The AUI Corporation has Corporate Reserves for the purpose of providing: 1) a source of funds for activities that are consistent with the Corporate Charter, but are not supported by contracts through an indirect cost rate or a management fee, and 2) for the orderly dissolution of the Corporation if necessary. The use of Corporate Reserves is subject to review and approval by the AUI Board of Trustees on an annual basis.
AUI Corporate investments are reported at fair value based on quoted market prices or, in the case of non-marketable investments, at estimated fair values provided by the investment managers and/or general partners based on a valuation of net asset value of the investment. The AUI Treasurer reviews and evaluates these fair values and the valuation methods and assumptions developed by the investment and/or general partners manage to determine the reasonableness of the fair value of the non-marketable investments.
- Fair (Market) Value (FMV) Measurements – SFAS No. 157, Fair Value Measurements in 2008 defines fair value as an exit price, representing the amount expected to be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. SFAS No. 157 sets forth a three-tier hierarchy for the inputs used to measure fair value based on the degree to which such inputs are observable in the marketplace, as follows: (i) Level 1 – observable inputs such as quoted prices in active markets; (ii) Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (iii) Level 3 – unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
- TIFF – The Investment Fund for Foundations
- Performance Indices – Market indices track the performance of a specific “basket” of stocks considered to represent a particular market or sector of the U.S. stock market or the economy. AUI tracks the S&P 500, Wilshire 5000, and the Barclays Aggregate Bond Index.
- At the end of the month, the AUI/NRAO Chief Accountant prepares reconciliation between cost and market value of each investment to calculate the correct unrealized gain/loss for the month and ensures that any differences are properly identified and evaluated.
- The AUI/NRAO Chief Accountant then prepares journal entries to adjust the balances in the investment cost and valuation accounts, for each investment, to market value based on the reconciliation of the investment statements received from financial institutions. A roll forward spreadsheet is prepared as well. The journal entries are then reviewed by the AUI Controller during the review of the monthly AUI General Ledger.
- The AUI/NRAO Chief Accountant prepares an “Investment Summary” report which aggregates the activity and performance (based on the information from the roll forward) and submits the report to the AUI Treasurer for review.
- The “Investment Summary” report shows the FMV of the investments at the end of the month versus the beginning of the month, the beginning of the fiscal year, and the changes since the beginning of the fiscal year in dollars. The report looks at the return on the investments on a monthly basis and the cumulative return on an YTD (fiscal) basis. Additionally, the report compares each investment’s performance to selected indices (Barclays Capital US Aggregate Bond Index, Standard & Poor 500 Index and Wilshire 5000 Index) on an YTD return, 1 year, 5 years and 10 years (annualized).
- The “Investment Summary” is included in the internal AUI monthly Financial Statements, which is presented to the AUI Board of Trustees (either electronically or hard copy.)
- The AUI Board of Trustees, Operations and Administration Committee (OAC) meets three times a year prior to the Board of Trustees meetings. At their meeting, The OAC reviews the AUI Financial Statements and the AUI’s investment performance and portfolio. The Committee also reviews the portfolio against AUI’s investment policy to ensure that it is in compliance with the Board approved investment policy. Part of this review includes looking at the TIFF fund performance and comparing it against other comparable funds.