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Treasury Management Policy
Responsibility for policy: Audit and Risk Committee
Approving authority: Council
Last reviewed: May 2014
Next review: May 2017
Application
1. This policy applies to all staff of the University with cash handling responsibilities
Purpose
2. The purpose of this policy is to set out the high-level framework for the University's financial
governance and management.
Scope
3. The scope of this policy excludes endowment funds.
Legislative context
4. The following documents provide the legislative context for this policy:
 Education Act 1989
 Public Finance Act 1989
 Crown Entities Act 2004.
Related documents
5. This policy should be read in conjunction with the following documents:
 Financial Authority Policy
 Financial Ethics Policy
 Koha, Donations and Sponsorship Policy
 Purchasing Policy
 PCard Policy
 Travel Policy
 Governance and Management Guidelines
 Staff Code of Conduct
Definitions
6. In this policy:
borrowing means any financing that includes draw-down facilities and credit facilities with a
maturity of more than 30 days; it does not include routine payment arrangements with vendors
and credit card facilities
cash means all forms of payment accepted by the University, including currency (notes and
coins), cheques, money-orders, credit cards, EFTPOS and other electronic transactions
cash handling means the receipt, storage, banking and distribution of cash
credit risk means the risk of loss arising from a counterparty to a financial contract failing to
discharge its obligations
counterparty means a financial institution with which the University enters into a financial
arrangement
derivative instrument means a financial instrument whose value can be derived from an
independent market
endowment fund means an investment that is funded solely by way of donations and managed
by the University of Waikato Foundation Trust Investment Committee
financial instrument means a contract that creates both a financial asset in one entity and a
financial liability or equity instrument in another; it includes cash deposits, lease arrangements,
hire purchase agreements and derivative instruments foreign currency exposure means the
value of expected payments or receipts in foreign currency based on the budget and
subsequently the updated cashflow forecast
foreign exchange risk means the risk of loss to an entity arising from an adverse movement in
foreign currency exchange rates hedging means establishing parameters to offset or minimise
costs and/or risks associated with foreign currency transactions
liquid asset means cash or any other financial asset that can be liquidated within two working
days
purchasing card means a credit card facility for staff.
Approved counterparties
7. The Chief Financial Officer must ensure that transactions are only conducted with banks or
financial institutions which have either:
a. a minimum Standard and Poors short-term rating of A-2 or long-term credit rating of A+, or
b. a minimum Moody's Investors short-term rating of P-2 or long-term credit rating of A
and which have been granted approved counterparty status by the Audit and Risk Committee.
(The current schedule of approved counterparties is set out in Appendix 1.)
8. The Audit and Risk Committee is responsible for monitoring approved counterparties to ensure
that they maintain the minimum credit ratings specified in section 7 of this policy.
9. The Chief Financial Officer must ensure that the University's financial exposure to any one
counterparty does not exceed 40% of its total funds, or NZ$10 million, whichever is greater.
10. Counterparty limits are subject to the approval of the Audit and Risk Committee, on the
recommendation of the Chief Financial Officer.
Banking and financial arrangements
11. The Chief Financial Officer is responsible for ensuring that the University's banking arrangements
comply with the Education Act 1989 and that, for control purposes, the number of University
bank accounts is kept to a minimum.
12. Staff must not open or close bank accounts on behalf of the University without the prior approval
of the Vice-Chancellor. (The current schedule of approved University bank accounts is set out in
Appendix 2.)
13. The Chief Financial Officer is responsible for ensuring that short-term deposits are only placed
with the banks or financial institutions which have been granted approved counterparty status
under section 7 of this policy.
14. The Chief Financial Officer is responsible for ensuring that any investment of money by the
University complies with the Education Act 1989.
15. The Chief Financial Officer is responsible for ensuring that approval by the Minister is obtained in
advance for any term investments and investments in shares, derivatives, gold, silver or any other
commodities that are not otherwise covered under section 14 of this policy.
Authorised bank account signatories for financial transactions
16. Authority to act as a bank account signatory is subject to the approval of the Vice-Chancellor.
17. The Chief Financial Officer must report the schedule of approved bank account signatories to the
Audit and Risk Committee annually. (The current schedule of approved bank account signatories
is set out in Appendix 3 and Appendix 4.)
18. All payroll transaction require the signature of one approved bank account signatory from the list
set out in Appendix 3, together with the signature of one approved bank account signatory from
the list set out in either Appendix 3 or Appendix 4.
19. All other bank account transactions require the signature of two approved bank account
signatories from the list set out in Appendix 3.
20. In situations where two signatories from the list set out in Appendix 3 are not available, the Chief
Financial Officer may call upon one signatory from the list set out in Appendix 4 to counter-sign a
non-payroll bank account transaction, together with one signatory from the list set out in
Appendix 3.
