1 3 Audit Report No. 14, &RPPRQZHDOWK'HEW0DQDJHPHQW Introduction 3.1 Since Federation, the Commonwealth has issued a wide range of debt instruments to finance its expenditure programs. To ensure effective separation between monetary policy and debt management, the Commonwealth fully funds its budget deficits by borrowing from the short-term money market and the fixed interest market At 30 June 1999 the Commonwealth had an $85.5 billion repayment liability with a market value of $93.9 billion. The Department of the Treasury (Treasury) uses the domestic market as its primary funding source and has not issued physical debt securities in offshore markets since The Commonwealth is also an active participant in the over-the-counter derivatives market, entering into interest rate and cross-currency swaps to manage the cost and risk of the Commonwealth debt portfolio by adjusting the duration and currency exposure of the portfolio. The annual swaps strategy, which is part of the overall debt management strategy, is endorsed by the Treasurer as part of the Budget process Until 30 June 1999, Treasury advised the Treasurer on all aspects of Commonwealth debt management. A specialist agency, the Australian 1 Audit Report No. 14, , pp. 27, Audit Report No. 14, , pp. 27, Audit Report No. 14, , p. 27.
2 18 REPORT 378 Office of Financial Management (AOFM), assumed responsibility for Commonwealth debt management on 1 July AOFM is an advisory board whose reporting line is through the Secretary to the Treasury and the Treasurer The ANAO s aim in conducting the audit was to provide enhanced assurance to Parliament about the management of the debt portfolio and to identify opportunities for improvement. The audit found that Treasury s debt issuance programs had met Budget funding requirements and domestic debt management had been effectively undertaken. However, the audit found that the Commonwealth was exposed to a number of significant risks in its debt management operations The ANAO made six recommendations, all of which were agreed to by the AOFM. Treasury endorsed the AOFM s comments on the report and responses to the recommendations The Committee invited the AOFM and the Reserve Bank of Australia (RBA) to a public hearing on 16 May 2000 to examine a number of issues raised in the audit report. 3.8 In the course of the public hearing, the Joint Committee of Public Accounts and Audit (JCPAA) took evidence on the following: AOFM resourcing; debt portfolio benchmark; foreign currency exposures; derivatives and risk management, and cash management framework. AOFM resourcing 3.9 The funding provided in the Budget allowed for staffing and resources additional to those of Treasury s Debt Management Office which the AOFM replaced. 7 The JCPAA sought information from the AOFM on whether it had the resources to take on personnel with the necessary high level commercial skills. 4 Audit Report No. 14, , p. 10; Transcript, 16 May 2000, p Audit Report No. 14, , p Audit Report No. 14, , p Audit Report No. 14, , p. 30.
3 COMMONWEALTH DEBT MANAGEMENT The AOFM s new CEO responded that his appointment highlighted the move by Treasury to be able to introduce new skills into the office, and to improve and obtain skills to manage the debt portfolio consistent with commercial best practice. The CEO stated that: addressing our need to be able to introduce new commercial skills to our organisation, in line with the development of our business and of our strategic debt management plans [was] certainly a major emphasis of the brief I have joined the organisation with In response to a question from the Committee on whether there had been a significant increase in staff as a result of setting up AOFM, AOFM stated that the Office was currently resourced at 23 and that there were plans in the original proposal for the Office to include up to 40 staff. AOFM indicated that once it had looked at the strategic issues, the Office would specifically address the resourcing needs required to undertake the management task The Committee examined the issue of remuneration and expertise with the Reserve Bank of Australia (RBA) The RBA noted that remuneration in the RBA was well below that in the marketplace but that the advantages seen in the quality of the work at the bank would be very attractive to some people. The RBA continued: Every year the bank hires a stream of graduates, maybe 20 or 30 a year. We target the top honours graduates in economics and finance essentially. Out of that pool we tend to keep some very good people because they are attracted to the quality of the work. We send some of those off to study overseas to further their education in finance and economics. So all in all I do not think the bank really has a problem retaining good people at the moment Responding to the Committee s questioning on the role of external expertise, the RBA confirmed that it had a lot of interaction with other central banks and investment banks worldwide. However, the RBA s experience was that paying for external consultancy services was not very cost effective. The RBA told the Committee: I think [the AOFM has] to make a judgment about what the qualifications of their staff are. Certainly I feel that we have the expertise within the bank to do a lot of the work that we need to 8 Transcript, 16 May 2000, p Transcript, 16 May 2000, p Transcript, 16 May 2000, p. 12.
4 20 REPORT 378 do ourselves rather than get consultants in. Whether Treasury feel the same, I am not sure The AOFM s position was that it needed both internal knowledge and expertise maintained over time, particularly to provide an understanding of the benchmarking process, as well as external advice where the expertise was not available in-house. It noted that its resource base was much smaller than that of the RBA and that to introduce skills across a broad range of skill sets did not easily allow the resources to develop an in-house competence in other areas. The AOFM noted that under the formation of the Office, plans existed to allow the employment of further expertise from the private sector The AOFM agreed that in employing external advisers, it was very important to have the expertise and in-house skills to ensure that the advice you do get from outside is of value. 12 Committee comments 3.17 The funding provided for the AOFM in the budget allowed for staffing and resources additional to those of Treasury s Debt Management Office. The Government expects the new agency to significantly enhance the Commonwealth s capacity to manage its net debt portfolio and to offer the prospect of savings in debt service costs and an improvement in balance sheet worth over time The Committee considers it very important that opportunities to obtain and retain in-house expertise, provided by the establishment of AOFM and the commitment to increased resources, should not be wasted. Where the risks are high, the relevant expertise is required. This does not and should not come cheaply While agreeing that the RBA has a higher level of resourcing than the AOFM, the Committee notes with interest the comments of the RBA in relation to its assessment of the expertise of some of its external advisers and the view that using independent experts was not necessarily cost effective: [The consultants] came in and did a competent job [on the benchmark review], but there were plenty of people in the bank 11 Transcript, 16 May 2000, p Transcript, 16 May 2000, p Budget Related Paper No.1.16, Portfolio Budget Statements , Treasury Portfolio, p.16.
