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Treasury Management

POLICY NO: C-33

DATE : 26 August 2010
Council Resolution 2010/5/9

REFERENCE AUTHORITY: Chief Operating Officer

CROSS-REFERENCES:

Vice Chancellor’s Authorisations
Risk Management Policy
Financial Management Handbook
Treasury Management: Operating Parameters
UniSA Foundation — Investment Policy and Guidelines

 

 

Policy Statement

The University will identify and effectively manage the financial risks associated with treasury activities.

 

Preamble

The primary objective of the Treasury Management Policy is to provide a framework for identifying and effectively managing the financial risk associated with treasury activities. The Policy recognises the need to maximise returns on investment but in a responsible manner.

This framework has been developed to manage the following financial activities of the University of South Australia (UniSA), with the exception of funds managed by the UniSA Foundation Committee:

 

Definitions

Credit risk - the risk of financial loss through the unwillingness or inability of a counterparty to meet its obligations.
Financial risk - the potential for gain or loss arising from financial assets and liabilities.
Foreign currency exchange rate risk - the risk of loss from changes in exchange rates.
Interest rate risk - the risk that, as a result of fluctuations in interest rates, excessive variations in interest expense or revenue will be incurred.
Liquidity risk - the potential inability, through an unforeseen event or miscalculation, to fund operations or convert assets into cash to meet commitments.

 

Governance and Responsibilities

Council

Finance Committee

Vice Chancellor

 

Cash and Investment Management

The University will seek to maximise returns whilst minimising the risk of capital losses, having regard to the University’s cash flow requirements.

Funds available for investment will fall into one of the following categories:

In the event the University receives direct investments (excluding University funds managed by the UniSA Foundation Committee) they will be liquidated as soon as possible, unless expressly approved by the Finance Committee to continue to directly hold these investments. Where investments are restricted from sale for a designated period of time, the University will hold said investments until the restricted period has elapsed and then liquidate them as soon as possible thereafter, unless expressly approved by the Finance Committee to continue to directly hold these investments.

 

Debt Management

Borrowings require the approval of University Council, based on the recommendation of the Finance Committee. Lease commitments are approved in accordance with Vice Chancellor’s Authorisations. The University will seek to minimise the cost of borrowings.

 

Management of Financial Risks

The financial risks associated with cash and investment management are: liquidity risk, interest rate risk, foreign currency exchange rate risk and credit risk.

Liquidity Risk

Liquidity risk management has the objective of ensuring the University has sufficient funds to meet its obligations.

The University’s liquidity level is to be maintained at all times to meet all reasonably anticipated operating requirements of the University, as and when they fall due.

Interest Rate Risk

Interest rate risk management has the objective of managing the University’s exposure to interest rate volatility and its impact on operating results.

The University will seek to maximise the return on investment and minimise costs.

Borrowings may be a mixture of fixed and floating interest rates and require approval by Council based on a recommendation from the Finance Committee.

Foreign Currency Exchange Rate Risk

Foreign Currency Exchange Rate risk management has the objective of ensuring the University’s foreign exchange exposure is minimised.

Material Foreign Currency Exchange Rate risk will be hedged with approved counterparties, unless otherwise approved by Finance Committee.

Credit Risk

The management of credit risk has the objective of minimising the financial loss suffered through the default of a financial counterparty whether due to the financial insolvency of the counterparty, the inability or unwillingness of the counterparty to perform, or any other circumstance.

Treasury transactions may only be made with an approved counterparty.

 

Review and Amendments

The Treasury Management Policy is to be regularly reviewed with any amendments made to the Policy to be approved by Council on recommendation of the Finance Committee.

 

Enquiries

Enquiries can be directed to the Chief Financial Officer (extension 21181)

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