Purchasing card facilities
21. Only the Chief Financial Officer has authority to approve the establishment of any purchasing
card facility for the University.
22. Conditions for the provision and use of University purchasing cards are set out in the PCard
Policy.
Borrowing
23. The Chief Financial Officer is responsible for ensuring that all borrowing by the University
complies with the Education Act 1989.
24. The Chief Financial Officer is responsible for ensuring that the maturity dates of any drawdowns
and bank facilities are spread in order to mitigate any pressure in re-funding any individual
tranche of borrowing and to reduce exposure to adverse circumstances which might otherwise
impact on the availability or price of such funding.
Liquidity risk management
25. The Chief Financial Officer is responsible for ensuring that, unless approved otherwise in
advance by Council, the University's funding commitments are managed to ensure that a
minimum of 105% of the forecast peak funding requirements at any one point in time in the
following 12 month period are covered on the day by a combination of:
 liquid assets, and
 secured committed financing arrangements.
26. The Chief Financial Officer must monitor funding commitments and the University's liquidity
position on a monthly basis and report on such matters to each meeting of the Audit and Risk
Committee.
Foreign exchange risk management
27. In order to limit its exposure to foreign exchange risk, the University's preference to transact in
NZ$ wherever practicable must be communicated to both suppliers and customers.
28. The Chief Financial Officer has the authority to use hedging instruments to mitigate University
foreign exchange risks; however, active trading that is speculative in nature is prohibited.
29. The Chief Financial Officer may undertake hedging transactions with the approved
counterparties set out in Appendix 1, provided that only the following financial instruments are
used:
a. foreign exchange spot contracts
b. forward exchange contracts
c. market and stop-loss orders.
30. The Chief Financial Officer must report the details of any net foreign currency exposures and
related hedging to the next meeting of the Audit and Risk Committee following the relevant
transaction.
31. Individual foreign currency expenses or receipts with an equivalent spot value of NZ$50,000 or
less should be transacted at the spot rate on the date of payment or receipt; the Chief Financial
Officer must monitor foreign exchange risk for these types of transactions, but may leave them
unhedged at his or her discretion.
32. Wherever a confirmed foreign currency exposure has an equivalent spot value higher than
NZ $50,000, the Chief Financial Officer is responsible for ensuring that the foreign currency
exposure is 100% covered by foreign currency deposits or hedged in accordance with the
provisions of sections 28-29 of this policy, within five working days of the commitment arising
provided:
a. there is reasonable certainty over the amount and timing of the exposure, and
b. the term of the latest payment or receipt does not exceed 12 months.
33. Where, in the Chief Financial Officer’s view, a contract involving foreign currency is very likely to
be entered into within six months, he or she may arrange for up to 70% of the foreign currency
exposure to be covered by foreign currency deposits or hedged in accordance with the provisions
of section 28-29 of this policy.
34. The Chief Financial Officer is responsible for ensuring that at least two competitive quotes from
approved counterparties are obtained for any foreign currency transactions with an equivalent
spot value higher than NZ$250,000
Cash handling
35. The Chief Financial Officer has authority to designate an area as a Cash Collection Point.
36. The Chief Financial Officer is responsible for ensuring that internal control procedures for a Cash
Collection Point are appropriate, and that:
a. duties for the receipting, distribution, and recording of cash transactions are segregated, or
b. where the limited number of staff or the nature of the cash transactions makes segregation of
duties impossible, alternative appropriate controls are built into the cash handling procedure
of the Cash Collection Point.
37. The Chief Financial Officer is responsible for ensuring that cash received through the Cash
Collection Point is kept physically secure at all times through appropriate safekeeping equipment
and procedures, and that the safety and security of staff within the area is maintained.
38. Staff must maintain a formal accounting record of all cash transactions and must reconcile
transactions at the close of each business day.
39. Staff who receipt cash on behalf of the University must ensure that it is deposited into the
appropriate University bank account as soon as practicable.
40. Staff must not alter University accounting records, misappropriate cash received on behalf of the
University, or use cash received on behalf of the University for personal purposes.
Compliance
41. The Audit and Risk Committee is responsible for monitoring compliance with this policy, by way
of six-monthly reports from the Chief Financial Officer.
42. Breaches of the policy must be reported to the Vice-Chancellor and the Chairperson of the Audit
and Risk Committee, and may result in disciplinary action under the Staff Code of Conduct.
