Best Practices in Investment Reporting

Transcription

1 Best Practices in Investment Reporting Doug Bressette Assistant Treasurer Celgene Corporation R.B. Erickson Customer Solutions Clearwater Analytics

2 Introduction: Presenters Doug Bressette Assistant Treasurer, Celgene Over 15 years of treasury industry experience Former Director of Treasury Services at ADP, Inc. and Sr. Manager, Capital Markets at Pharmacia Corp. Responsible for investment of Celgene s $2.5B global corporate cash portfolio RB Erickson Customer Solutions, Clearwater Analytics 8 years of experience in enterprise systems and the financial services industry Former ERP Business Analyst for Boise Cascade and Director, Relationship Management for Clearwater Analytics

3 Introduction: Clearwater Analytics Clearwater Analytics Provider of web-based investment portfolio reporting for investors, investment managers, money fund portals and custody banks Formed in 2003 Headquartered in Boise, Idaho with offices in New York, New York $400 billion in assets on the system 2,000 investor clients

4 Outline Investment analytics defined Organizational perspective of investment reporting Investment reporting best practices Celgene experience implementing investment reporting Takeaway A new perspective on how investors use reporting and analytics to improve investment transparency

5 Investment Reporting Defined Investment reporting provides the appropriate level of content that each stake holder needs in the most efficient way possible. Who needs how much of what? A comprehensive reporting system allows for changing investment needs

6 Investment Reporting Constituents (Who) Senior Management CEO, COO, CFO, Audit Committee Treasury Treasurer, Assistant Treasurer, Treasury Analyst Accounting Controller, Staff Accountant Audit Internal, External Financial Reporting Tax

7 Investment Reporting (What) Accounting Create journal entries and FASB disclosures Compliance Monitor your investment policy Performance Know and understand the portfolio s return Risk Monitor the portfolio s risk profile (i.e. Concentrations & Allocations)

8 Investment Reporting (How Much) Lot Level Detail Level of Detail Accounting Compliance Performance Risk Executive Summary Senior Management Treasury Accounting Audit Tax Financial Reporting Constituents

9 Best Practices Complete Do processes and systems efficiently provide the appropriate amount of information to all our constituents? Transparent Do we have access to timely information anytime, anywhere? Bad things don t just happen at month-end

10 Best Practices [continued] Integrated Data consistency across reporting areas Do our accounting numbers tie to reporting portfolio returns? Administration cost What resources do we spend maintaining disparate systems or integrating data and creating reports from multiple sources? Aggregated One-stop shop All the required data for the entire portfolio

11 Best Practices [continued] Flexible Do current processes/systems meet our requirements (compliance rules, accounting assumptions)? How quickly can we adapt to changing regulations (i.e. FASB)? Scalable Will our processes/systems be sufficient as we grow or will they adapt as we modify our investment strategy?

12 Best Practices [continued] Reconciled How do I know my information is accurate? What controls do I have in place? (Internal or SAS 70 Type II) Specific reporting requirements By industry (i.e. FASB, GASB, Schedule D, 5500) Within each reporting area (accounting, compliance, performance, risk) Outsourced vs. In-house

13 Celgene Corporation Our mission is what we do and who we are: Celgene is building a major global biopharmaceutical company focused in the discovery, development and commercialization of innovative therapies for unmet medical needs in cancer and immuneinflammatory diseases

14 Celgene Growth Brands

15 Celgene s Growth Opportunity Multi-Billion Dollar Global Market Opportunity ~2.15 Million patients (MM, MDS, CLL and NHL) ~1.35 Million patients (NHL) ~350,000 Patients (CLL) ~450,000 Patients (MM and MDS) Sources: GLOBOCAN Worldwide IARC CancerBase Aul C; Gattermann N; Schneider W Br J Haematol 1992 Oct;82(2): Williamson, et. al, 1994, British Journal of Hematology 87.,

16 Celgene Historical Growth

17 For our Continued Growth Cash required for: Organic growth Research and development, product launches and commercial expansion Partnerships Research collaborations, license agreements, co-promotion and marketing Mergers and Acquisitions When cash is needed - need to know: How much? Where is it? Costs to liquidity? Impact on remaining portfolio? Timely, accurate reporting is paramount to fuel growth