5 COMMONWEALTH DEBT MANAGEMENT 21 who knew more about the topic than they did. That was my assessment A related issue for the Committee is that some Commonwealth agencies have engaged external advisers and have failed to adequately oversight and fully understand the process being undertaken The Committee considers it essential to the proper management of the Commonwealth s debt that the AOFM has available a high degree of inhouse expertise. Recommendation The Committee recommends that the Australian Office of Financial Management take action to obtain and maintain the high level of inhouse expertise required to enhance its own management and to retain control and exercise judgment over external adviser inputs. Debt portfolio benchmark 3.23 Since 1989 Treasury has retained consultants to advise on the management of the Commonwealth debt portfolio. Portfolio management is concerned with managing the ongoing cost and risk of the Commonwealth debt portfolio. This requires a focus on changes in interest rates and exchange rates as these variables can have a significant impact on borrowing costs The stated purpose of the portfolio benchmark is to specify the optimal exposure to foreign currencies and interest rates to achieve Treasury s debt management objective. The annual swaps strategy is used to move the portfolio towards the portfolio benchmark targets At the hearing, the Committee noted that over the last few years the Commonwealth s debt had reduced substantially and that the 10-year bond rate differential between Australian and the United States (US) had fallen significantly. The Committee asked why, in view of this, the benchmark had not been reviewed Transcript, 16 May 2000, p Audit Report No. 14, , pp. 47, Audit Report No. 14, , pp. 49, Transcript, 16 May 2000, p. 4.
6 22 REPORT The AOFM stated that the benchmarking process was subject to review on an ongoing basis. It also noted that the benchmark was not based on exchange rate or interest rate views: It is a long-term benchmark grounded in long-term structural relationships between interest rates and exchange rates. Typically, benchmarks ought to be reviewed on a four or five-year cycle, and that is where we are at the moment The AOFM also noted that the 1996 report by external consultants adopted a long-term framework for analysing the cost and risk implications of currency and interest rate exposures. The AOFM acknowledged that the long term refers to a five-year time horizon in the analysis When the Committee noted that the benchmark was due for review, the AOFM replied that the appropriate review process had not yet been undertaken but there was an intention to undertake such a review: Any appropriate recommendations in terms of changing the benchmark will be put to our board and from there it will be put to the Treasurer for approval.. 20 We have conducted a tender to invite people from the marketplace to come and analyse and review our benchmarking process. That could reasonably be expected to take from a couple of months to less than six months. So that time line would suggest that we would have a new benchmark in place by the latter part of this calendar year The AOFM stated that the current benchmark US dollar exposure was based essentially on the notion that there was a systemic bias in the relationship between the Australian dollar and US dollar interest rates, and conceded that while it did not tell the whole story, a zero interest differential was certainly a signal to re-evaluate the benchmark: we are again testing that proposition and again mindful of some of the major changes in the environment in which we operate since the original recommendation in favour of US dollars.. I think that this review process will indicate quite a different approach to the benchmark to what we currently have Transcript, 16 May 2000, p AOFM, Submission No. 4, p Transcript, 16 May 2000, p Transcript, 16 May 2000, p Transcript, 16 May 2000, pp. 5, 6, 7.
7 COMMONWEALTH DEBT MANAGEMENT The Committee explored with the AOFM whether the review would address the concept of future reviews being triggered by a set of events rather than by the expiry of a set review period The AOFM replied that the commercial approach would be to review benchmarks on a regular basis, while monitoring risks on a dynamic basis so that any weaknesses in approach would be identified: Committee comments I agree with the view that it has to be a dynamic approach The Committee notes that the current benchmark was adopted by Treasury in July 1996 and that the five-year time horizon adopted for the modelling expires in The Committee also notes that Treasury s most recent (August 1998) review of the foreign currency benchmark target acknowledged that, if the US exposure resulted in excessive cost volatility, the expected long-term cost savings may involve unacceptable risk and therefore may not be worthwhile The Committee has some concern about the reliance of the portfolio benchmark on mean reversion theories of long-term interest rate movements. As the audit report points out, mean reversion theory does not recognise that the future may see new economic situations and trading regimes emerge such that history is not a guide to the future Effective management of the Commonwealth debt portfolio can only occur if the benchmarks are appropriate. The Committee strongly supports the audit report recommendation that as part of its ongoing debt portfolio management, the AOFM continue to evaluate the data and assumptions underlying its US dollar exposures Despite the assurances of AOFM that the portfolio benchmark review process is underway, the Committee is concerned to ensure that it leads to a review mechanism with the required dynamism. 23 Transcript, 16 May 2000, pp Audit Report No. 14, , p Audit Report No. 14, , p. 51.
