University College London
Treasury Management Policy
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1. General Statement
1.1.
University College London (UCL) defines its treasury management activities as:
The management of UCL's cash flow, its banking, money market and capital market
transactions; the effective control of the risks associated with those activities; and the
pursuit of the optimum performance consistent with those risks.
UCL acknowledges that effective treasury management will provide support towards
the achievement of its business objectives.
The Director of Finance & Business Affairs will design, implement and monitor all
arrangements for the identification, management and control of treasury management
risk: will report at least annually on the adequacy/suitability thereof, and will report, as
a matter of urgency, the circumstances of any actual or likely difficulty in achieving the
objectives.
UCL's appetite for risk is low and is more willing to take term than credit risk.
2. Cash Flow Management
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
Monthly schedules of actual cash flow performance are to be prepared and monitored
against original projections by the Assistant Director, Financial Accounting. Revised cash
flow projections will be prepared on a monthly basis.
Cash Flow statements are to be prepared for each Finance Committee detailing actual
and projected cash flow for the financial year and significant variances since the last
Finance Committee of actual against forecasted cash flow. Copies of UCL's projected cash
flow are to be sent to UCL's Cash Managers twice a year.
Cash Flow Projections are to be prepared for the following financial year, in June of each
year, with outline projections for the following four years.
Cash balances are to be reviewed on a daily basis by the Treasury Accountant and surplus
funds invested with UCL's bankers, BlackRock or, on the authority of the Assistant
Director, Financial Accounting, with UCL's Cash Managers, taking into account rates of
return and the length of time it is anticipated the funds are available for investment.
UCL will retain funds in currencies only to the extent that payments are due to be made
in those currencies. Currency receipts surplus to this requirement will be transferred into
sterling (GBP) at the best rate achievable at the time.
Performance targets will be agreed each year with the Cash Managers. Rates of Returns
achieved by the Cash Managers will be measured against benchmarks (e.g. 3 month
rolling LlBOR).
The Director of Finance & Business Affairs will ensure that satisfactory written procedures
are in place for raising invoices and collecting debt. Regular debtors reports shall be
prepared for Finance Committee and bad debts written off shall be reported above
prescribed limits.
Arrangements will be put in place for reporting the level of stocks and stores above an
agreed threshold at least once a year and consideration given from time to time to
optimising stock levels.
The Director of Finance & Business Affairs shall ensure that satisfactory arrangements are
in place for the payment of expenses and suppliers, and that discounts are taken, where
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appropriate. The Banks Automated Clearing System 2.1(BACS) for payment will be used
wherever possible.
3. Banking Arrangements
3.1.
The Director of Finance & Business Affairs will be responsible for opening and
maintaining the bank accounts needed to conduct properly the business of UCL. Finance
Committee will authorise account signatories.
3.2. The Director of Finance & Business Affairs will ensure the reconciliation of the bank
accounts on a monthly basis, by persons other than those whose responsibility includes
the handling of receipts and maintaining accounts receivable records.
3.3. Other than the Director of Finance & Business Affairs, no member of staff has authority
to open a bank account for UCL related activity or use the name of UCL or its
departments.
3.4. Cheque signatories shall take such steps as necessary to satisfy themselves that proper
procedures have been followed to ensure that payment requests are supported by
properly checked, approved and appropriate documentation.
3.5. The Director of Finance & Business Affairs shall ensure that proper control is exercised
over unused and cancelled cheques.
3.6. Open Cheque Facilities can be set up with the approval of the Director of Finance &
Business Affairs for the cashing of petty cash cheques, and cheques where the payee has
no UK bank account.
3.7. BACS will be used for the payment of salaries and suppliers wherever possible to reduce
the need to draw cheques.
3.8. The use of Electronic Banking facilities should be made where appropriate.
3.9. The Director of Finance & Business Affairs is authorised, as appropriate, to make use of
Banking Facilities including:
Business Cards/Corporate Cards
Purchasing Cards
Overdraft Facilities
Negotiation Facilities
Terminable Indemnity Facility (Duty Deferment Guarantees)
Safe Custody
Credit/Debit Cards
3.10. Bankers are to be appointed (subject to review at least every three years) to look after
UCL's banking arrangements.
4. Investment of short term funds
4.1.
4.2.
The Director of Finance & Business Affairs shall be responsible for arranging short-term
deposits of UCL funds on a daily basis with due regard to any restrictions imposed by
Finance Committee.
The investment objectives are to maximise returns whilst maintaining an appropriate
level of liquidity, without undue risk.
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4.3.
4.4.
4.5.
4.6.
4.7.
4.8.
4.9.
4.10.
4.11.
4.12.
4.13.
Cash Managers are to be appointed (subject to review at least every three years) to look
after the main part of the UCL's short-term funds. Fees are to be negotiated, dependent
upon the size of the funds under management, and shall be inclusive of all charges.
UCL's cash position is to be reviewed on a daily basis.
The Cash Managers will be responsible for the bulk of the UCL's cash balances and are to
be advised on the likely period over which sums will be available for investment.
