administration data– Open and close records– Ticklers– KEMID type– Associations with Fund and Unit
• Instructions– Transaction Restrictions
• KEMID Status, Agreement Documentation Status, Restrictions and authorizations
– Investment Instructions• Automated Investing, Daily and Periodic
– Fees
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 16
Securities, Holdings and Cash
• Balances by KEMID– Current and historical
– Cash
– Securities• Units, Carry Value, Market
Value, Accrued Income
• Securities Managed by the Organization– Current Values
• Units, Carry Value, Unit Value, Market Value
• Security type
• Interest rates and dividend per share, payment schedule
• Pooled Investment Fund Data – Current and historical unit values and distribution amounts
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 17
Investment Participation Management
• Pool Control KEMID (Master Trust Account)
– Holder of all Pool Investment Assets• An endowment uses cash to purchase units of the pool,
increasing the principal cash asset of the control KEMID.• When an endowment sells units of the pool, the principal cash
asset is reduced.• Excess principal cash is transferred to a manager for
investment in appropriate assets.
– Receives all investment income from the investments• Dividend and interest posted as income cash in the control
KEMID• Distributions to the endowments reduce income cash in the
control KEMID
KEM - 18
Investment Tracking and Reporting
• Tracking Managed Securities – Holdings by Security
• Current Position• Share Price• Income information
– Holdings by Endowment• Current and Historical• All Holders List• Holding Detail
• Securities Transactions– Purchases and Sales– Corporate Actions– Accrued Income Calculations– Income Distributions
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 19
Transactions
• Unique transaction types– Cash, Asset and Liability
• Purchases, Sales, Deposits, Disbursements• Increase, Decrease or Transfer
– Special types• Original Gift Value Adjustment• Holding Unit Adjustment• Corporate Reorganization• Trust Asset Transfer
• Multiple entry methods– Recurring transactions– Imported Transactions
• Gift Transactions, Spreadsheets– Daily Processes
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 20
Recurring Transactions
• Investment Models– Cash Sweeps (Money Market Investments)
– Pooled Funds
• Scheduled Transactions– Transfers
– Disbursements
• Automated Processes– Interfaces
– Batch• Daily
• Monthly
• Annual
KEMIDSECURITIES,
HOLDINGS AND CASH
TRANSACTIONS
RECURRING TRANSACTIONS
INDIVIDUAL
KEM - 21
Individuals
• Payees, KEMID Signers, Users
• Name and Address records– Home, Business, Campus, Seasonal
• 1099 reporting– Independent Contractor, NRA
• Bank Depository – ACH or Wire Transfer
• Associated KEMIDsKEM - 22
Possible Automated Processes
• Possible Interfaces to KEM– Importing Gift Transactions– Security Pricing– Exporting General Ledger Entries– Updating Database used for Web Inquiries
KEM - 23
Thank you!
Questions?
For progress updates
http://www.kuali.org/KEM - 24
Additional References
KEM Presentation
Supporting Materials
KEM - 25
KEM Scope
• Investment tracking and basic reporting– number of shares, book, par and market values, CUSIP
number, investment category (stocks, bonds, real estate, etc.), and capital commitments.
– purchases and sales of investments; income earned, collected, accrued; management and custodial fees and commissions; and other investment related data.
– provide data to compare investment policy allocation targets to actual allocations and incorporate pending transactions (i.e. rebalancing).
– track investment commitments for limited partnerships and contributions made against these commitments.
Go BackKEM - 26
KEM Scope
• Investment participation management and standard reporting including unitized transactions– Investment pool data (number of units, market value per unit) for
all funds that participate in an institution's investment pool(s). – Quantify units purchased and sold, and calculate the gain or loss
on withdrawal. – Record investment income, realized gains, unrealized gains, and
fees to the various funds, either in the specific fund or in high level accumulation accounts.
– Track the net asset balance of a true endowment fund between its components of historical book value and accumulated earnings.
– Allocate either a budgeted payout to the income accounts affiliated with a principal account (based on pooled units), or actual income earned on separately invested endowment funds.