8 24 REPORT 378 Recommendation The Committee recommends that the Australian Office of Financial Management put processes in place to monitor risks and identify weaknesses which may impact on the appropriateness or timing of the portfolio benchmark review process The Committee acknowledges that the AOFM operates under constraints which do not apply to its corporate counterparts. Treasury has adopted an approach to debt management that specifically avoids sending signals to the market regarding the future direction of interest and exchange rates Effective management of the Commonwealth debt portfolio can only occur if the portfolio benchmark targets are appropriate. The Committee awaits with interest the result of the benchmark review process. Foreign currency exposures 3.40 The audit noted that Treasury had not issued physical debt securities in offshore markets since Accordingly, as of 30 June 1999, there was $91.8 billion (market value) of Australian dollar denominated debt securities on issue compared to a relatively low level of $722 million of securities denominated in foreign currencies A key conclusion of the 1996 portfolio management consultancy was that the Commonwealth could look to minimise the long-term expected cost of the debt portfolio (subject to acceptable risk) by adjusting the foreign currency composition of the debt portfolio, without taking interest and exchange rate views. The report recommended holding 10 to 15 per cent of the debt portfolio in US dollars. The three key underlying assumptions in this recommendation were: the timeframe adopted for analysis, interest rate differentials; and the exchange rate Transcript, 16 May 2000, p Audit Report No. 14, , p Audit Report No. 14, , pp
9 COMMONWEALTH DEBT MANAGEMENT In adopting this recommendation as part of its portfolio management approach, Treasury has actively increased its exposure to foreign currency risk through the use of derivatives The Committee sought information from the AOFM on the merits of increasing the Commonwealth s foreign currency risk exposure above the level necessary to fund expenditure The AOFM told the Committee that many other sovereign debt managers maintain open foreign currency exposures: In some instances the sovereign debt manager has merely borrowed in foreign currencies to replenish central bank foreign reserves, but in many others the foreign currency exposure has resulted from their debt management activities. 30 Committee comments 3.45 Despite AOFM s understanding that open foreign currency exposures are maintained by other sovereign debt managers, the Committee notes Treasury s 1996 institutional arrangements and resourcing consultancy which stated that the Commonwealth s practice of seeking a net foreign currency exposure, independent of foreign exchange needs or the need to offset foreign currency assets, was in contrast to the practices of other sovereign debt managers, State treasury corporations and most private sector practice. 31 The Committee has not been provided with any evidence that this situation has altered Foreign currency exposures from debt management operations usually arise where a country borrows offshore. A decision may then be taken to use derivatives to manage (or hedge) the foreign currency exposure. Australia has not needed to borrow offshore. Our exposure arises from a deliberate policy of using derivatives (cross-currency swaps) to create new exposures to try to reduce the cost of debt The Committee remains unconvinced of the validity of the underlying assumptions and the acceptability of the risk in relation to the Commonwealth s foreign currency exposures Unless the Australian dollar appreciates against the US dollar, significant cash flow losses will be borne by the Commonwealth in future years as the out-of the-money positions start coming forward. 29 AOFM, Submission No. 4, pp AOFM, Submission No. 4, p Audit Report No. 14, , p. 53.
10 26 REPORT The Committee looks forward to seeing the result of the benchmark review process. Derivatives and risk management 3.50 Holders of financial assets face a number of financial risks in managing the portfolio, including interest rate risk, foreign exchange risk, credit risk, liquidity risk and settlement risk. The audit report found that the Commonwealth is exposed to a number of significant risks through Treasury s debt management operations Between May 1998 and June 1999 Treasury entered into 332 swap transactions with a notional principal value of around $38 billion. At 30 June 2000, the aggregate Commonwealth swap portfolio consisted of 208 swaps with 25 counterparties with an outstanding notional principal value of around $30 billion Treasury does not use swaps to hedge existing exposures, but creates new exposures to try and reduce debt costs for an acceptable level of risk The audit report noted that significant unanticipated financial losses can occur as a result of unfavourable movements in interest and exchange rates or flawed corporate governance systems that do not ensure approved policies are applied and are effective The report identified control deficiencies in a number of areas, namely: a lack of internal audits or external reviews of compliance with the controls associated with Treasury s use of financial derivatives; the dated nature of some of Treasury s Master Agreements; the lack of facsimile bid confirmations for 22 per cent of unsuccessful bids in the swap tender sample examined by ANAO; and review and reporting of significant movement in the net exposures around the mid-point of the relevant benchmark ranges for swaps The Committee asked the Reserve Bank of Australia (RBA) to outline the measures it takes to ensure effective control of its derivatives. 32 Audit Report No. 14, , p Audit Report No. 14, , p Audit Report No. 14, , p Audit Report No. 14, , Chapter 5.