The Cash Managers are required to attend a meeting of Investments Committee each
year to review arrangements and past performance.
The balance on liquidity accounts should be kept to a minimum, sufficient to meet
working capital needs.
Custodial arrangements are to be entered into with parties, agreed by UCL’s Investments
Committee, in respect of deposits placed with receiving counterparties, to provide UCL
with additional security.
Approved counterparties are to be restricted to those Banks and Building Societies with a
Moody's and Standard and Poors short term credit rating of minimum P1 and A1
respectively, with deposit limits set by Investment committee. Deposits may be subject to
restrictions imposed from time to time by the Director of Finance & Business Affairs, after
discussion with the Cash Managers, on Institutions located in certain geographical areas.
The list of approved counterparties and lending limits are to be reviewed by Investments
Committee and updated on a regular basis in consultation with the Cash Managers.
Consideration will be given from time to time by Finance Committee and Investments
Committee to the nature of investments. Currently, permitted investments are:
Deposits with approved Banks and Building Societies.
Certificates of Deposit issued by approved Banks and Building Societies.
Treasury Bills.
Investment Limitations are:
No investment/deposit in companies detailed in the bold footnote of this policy.
No powers to enter into or acquire Options, Futures or Contracts of Differences.
Rates of Return are to be measured against benchmarks to include:
Rates of Return on the Barclays Call
Rates of Return on the Investment Managers� general deposit account.
3 month rolling LlBOR.
5. Capital Financing
5.1.
5.2.
The Investments Committee is regulated by UCL's Regulations for Management 5.13,
which directs that "There shall be an Investments Committee which may make or vary
investments of the funds of the College or of Trusts appertaining thereto, subject to the
provision of Statute 6 (3), and shall report, by way of Finance Committee, to the Council.
Statute 6 (3) directs that "Subject to the conditions or provisions (if any) attached by the
donor to any gift from which the same are derived moneys and funds of the College may
be invested in such stocks, funds, fully-paid shares or securities and investments as the
Council shall from time to time think fit, whether within the United Kingdom of Great
Britain and Northern Ireland or not, including the purchase of land of any tenure or any
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5.3.
5.4.
5.5.
5.6.
5.7.
5.8.
5.9.
a.
b.
c.
d.
5.10.
5.11.
5.12.
interest therein in the said United Kingdom; provided that in the case of monies and
funds held by the College as trustees the powers conferred by this Statute shall be
exercised, subject to the provisions of the law relating to investment by trustees."
The Investments Committee shall meet at least four times a year, usually October,
January, April and July, although additional meetings can be arranged if required.
The Constitution, Membership and Terms of Reference of the Investments Committee
are to be confirmed each year, in October, and any changes in membership reported to
the Committee on College Governance.
The Director of Finance & Business Affairs shall ensure that legacies, gifts and
endowments made to UCL are administered and invested in accordance with the terms
laid down by the Donor.
The Investments Committee will agree each year, normally at its October meeting, the
investment strategy for both short and long-term investment having due regard to any
legislative requirement for charity investments and also any policy that UCL may wish to
apply in respect of socially responsible investments. Income targets will also be agreed.
Investment Advisers are to be appointed to manage the long-term investments within
the guidelines laid down by the Investments Committee. Appointment of Investment
Advisers will be reviewed at least every three years.
The performance of the Investment Managers will be measured against agreed
benchmarks and also monitored with other managers taking into account risks and
volatility of investment strategy.
The Investment Managers are required to attend the meetings of the Investments
Committee to discuss investment strategy, agree investment targets and to report on
changes to the investment portfolio. Information to be provided to Investments
Committee by the Investment Advisers will normally include:
A Valuation Summary for each of the Funds including details of the book and market
values, purchases and sales, rights and bonus issues et
An Investment Review of the period covered, including a report on the economic
situation.
A Statistical Analysis Report with performance comparisons against recognised indices.
A Statement of Asset Mix and Income Targets.
Rates of Return are to be measured against benchmarks which may include:
FTSE Government All Stocks Index.
FTSE All Share Index.
Combined Actuarial Performance Services (CAPS) or the WM Charity Universe or
similar index.
The fee rates of investment managers will be considered from time to time.
Further information can be found in the UCL Investment Policy.
6. Capital Financing
6.1. The Finance Committee will formally assess from time to time any future borrowing
requirements.
6.2. When considering the extent of external borrowing, due regard will be given to the level of
internal cash resources and their utilisation.
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6.3. All financing options will be fully evaluated, and consideration will be given to
commissioning independent expert advice.
6.4. Formal approval by the Finance Committee and Council shall be given in respect of all
borrowing, and where necessary the HEFCE shall be consulted.
6.5. A review of financial instruments, available in the market place, will be undertaken by the
Director of Finance & Business Affairs at least every three years, with a reassessment of
UCL's borrowing requirements involving security, covenants, interest rate exposure
consideration, financially modelling and sensitivity analysis. The appropriateness of existing
arrangements, and where necessary, market testing of alternative options will be pursued.
Updated: May 2014
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