TREASURY MANAGEMENT POLICY
APPENDICES
Appendix 1 - Approved Counterparties
The University's approved counterparties, their
exposure limits are:
Standard &
Poors
Counterparty
short-term
credit
rating
long-term credit ratings, and their associated
Standard &
Poors longterm credit
rating
Moody's
shortterm
credit
rating
Moody's
long-term
credit rating
Exposure
Limit as
a % of
Total
Funds
ANZ Bank NZ Limited
A-1+
AA-
P-1
Aa3
0 - 40%
ASB Bank Limited
A-1+
AA-
P-1
Aa3
0 - 40%
Bank of New Zealand
A-1+
AA-
P-1
Aa3
0 - 40%
Commonwealth Bank of
Australia
A-1+
AA-
P-1
Aa2
0 - 40%
Rabobank
A-1+
AA
P-1
Aa2
0 - 40%
Westpac Banking Corporation
A-1+
AA-
P-1
Aa3
0 - 40%
Western Union
A-2
BBB
P-2
Baa2
0 - 40%
Appendix 2 - Bank Accounts
The schedule of bank accounts held by the University and its subsidiaries, as approved by the ViceChancellor, is provided below.
Counterparty
Account Type
Current Accounts
ASB Bank Limited
Current Account - University
ASB Bank Limited
Current Account - Foundation
ASB Bank Limited
Current Account - WaikatoLink
ASB Bank Limited
Current Account – iEngagEd Ltd
ASB Bank Limited
Business Saver Account - University
ASB Bank Limited
Business Saver Account - Foundation
ASB Bank Limited
Business Saver Account - WaikatoLink
ASB Bank Limited
Current AUD Account - University
ASB Bank Limited
Current EUR Account - University
ASB Bank Limited
Current GBP Account - University
ASB Bank Limited
Current JPY Account - University
ASB Bank Limited
Current USD Account - University
ASB Bank Limited
Current USD Account - WaikatoLink
ASB Bank Limited
Current USD Account - US Federal Funds
Commonwealth Bank of Australia
Business Cheque Account
Commonwealth Bank of Australia
Business Transaction Account
Foreign Currency Transacting Accounts
Western Union
Foreign Currency Transacting-University
Call Accounts
ANZ Bank NZ Limited
Call Account - University
ASB Bank Limited
Call Account - University
Bank of New Zealand
Call Account - University
Westpac Banking Corporation
Call Account - University
Term Deposits
ANZ Bank NZ Limited
Term Deposit - University
ASB Bank Limited
Term Deposit - University
ASB Bank Limited
Term Deposit - Foundation
Bank of New Zealand
Term Deposit - University
Westpac Banking Corporation
Term Deposit - University
At its own discretion, each bank typically opens a new bank account for the University upon the
deposit of short term funds.
Appendix 3 - Approved bank account signatories
Holders of the following positions are approved as bank account signatories:
Title
Chief Financial Officer
Manager, Financial Management
Project and Financial Information Manager
Accountant/Financial Advisor
Appendix 4 - Approved bank account signatories for electronic payroll authorisations only
Holders of the following positions are approved as bank account signatories for electronic payroll
authorisations only:
Title
Director of Human Resource Management
Human Resources Manager
Appendix 5 - Delegated Authority Framework
Activity
Delegated Authority
Banking
Opening new bank account
Vice-Chancellor
Closing existing bank account
Vice-Chancellor
Assigning & removing signatory
Vice-Chancellor
status
Establishing new credit card
Chief Financial Officer
facilities
Financial Instruments and Financial Arrangements
Audit and Risk
Approval of financial instruments
Committee
Approval of short-term investment
Vice-Chancellor
of funds over NZ$ 10,000,000
Approval of short-term investment
Chief Financial Officer
of funds up to NZ$ 10,000,000
Approval of financial arrangements
Chief Financial Officer
Interest Rate Risk Management
Establishing debt arrangements
Liquidity Risk Management
Council
Setting of funding requirements
Audit and Risk
Committee
Foreign Exchange Risk Management
Hedging of foreign currency
Chief Financial Officer
Parameters
Public Finance Act 1989
Must be an approved counterparty
Council to be notified at next meeting
Council to be notified at next meeting
Must be an approved counterparty
Public Finance Act 1989
Must be an approved counterparty
Must be an approved counterparty
Must be a major NZ trading bank
Must be an approved counterparty
Must be a major NZ trading bank
Public Finance Act 1989
Must be an approved counterparty
Must be an approved counterparty
Public Finance Act 1989
expenses and receipts over
NZ$ 50,000
Credit Risk Management
Must be an approved counterparty
Approval of counterparties
Audit and Risk
Committee
Setting of counterparty exposure
limits
Audit and Risk
Committee
Minimum Standard and Poors shortterm credit rating of A-2 or long-term
credit rating of A+, or equivalent
Minimum Moody's Investors’ ratings
Appendix 6 - Approved Financial Instruments
The University's approved financial instruments and their associated maximum maturity are:
Instrument
Maximum Maturity
Bank Bills
90 days
Bank Deposits
5 years
New Zealand Government Stock
5 years