11 COMMONWEALTH DEBT MANAGEMENT The RBA stated that the first requirement was a very clear idea of what the bank wanted to do in terms of its investment strategy and what risk the bank was prepared to accept. Within that we have a benchmark and the government then delegates trading in the ranges that it is prepared to allow the staff to undertake The RBA indicated that it had very good control systems common to each of its portfolios, such as close management oversight and reporting, separation of duties between front and back and middle offices to avoid conflicts of interest and reduce the scope for fraud, and regular audits by both internal and external auditors The Committee then asked the AOFM to respond to the audit report findings in relation to derivatives. Internal audits and external reviews 3.59 The AOFM told the Committee that a 1997 review of the control environment for financial derivatives, undertaken as part of a consultancy report on institutional and resourcing arrangements for Commonwealth debt management, found that the control environment was essentially sound, with a clear segregation of duties. The AOFM also stated that derivative transactions had been subject to audits each year as part of the ANAO s audits of the Treasury s financial statements: Aspects of theses audits have involved testing compliance with the control framework The AOFM informed the Committee that it intends to have external reviews undertaken on a regular basis, and that the AOFM Audit Committee had agreed to the appointment of a consultant in early to advise on an internal audit program. 39 Committee comments 3.61 The audit report made it quite clear that there have been no internal audits or independent reviews of controls over derivatives. The review referred to by the AOFM looked at the control environment but did not actually test whether the documented controls were being complied with. As was evident from the audit report, controls were not being complied with. For 36 Transcript, 16 May 2000, p RBA, Submission No. 2, p AOFM, Submission No. 4, p AOFM, Submission No. 4, p. 6.
12 28 REPORT 378 example, 22 per cent of a sample of swap bids were not confirmed in writing by Treasury, despite a stated Treasury control that this was to occur The Committee considers it essential to the effective oversight of AOFM s derivative activities that recommendation no. 3 of the audit report be implemented. The Committee acknowledges the steps AOFM is taking to improve the internal control framework. Master Agreements 3.63 In response to the Committee s questions about AOFM s actions to address legal issues arising from uncompleted Master Agreements, AOFM outlined the steps which had been taken: Where there have been deficiencies identified in terms of the signatories to agreements or authorisations of the like, we have certainly put in place management actions to make sure those outstanding lists are received from counterparties.. There are a number of issues that remain outstanding, particularly in terms of renegotiating existing contracts. There is a very strong reluctance from counter parties to negotiate some of the existing clauses, particularly where they have a preference for using English law and New York law to swap agreements. But our policy is that, for any new agreements entered into, these issues have to be negotiated before those agreements can be signed AOFM later advised the Committee that: counterparties had been advised that an updated Master Agreement was a prerequisite for new business after 30 June 2000; a requirement for Australian governing law was the AOFM s opening stance in negotiation, and assurances concerning the power, capacity and due authorisation of counterparties to enter into swap transactions were now sought as part of standard procedures. Committee comments 3.65 The Committee acknowledges the actions being taken by the AOFM to improve internal controls. The Committee commends the establishment of 40 Audit Report No. 14, , pp. 85, Transcript, 16 May 2000, pp
13 COMMONWEALTH DEBT MANAGEMENT 29 the Liability Management Committee to which reports on failed settlements, progress on the updating Swap Master Agreements and details of future derivative settlement activity are provided. 42 Bid confirmations 3.66 The AOFM acknowledged that all unsuccessful bid confirmations were followed up, but that this action did not always lead to the receipt of confirmations: A much tougher approach is now taken with unsuccessful bidders. It is made clear that potential counterparties with outstanding bid confirmations will not be asked to participate in further tenders. Since this approach has been instituted there has been 100 per cent compliance in the receipt of confirmations The control framework for swap tenders is aimed at ensuring the best bid is accepted. The AOFM stated that the number of officers involved in the execution of swaps and the confirmation process prior to acceptance of the best bid provide a high level of assurance that the best bids are accepted. 44 Committee comments 3.68 The telephone tender process referred to by the AOFM is not wholly consistent with better practice. The AOFM might seek bids from more than one bank, but the absence of telephone recording facilities mean that there is no one outside of the officer or officers involved that can attest that the best bid was accepted A more comprehensive approach on unsuccessful bid confirmations is welcome but needs to be supplemented by telephone recording systems. The AOFM noted at the hearing that the planned upgrade to the existing Treasury telephone system which would enable digital recording, or recording of conversations, was not scheduled to occur until January However, it is clear to the Committee that the AOFM is taking steps in line with the audit report recommendations to improve procedural controls. 42 AOFM, Submission No. 4, p AOFM, Submission No. 4, p AOFM, Submission No. 4, pp Transcript, 16 May 2000, p. 16; AOFM, Submission No. 3, Attachment p. 2.
14 30 REPORT 378 Monitoring and reporting of exposures 3.70 The Committee asked AOFM what monitoring of foreign currency exposures occurred and at what frequency AOFM responded that exposures were monitored on an ongoing basis and reported against the predetermined benchmark on a bi-weekly basis: 46 Each week the Middle Office provides a report to management on the total portfolio position, including the position of the derivatives portfolio. The Middle Office also prepares a weekly report on credit exposure to derivative counterparties, which includes details of both market and potential exposure and credit limit utilisation In response to the Committee s inquiry as to how often reports were made to the Minister on the portfolio s performance, the AOFM acknowledged that there was currently no regular reporting to the Minister. The AOFM stated that there was only reporting of portfolio management operations and performance in meeting portfolio benchmark targets in the annual Commonwealth Debt Management report The AOFM agreed with audit report recommendations in this area and told the Committee that it was working towards a comprehensive reporting and governance regime that incorporated the Minister The Committee noted that at 30 June 1999, the economic gain on swap transactions was $539.2 million. However, at 26 June 2000, the swap book was out of the money by $2.134 billion. The Committee asked the AOFM about the implications of large swings in the net position of the Commonwealth The AOFM responded that: Market value and indeed swings in that market value carry no implications for current year fiscal balance or underlying cash budget balance measures. Further, the market value is not a valid indicator of the economic benefit of the Commonwealth s swap portfolio, nor of the underpinning long-term portfolio management strategy Transcript, 16 May 2000, pp AOFM, Submission No. 4, p AOFM, Submission No. 4, p AOFM, Submission No. 4, p AOFM, Submission No. 4, p. 3.