18 Investment Reporting Constituents Board of Directors Management Accounting Audit Investment Managers

19 Investment Reporting Requirements Board of Directors & Audit Committee Approval of Investment Policy Summary of Holdings by Asset Class Investment Income and Forecast Investment Performance Asset Impairments Management CEO, COO, CFO, Treasurer Detailed Holdings by Asset Class/Entity Investment Income and Forecast Investment Performance by Asset Class/Manager Asset Impairments

20 Investment Reporting Requirements Accounting General Ledger Detailed Holdings Interest earned, amortization, accretion Schedule of activity External Reporting FAS 157 Schedule of Market Risk

21 Investment Reporting Requirements Audit Internal Audit Trade compliance Reconciliation External Audit Detailed Holdings Trade compliance Asset Impairments FAS 157 and Valuation Investment Managers Internal Performance feedback Compliance violations

22 Investment Reporting History at Celgene Phase 1 Spreadsheet Drove accounting management, and audit reporting to all constituents Phase 2 Hybrid Spreadsheet/Accounting Services Outsourced accounting service Consolidated data into spreadsheet system Phase 3 Outsourced to a single software and service provider Hosted remotely and secure (ASP, SaaS) Met multiple reporting requirements for all constituents from one system

23 Phase 1 of Growth Cash Investments Spreadsheet Reporting 1-3 reporting entities $300M - $600M Cash and Marketable Securities items to report Easy compliance, performance, risk, etc. Can accommodate additional transactions (in similar asset classes, for same entity Focused on Accounting

24 Phase 1 of Growth Cash Investments Information Flow In-house Traders Reconciliation Money Fund Portal 1 Bloomberg Trades Primary Custody Bank Insert Pic of Excel worksheet Reporting & Service General Ledger Corp treasury compiles and calculates Investment Managers Money Fund Portal 2 Management Reports

25 Phase 1 of Growth Pros Simple Calculations easily verifiable Cons Not scalable Control issues with Excel reporting Best Practices deployed Complete Integrated Aggregated In what situations does this approach make sense? Small portfolios, concentrated in one or two legal entities Hands-on Treasury or Controllers staff

26 Phase 2 of Growth Cash Investments Hybrid Spreadsheet Reporting w/ Outsourced Accounting 4-7 reporting entities $600M - $1,000M Cash and Marketable Securities items to report Accounting for marketable securities performed on assets held at custodian No reporting on separate money market accounts Management, audit, and Treasury reporting more complicated with additional reporting companies etc. Merge in-house asset reporting with managers asset reporting

27 Phase 2 of Growth Cash Investments In-house Traders Money Fund Portal 1 Information Flow Reconciliation Trades Money Fund Portal 2 Corp treasury compiles and calculates Reporting & Service Management Reports Primary Custody Bank Investment Managers Accounting Service Provider General Ledger

28 Phase 2 of Growth Pros Greater scalability and complexity (legal entities, instruments) Greater credibility with Audit on complex calculations and pricing Cons Multiple data sources Manual reconciliation for consolidated reports Best Practices deployed Flexible Scalable When does this approach make sense? Small to mid-sized portfolios Accounting-focused management Portfolio management is focused on the assets in custody

29 Phase 3 of Growth Cash Investments Complete Outsourcing of Reporting Integrated Solution 15 reporting entities 2.5B 3.0B Cash and Marketable Securities Over 400 separate items to report Aggregation of all money markets funds and marketable securities into single database Reporting for all constituents performed off one database Scaleable to accommodate most complexities Reporting companies, asset classes, transactions Custom or ad-hoc reporting using spreadsheet export from database

30 Phase 3 Growth Cash Investments Information Flow Reconciliation Money Fund Portal 1 General Ledger Trades Primary Custody Bank Consolidator Reporting & Service Integrated Money Fund Portal 2 Investment Analytics

31 Phase 3 of Growth Pros Single database drives reporting for ALL constituents Daily updates of financials, risk, and performance All data fully exportable for custom/ad-hoc reports Cons Upfront planning for aggregated views Third-party data sources drive sector/industry classifications Reports and functions controlled by the outsource provider Take aways, etc. Always think and plan like you are 5X bigger than you are it may happen soon than you think

32 Summary Know your organizations needs Who needs how much of what? Best practices are achievable today Investment reporting can: Safeguard your investment portfolio Streamline accounting processes and reporting to upper management Provide controls important for management and auditors Increase the strategic importance of treasury in your company OR Leave you exposed to unknown risk Overwhelm scarce resources

33 Leave Behinds Celgene case study es/education/celgenecasestudy.asp Self assessment questionnaire SelfAssessment