Go Back
KEM - 27
KEM Scope
• Budgeted payout and income projection– Project the budgeted payout (based on pooled
units and an approved spending policy) – Project the anticipated income based on
declared dividends, bond holdings, etc. – Update current year income projections– Create spending policy reports by fund,
KEMID, college, dept, etc.Go Back
KEM - 28
KEM Scope
• Access to donor instructions– Capture and distribute the donor instructions
for a gift or endowment fund– Link imaged document files to KEM accounts
and transactions
Go Back
KEM - 29
KEM Scope
• Beneficiary disbursement process and tax reporting – Disburse payments to beneficiaries (including
“split interest agreements”) – Provide data for annual tax reporting
Go Back
KEM - 30
KEM Interface Diagram
Kuali Endowment Module (KEM) Conceptual Diagram (3/15/2006)
Inst
itutio
n F
inan
cial
In
form
atio
n S
yste
m
Transaction Module
KE
MO
usid
e K
uali
FIS
Out
side
KE
M Gift Processing Transaction
Interface
Transaction Import
Miscellaneous transactions
(spreadsheets)
Automated Investments
Income Distributions
Fee Transactions
Pool Management
Automated Disbursements and Transfers
Manual Transactions
E-DOCS(WORKFLOW)
Custodial Bank
Pool Valuation
KEM Transactions
KEM AccountData
Instructions
Donor Compliance
Ownership
GL Relationship
KEM Individual Data
Payees, Trust Beneficiaries,Account Authority,Users
Multiple Addresses and Relevant data for contact or payment
KEM Recurring Transaction Information
Automated Investments
Automated Income Distribution
Transfers and Disbursements
KEM Security and Holdings Data
Balance Data
Security TotalsKEM Account totals
CashInvestments
DailyHistorical
General Ledger Module
Scrubber PosterGeneral Ledger
Interface
GL Pending Entries
Payment Disbursement
Processing
Purchase Orders/
Accounts Payable
Accounts Receivable
Updates
Check PrintingACH file
Generation
External Pricing Service
E-Docs
Tax Reporting Service
Donor Relations Database
Kuali Chart of Accounts
Kuali Budgets
Relates to
Validates
Validates
Validates
Reporting Environment/
Data Warehouse
Actuarial Values
External SystemsBursar, Payroll,
Independent Billings etc.
Decision Support System
Imaged Documents
Student Information
System
KEM - 31
Baseline System of KEM
• Endowment Trust Accounting (ETA) System used by Indiana University Foundation is the baseline system of KEM.
• ETA will be “kuali-fied” – look-and-feel will be Kuali but core design and functionality will be based on ETA.
• A few ETA screens available on the next few pages…
KEM - 32
Endowment and Trust Accounting
• Account Management
• Investment Management
• Automated Functions
• Relational Database
• Multiple Reporting Options– ODBC – User-Designed Daily and On Demand Reports– Web Access
KEM - 33
ETA Accounts(Endowments and Trusts)
• All relevant account administration data– Open and close records– Ticklers– Account type– Associations with Fund and Unit
• Instructions– Transaction Restrictions
• Account Status, Agreement Documentation Status, Restrictions and authorizations
– Investment Instructions• Automated Investing, Daily and Periodic
– FeesKEM - 34
Account Detail Screen
Go backKEM - 35
Securities, Holdings and Cash
• Balances by Account– Current and historical– Cash– Securities
• Units, Carry Value, MarketValue, Accrued Income
• Securities Managed by the Organization– Current Values
• Units, Carry Value, Unit Value, Market Value• Security type• Interest rates and dividend per share, payment schedule
• Pooled Investment Fund Data – Current and historical unit values and distribution
amounts KEM - 36
Balances by Account
K̀EM - 37
Securities by Account
KEM - 38 Go back
Accrued Income Calculations
• Income Accrual Methods– Automated Cash Management – This is the accrual mechanism for “money market”
type KEMIDs. It will calculate daily based on the holdings of each date and add the amount to the total interest due to the KEMID holder.