15 COMMONWEALTH DEBT MANAGEMENT 31 Committee comments 3.76 In assessing the performance of the swap book, the AOFM makes much of the realised cash flow savings that have accrued ($1.8 billion) and the resulting reduction in public debt interests (estimated by the AOFM to be $150 million per annum). However, the AOFM s assessment is inconsistent with its own performance measures used in developing the portfolio, which involved a market measure of cost The Committee notes that the market value of the Commonwealth debt portfolio has continued to fall as the amount of debt on issue has continued to be reduced. Although the physical debt on issue is falling, there has been a marked deterioration in the market value of the derivatives portfolio as a result of the further deterioration in the exchange rate and increases in interest rates In adopting the strategy to be exposed to the US dollar, Treasury expected the savings on interest rates to outmatch the depreciation on the dollar. However, the 10-year bond differential has narrowed dramatically over the last 5 years and the Australian/US exchange rate has been volatile According to the AOFM, as at 26 June 2000, the swap book was out of the money by $2.134 billion, an increase of $0.838 billion in the unrealised loss of $1.296 billion reported by the ANAO as of 30 June This means that, unless the Australian dollar appreciates against the US dollar, significant cash flow losses will be borne by the Commonwealth in future years as the out-of the-money positions start coming forward The Committee considers that if Treasury is going to use financial derivatives, there must be a good control framework for the process. It seems clear from the audit report and the Committee s own inquiries that Treasury is only now looking to introduce systems, procedures and expertise for an activity already underway. Recommendation The Committee recommends that the Australian Office of Financial Management move as quickly as possible to implement all of the Australian National Audit Office recommendations. 51 AOFM, Submission No. 4, p.2; Audit Report No. 14, , p. 49.
16 32 REPORT 378 Cash management framework 3.83 As the audit report noted, the interrelationship between Treasury and the Office of Asset Sales and IT Outsourcing (OASITO the agency responsible for implementing the sale of major Commonwealth assets) is important in planning the issue and repurchase of Commonwealth debt: This is because Treasury relies on information from agencies to forecast revenues and expenses[,] and changes in the quantum and/or timing of these cash flows can significantly alter Treasury s borrowing and repurchase decisions. Treasury develops a profile of the pattern of receipts expected from major asset sales based on information provided by OASITO and previous asset sales experiences During the hearing the Committee referred to deficiencies in the information flow experienced by Treasury which led to difficulties with forecasting the timing and size of the receipt of proceeds from the 1997 Telstra public share offer. The AOFM was asked to comment on the nature of and reason for the difficulties it had encountered The AOFM stated that there was no requirement on the part of agencies to provide forecasts of their cash flows to Treasury (or now to the AOFM) to assist in its cash management operations: The whole framework is based on voluntary provision of detail and checking of that detail by us in conjunction with relevant agencies. That framework has been tightened up very significantly over the last two or three years and it is far more efficient. Nonetheless, we continue to look for further improvements in that framework. I would say, on looking back to that 1997 exercise that, at the margin there was certainly scope for better-quality and more timely information form the Office of Asset Sales. They might argue, as they have [in the report], that we might have expressed our requirements in that regard a little more explicitly to them The AOFM went on to say that the flow of information was now very effective and that there were no such difficulties with the Telstra 2 proceeds Audit Report No. 14, , p Transcript, 16 May 2000, pp Transcript, 16 May 2000, p. 9.
17 COMMONWEALTH DEBT MANAGEMENT The Committee sought more information on the late banking of retail application moneys for Telstra 1, and the impact on the repurchase dates of some fixed coupon bonds In a later submission to the Committee, the AOFM confirmed that an early repurchase of $1.8 billion of January 1998 Bonds from the RBA s portfolio, scheduled for Tuesday, 4 November 1997 could not be undertaken because Telstra proceeds received by the Commonwealth by Monday, 3 November were less than expected: Subsequent investigation revealed that, contrary to expectations, no processing of cheques occurred on Sunday, 2 November..The repurchase actually took place on Wednesday, 5 November 1997, when sufficient cash was available to fund the repurchase. 55 Committee comments 3.89 The ability to accurately forecast the timing and quantum of the significant cash flows associated with major Commonwealth asset sales is important to AOFM s borrowing and repurchase programs The Committee has consistently sought improvements in the Commonwealth s cash management operations. The Committee notes AOFM s claims that there have been recent improvements in information flow and expects the AOFM to actively maintain and improve agencies awareness of its information requirements. 55 AOFM, Submission No. 3, p Audit Report No. 14, , p. 81.
The Auditor-General Audit Report No.14 1999 2000 Performance Audit Commonwealth Debt Management Australian National Audit Office Commonwealth of Australia 1999 ISSN 1036-7632 ISBN 0 644 39162 6 This work
GLOSSARY Australian dollar Long-Term Debt Portfolio The majority of the Long-Term Debt Portfolio consists of the domestic debt component known as the Australian dollar Long-Term Debt Portfolio. It consists
The Auditor-General Audit Report No.42 2004 05 Performance Audit Australian Office of Financial Management Australian National Audit Office Commonwealth of Australia 2005 ISSN 1036 7632 ISBN 0 642 80839
Corporate Risk Management Advisory Services FX and interest rate solutions for clients Risk Management: The UBS Warburg approach UBS Warburg has built an outstanding reputation in the management of foreign
STANDARDS OF SOUND BUSINESS PRACTICES FOREIGN EXCHANGE RISK MANAGEMENT 2005 The. All rights reserved Foreign Exchange Risk Management Page 2 FOREIGN EXCHANGE RISK MANAGEMENT A. PURPOSE This document sets
Foreign Currency Exposure and Hedging in Australia Anthony Rush, Dena Sadeghian and Michelle Wright* The 213 Australian Bureau of Statistics (ABS) Foreign Currency Exposure survey confirms that Australian
AUSTRALIAN BANKS GLOBAL BOND FUNDING 1 Introduction Over the past decade, Australian banks have sourced a sizeable share of their funding in offshore markets. This article examines various aspects of these
THE SEPARATION OF DEBT MANAGEMENT AND MONETARY POLICY Debt management is the means by which the government issues securities to finance its deficit (or retires its debt if the Budget is in surplus) and
June 2 The Reserve Bank s Open Market Operations Introduction The Cash Rate The stance of monetary policy in Australia is expressed in terms of a target for the cash rate the interest rate on unsecured
Guidance Note GGN 221.1 Managing Outsourcing Arrangements 1. This Guidance Note provides further detail on the requirements for managing material outsourcing arrangements (refer Prudential Standard GPS
Trading in Treasury Bond Futures Contracts and Bonds in Australia Belinda Cheung* Treasury bond futures are a key financial product in Australia, with turnover in Treasury bond futures contracts significantly
Federation of European Accountants Federation of European Accountants Fédération Fédération des Experts des Experts comptables comptables Européens Européens Public Sector Public Debt and Cash Management
Foreign Exchange Policy and Procedures Commencement Date: 23 August, 2006 Category: Finance 1. PURPOSE The purpose of this policy is to regulate Foreign Currency transactions of Material amounts and to
GOLDSMITHS University of London CNCL/96 14-101 G TREASURY MANAGEMENT OPERATIONS 1 Background COUNCIL FINANCE AND RESOURCES COMMITTEE 18 March 2014 Goldsmiths Treasury Management Policy was last extensively
SSAP 24 STATEMENT OF STANDARD ACCOUNTING PRACTICE 24 ACCOUNTING FOR INVESTMENTS IN SECURITIES (Issued April 1999) The standards, which have been set in bold italic type, should be read in the context of
R Roche Capital Market Ltd Financial Statements 2009 1 Roche Capital Market Ltd, Financial Statements Reference numbers indicate corresponding Notes to the Financial Statements. Roche Capital Market Ltd,
STATUTORY BOARD SB-FRS 39 FINANCIAL REPORTING STANDARD Guidance on Implementing Financial Instruments: Recognition and Measurement CONTENTS SECTION A SCOPE A.1 Practice of settling net: forward contract
TCS Financial Solutions Australia (Holdings) Pty Limited ABN 61 003 653 549 Financial Statements for the year ended 31 March 2015 Contents Page Directors' report 3 Statement of profit or loss and other
Bangkok Bank Public Company Limited 044 RISK FACTORS AND RISK MANAGEMENT Bangkok Bank recognizes that effective risk management is fundamental to good banking practice. Accordingly, the Bank has established
Policy approved at 22 April 2013 meeting of the Board of Governors (Minute 133:4:13) INVESTMENT POLICY April 2013 Contents SECTION 1. OVERVIEW SECTION 2. INVESTMENT PHILOSOPHY- MAXIMISING RETURN SECTION
TMLS SINGAPORE BOND FUND SUMMARY (SUPPLEMENT TO PRODUCT SUMMARY) This supplement forms part of the product summary. You should read this together with the relevant Product Summary. Description of the Fund
Opinion n 2015-06 of 3 July 2015 relating to Central Government Accounting Standard 10 Cash Components On 3 July 2015 the Public Sector Accounting Standards Council adopted this Opinion relating to Central
Investment options and risk Issued 1 November 2013 The information in this document forms part of the Product Disclosure Statement for the Commonwealth Superannuation Scheme (CSS), sixth edition, issued
17 Financial assets Available for sale financial assets include 111.1m (2013: 83.0m) UK government bonds. This investment forms part of the deficit-funding plan agreed with the trustee of one of the principal
Report and Non-Statutory Accounts 31 December Registered No CR - 117363 Cayman Islands Registered office: PO Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands Report
Reg. no 2014/1392 30 September 2014 Central government debt management Proposed guidelines 2015 2018 1 Summary 1 Proposed guidelines 2015 2018 2 The objective for the management of central government debt
FINANCIAL SERVICES TRAINING PACKAGE FNB99 This is Volume 12 of a 13-volume set. This volume should not be used in isolation but in the context of the complete set for the Financial Services Training Package.