– Dividend –The total dividend amount to be paid to the holder of a security based on the ex-dividend record date, units held, dividend amount and payment date. These accrual amounts will be calculated periodically, based on the ex-dividend date.
– Treasury Notes and Bonds – Daily accruals are calculated based on the number of days in the six months prior to the semiannual payment date.
– Discount Bonds – Accruals are calculated daily but will never be paid to the KEMID holder until the security reaches maturity or is sold.
– Mortgage Pass-Through 30 –This is not a true daily accrual. The total income due is recomputed daily. It assumes that payments are made one month in arrears (30 days) on the 15th of the month.
– Mortgage Pass-Through 60 – Like the previous method except that it assumes that payments are made 2 months in arrears (60 days) on the 15th of the month.
– Time Deposits – Simple interest calculations, not compounded. Payment frequencies will vary depending upon the instrument
KEM - 39
Securities Managed
KEM - 40
Pooled Investment Funds
KEM - 41
Transactions• Unique transaction types
– Cash, Asset and Liability• Purchases, Sales, Deposits, Disbursements• Increase, Decrease or Transfer
– Special types• Original Gift Value Adjustment• Holding Unit Adjustment• Corporate Reorganization• Trust Asset Transfer
• Multiple entry methods– Recurring transactions– Imported Transactions
• Gift Transactions, Spreadsheets– Daily Processes KEM - 42
Transactions
KEM - 43
Transactions
KEM - 44
Transactions
KEM - 45
Recurring Transactions
• Investment Models– Cash Sweeps (Money Market Investments)– Pooled Funds
• Scheduled Transactions– Transfers– Disbursements
• Automated Processes– Interfaces– Batch
• Daily• Monthly• Annual KEM - 46
Investment Models
KEM - 47
Investment Models
KEM - 48
Scheduled Transfer
KEM - 49
Scheduled Disbursement
KEM - 50
ETA Automated Processes
• Interfaces– Importing Gift Transactions– Security Pricing– Exporting General Ledger Entries– Updating Database used for Web Inquiries
KEM - 51
Daily Nightly Batch Processes
• Daily– Transaction Import– Large Batch Posting– Accrual Transactions – Accrual Calculations– Recurring Transactions– Pooled Fund Distributions– Automated Cash Investments– Cash Sweeps– Pooled Fund Control Accounts Summary Transactions– Change Reporting– Date Frequency Roll Process
KEM - 52
Periodic Nightly Batch Processes
• Monthly– Cash Balance Archive– Holding Balance Archive– Seasonal Address Update– Fee Assessment Transaction Process
• Year-End– Update Original Gift Values
KEM - 53
Individuals
• Payees, Account Signers, Users• Name and Address records
– Home, Business, Campus, Seasonal
• 1099 reporting– Independent Contractor,
NRA
• Bank Depository – ACH or Wire Transfer
• Associated AccountsKEM - 54
Individuals
KEM - 55
What is KEMID?
• KEMID – represents monies held and invested for the benefit of a specific area and to be used for a specific purpose. One KEMID may be related to one or many GL accounts.
• The unique name was developed so as not to confuse it with the GL account concept.
Go back
KEM - 56
KEM Resource Estimates
Go back
KEM - 57
KEM Standard Reports
The following seven reports will be delivered with the KEM module:– Endowment Asset Statement– Endowment Transaction Statement– Endowment Transaction Summary– Non-Endowed Asset Statement– Non-Endowment Transaction Statement– Non-Endowment Transaction Summary– Trial Balance
Notes:– Trial Balance – will include columns for available expendable cash and
estimated income for the balance of the fiscal year.– All reports should have the capability to be run for organizational entities
or sequences including: department, division, school and campus, etc. The trial balance report should also have the capability to be run by endowment or account type.
– Additional internal and other reports needed by a KEM institution will be run at the school using a reporting tool of each school’s choice.
Go back
KEM - 58
End of Additional Resources
Thank you for your continued support!
KEM - 59