Risk Management Programme Guidelines Submissions are invited on these draft Reserve Bank risk management programme guidelines for non-bank deposit takers. Submissions should be made by 29 June 2009 and
Application for a Banking Authority Foreign Bank Branches Prudential Statement J2 PS J2 Introduction 1. A foreign bank wishing to operate as a branch in Australia must obtain a banking authority issued
Section N: Cambridge University Endowment Fund: Reports and financial statements to 30 June 2013 Cambridge University Endowment Fund Reports and financial statements 30 June 2013 IMPORTANT NOTICE The Cambridge
A guide to managing foreign exchange risk CPA Australia Ltd ( CPA Australia ) is one of the world s largest accounting bodies with more than 122,000 members of the financial, accounting and business profession
This document is issued by Standard Life Investments Property Income Trust Limited (the "Company") and is made available by Standard Life Investments (Corporate Funds) Limited (the AIFM ) solely in order
GUIDELINES FOR CENTRAL GOVERNMENT DEBT MANAGEMENT 2015 Decision taken at the Cabinet meeting November 13 2014 2015 LONG-TERM PERSPECTIVES COST MINIMISATION FLEXIBILITY Guidelines for the mana g ement of
2 FMG September 2006 Australian Government Foreign Exchange Risk Management Guidelines Financial Management Guidance FINANCIAL MANAGEMENT GROUP (FMG) September 2006 Australian Government Foreign Exchange
Effective July 1, 2015 Canadian Cancer Society Statement of Investment Policies and Procedures Background The Society wishes to invest funds in a prudent manner, with appropriate consideration given to
Monetary Authority of Singapore SECURITIES AND FUTURES ACT (CAP. 289) NOTICE ON RISK BASED CAPITAL ADEQUACY REQUIREMENTS FOR HOLDERS OF CAPITAL MARKETS SERVICES LICENCES Monetary Authority of Singapore
Export Development Canada Special Examination Report 2009 Office of the Auditor General of Canada Bureau du vérificateur général du Canada Ce document est également publié en français. Office of the Auditor
Vanilla Options Product Disclosure Statement Issued by Western Union Business Solutions (Australia) Pty Limited (NZ Branch) (Company Number 3527631, FSP 168204) 21 May 2015 This document provides important
The Scottish Investment Trust PLC INVESTOR DISCLOSURE DOCUMENT This document is issued by SIT Savings Limited (the Manager ) as alternative investment fund manager for The Scottish Investment Trust PLC
Investment Options and Risk Issued 1 July 2013 The information in this document forms part of the Product Disclosure Statement for the Military Superannuation and Benefits Scheme (MilitarySuper), third
A.B.N. 90 168 653 521 Appendix 4E - Preliminary Financial Report for the year ended 30 June 2015 Appendix 4E - Preliminary Financial Report For the year ended 30 June 2015 Preliminary Report This preliminary
S t a n d a r d 4. 4 a M a n a g e m e n t o f c r e d i t r i s k Regulations and guidelines THE FINANCIAL SUPERVISION AUTHORITY 4 Capital adequacy and risk management until further notice J. No. 1/120/2004
Statement of Guidance Asset Management & Investment Strategy For Insurance Companies 1. Statement of Objectives To ensure that assets are managed in a sound and prudent manner that is consistent with the
Research commentary Sources of return for hedged global bond funds August 2012 Author Roger McIntosh Executive summary. The recent results in key bond market indices demonstrate the importance of a strategic,
Guide To Foreign Exchange Policy Silicon Valley Bank 3003 Tasman Drive Santa Clara, California 95054 408.654.7400 svb.com May 2011 Companies planning to operate in the global marketplace should prepare
The Bank of Canada s Management of Foreign Currency Reserves Jacobo De León, Financial Markets Department The Government of Canada s official international reserves are held primarily in the Exchange Fund
Pharmaxis Ltd 1. Board responsibility The Pharmaxis Board is responsible for ensuring the Company establishes and maintains a risk management framework for the oversight and management of risk. The Board
1 BOARD NOTICE.. OF 2013 FINANCIAL SERVICES BOARD COLLECTIVE INVESTMENT SCHEMES CONTROL ACT, 2002 DETERMINATION OF SECURITIES, CLASSES OF SECURITIES, ASSETS OR CLASSES OF ASSETS THAT MAY BE INCLUDED IN
PRINCIPAL GLOBAL INVESTORS FUNDS Supplement dated 31 July 2013 for the Long/Short Global Opportunities Equity Fund This Supplement contains specific information in relation to the Long/Short Global Opportunities
MERCER GLOBAL CREDIT FUND Product Disclosure Statement 1 June 2015 ARSN: 141 046 282 APIR: MIN0032AU Contents Page 1. About Mercer Investments (Australia) Limited 2 2. How the Mercer Global Credit Fund
ARSN 159 605 811 Annual report - for the period from 1 July to ARSN 159 605 811 Annual report - for the period from 1 July to Contents Page Directors' report 2 Auditor's independence declaration 6 Statement
WHITE PAPER Managing Foreign Exchange Risk The Canadian dollar has made the headlines on numerous occasions in recent years. Its value has changed significantly and rapidly many times, greatly impacting
STATEMENT 7: DEBT MANAGEMENT This statement discusses debt management, including maintaining the Commonwealth Government Securities (CGS) market and the proposed investment of financial assets in the Future
Auditing Derivative Instruments 1915 AU Section 332 Auditing Derivative Instruments, Hedging Activities, and Investments in Securities 1 (Supersedes SAS No. 81.) Source: SAS No. 92. See section 9332 for
Understanding and Managing Interest Rate Risk Finance & Treasury April 2008 CPA Australia Ltd ( CPA Australia ) is the sixth largest professional accounting body in the world with more than 117,000 members
(Incorporated in the Republic of Singapore) AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION FOR THE PERIOD FROM 23 DECEMBER 2008 (DATE OF INCORPORATION) TO 30 JUNE 2009 LAM/KCH DIRECTORS REPORT
RISK MANAGEMENt AND INtERNAL CONtROL Overview 02-09 Internal control the Board meets regularly throughout the year and has adopted a schedule of matters which are required to be brought to it for decision.
Auditing Treasury Activities Devina Rankin Assistant Treasurer Overview of the Treasury Function Making sure the right amount of cash is in the right accounts on a daily basis Day-to-day cash management
Thames Water Utilities Cayman Finance Limited Annual report and voluntary financial statements for the year ended 31 March Registered no: MC-187772 (Cayman Islands) Thames Water Utilities Cayman Finance
The International Certificate in Banking Risk and Regulation (ICBRR) The ICBRR fosters financial risk awareness through thought leadership. To develop best practices in financial Risk Management, the authors
PROVINCIAL JUDGES AND MASTERS IN CHAMBERS RESERVE FUND Financial Statements Year Ended March 31, 2015 Independent Auditor s Report.... 204 Statement of Financial Position..................... 205 Statement
MERCHANT NAVY OFFICERS PENSION FUND STATEMENT OF INVESTMENT PRINCIPLES Introduction The main purpose of the MNOPF is the provision of pensions for Officers in the British Merchant Navy on retirement at
MLC MasterKey Unit Trust Product Disclosure Statement (PDS) Preparation date 1 July 2014 Issued by MLC Investments Limited (MLC) ABN 30 002 641 661 AFSL 230705 This information is general and doesn t take
Writing your charity s investment policy A guide www.cfg.org.uk www.charityinvestorsgroup.org.uk Contents Introduction What is this guide for?... 1 Who is this guide for?... 1 Why have a written investment
2008 Guidelines for for Insurance Insurance Undertakings Undertakings on Asset on Asset Management Management 2 Contents Context...3 1. General...3 2. Introduction...3 3. Regulations and guidelines for
Accounting Standard AASB 1014 December 1996 Set-off and Extinguishment of Debt Issued by the Australian Accounting Standards Board Obtaining a Copy of this Accounting Standard Copies of this Standard are
Summary Prospectus MAY 1, 2015 Bond Fund of the TIAA-CREF Life Funds Ticker: TLBDX Before you invest, you may want to review the Fund s prospectus, which contains more information about the Fund and its
Risk and Audit Committee Terms of Reference 16 June 2016 Risk and Audit Committee Terms of Reference BHP Billiton Limited and BHP Billiton Plc Approved by the Boards of BHP Billiton Limited and BHP Billiton
Financial Statements of RAPID TRANSIT PROJECT 2000 LTD. KPMG LLP Chartered Accountants St. Andrew s Square II 800-730 View Street Victoria BC V8W 3Y7 Canada Telephone (250) 480-3500 Telefax (250) 480-3539
APRIL 2016 This statement provides you with key information about Income Partners RMB Bond Fund (the Sub-Fund ). This statement is a part of the offering document and must be read in conjunction with the
Managed Investment Funds Product Disclosure Statement A range of funds that allows you to create an investment portfolio that suits your individual needs This is a combined Financial Services Guide and
Financial Statements June 30, 2015 and 2014 Medical Facility Infrastructure Loan Program MEDICAL FACILITY INFRASTRUCTURE LOAN PROGRAM Table of Contents Exhibits Page INDEPENDENT AUDITOR S REPORT 1 MANAGEMENT
Treasury of the Republic of Latvia Smilšu iela 1, Rīga, LV-1919, Latvia, phone +371 67094222, fax +371 67094220, e-mail email@example.com, www.kase.gov.lv STRATEGY Rīgā APPROVED BY Minister of Finance J.Reirs
PART I - PRELIMINARY...1 Objective...1 Applicability...2 Legal and Regulatory Provision...2 PART II POLICY REQUIREMENTS...3 Investment and Risk Management Policy...3 Monitoring and Control...5 Roles of
I. STATEMENT OF POLICY SALESFORCE.COM, INC. CHARTER OF THE AUDIT AND FINANCE COMMITTEE OF THE BOARD OF DIRECTORS (Revised September 11, 2012) This Charter specifies the scope of the responsibilities of
Ownership of Australian Equities and Corporate Bonds Susan Black and Joshua Kirkwood* Australian financial and non-financial companies tap capital markets particularly equity and bond markets to source
WisdomTree ETFs BOFA MERRILL LYNCH HIGH YIELD BOND ZERO DURATION FUND HYZD The U.S. high-yield bond market has been one of the best-performing subsets of the fixed income investable universe over the past
Online Share Trading Currency Futures Wealth warning: Trading Currency Futures can offer significant returns BUT also subject you to significant losses if the market moves against your position. You may,