Commonwealth of Pennsylvania - Treasury Department - Invest Program For Local Governments - Invest
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COMMONWEALTH OF PENNSYLVANIA TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS INVEST DAILY AND INVEST COMMUNITY PORTFOLIOS AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2008 COMMONWEALTH OF PENNSYLVANIA TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS INVEST DAILY AND INVEST COMMUNITY PORTFOLIOS HARRISBURG, PENNSYLVANIA AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2008 TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS DECEMBER 31, 2008 CONTENTS Background ................................................................................................................................ 1 Independent Auditor’s Report ................................................................................................... 3 Management’s Discussion and Analysis ................................................................................... 5 Statements of Fiduciary Net Assets ........................................................................................... 7 Schedules of Investments ........................................................................................................... 9 Statements of Changes in Fiduciary Net Assets ..................................................................... 12 Statements of Operations ... 13 Financial Highlights for a Share Outstanding ............................... ...
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COMMONWEALTH OF PENNSYLVANIA TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS INVEST DAILY AND INVEST COMMUNITY PORTFOLIOS AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2008
COMMONWEALTH OF PENNSYLVANIA TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS INVEST DAILY AND INVEST COMMUNITY PORTFOLIOS HARRISBURG, PENNSYLVANIA AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2008
TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS DECEMBER 31, 2008
CONTENTS
Background ................................................................................................................................ 1 Independent Auditor’s Report ................................................................................................... 3 Management’s Discussion and Analysis................................................................................... 5 Statements of Fiduciary Net Assets ........................................................................................... 7 Schedules of Investments........................................................................................................... 9 Statements of Changes in Fiduciary Net Assets ..................................................................... 12 Statements of Operations ......................................................................................................... 13 Financial Highlights for a Share Outstanding....................................................................... 14 Notes to Financial Statements................................................................................................. 15 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ............................................................................................. 21 Finding No. 1 Internal Control Deficiencies in Monitoring and Financial Statement Reporting for Investments ...................................................................................... 23 Audit Report Distribution List ................................................................................................. 27
TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS DECEMBER 31, 2008 BACKGROUND The INVEST Program for Local Governments (INVEST) is a diversified investment portfolio open to all local governments in the Commonwealth of Pennsylvania. INVEST operates by pooling local government funds and investing them under the investment expertise and integrity of the Treasury Department. Any local government in the Commonwealth (county, city, borough, incorporated town, township, school district, authority or other similar general purpose unit of government which is created by the Pennsylvania General Assembly or other non-profit or quasi-governmental entity), Pennsylvania colleges and universities, fire companies and libraries may participate in INVEST. INVEST was implemented to provide local governments an alternative to existing investment methods. INVEST consists of two primary portfolios, INVEST Daily and INVEST Community. INVEST Daily and INVEST Community have no minimum or maximum balance requirement, no minimum investment term and no minimum transaction size. The investment objective of INVEST is to provide a low-cost liquid investment mechanism for local governments which 1) is operated by prudent investment management, 2) provides a high level of security for the INVEST members, and 3) also meets their short-term cash needs. In an effort to achieve this objective, INVEST prioritizes its operations in the following manner: . Safety of principal. INVEST maintains a stable net asset value of $1.00 per $1.00 invested to preserve the capital commitments of the INVEST members. Safety of principal is the foremost objective. . Liquidity INVEST Daily and INVEST Community Portfolios. The maintain daily liquidity in order to meet any reasonably anticipated operational requirements of their members. Furthermore, the electronic transfer feature for deposits and withdrawals provides the fastest movement of funds available each day. . Income strives to provide the greatest possible market rate of. INVEST return (after nominal fees are paid), while accounting for investment risk constraints and the cash-flow aspects of the investment pools.
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Independent Auditor’s Report
Shareholders INVEST Program for Local Governments We have audited the accompanying statements of fiduciary net assets, including the schedules of investments, of the INVEST Daily and INVEST Community Portfolios (two of the main portfolios constituting the Commonwealth of Pennsylvania Treasury Department’s INVEST Program for Local Governments) as of December 31, 2008, and the related statements of operations, changes in fiduciary net assets and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Treasury Department. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards Those, issued by the Comptroller General of the United States. standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note A, the financial statements present only the INVEST Program for Local Governments and do not purport to, and do not, present fairly the financial position of the Commonwealth of Pennsylvania as of December 31, 2008, and the changes in its financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note A, the INVEST Program for Local Governments includes customized portfolios for certain shareholders, which are not reported as part of the accompanying financial statements.
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In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the INVEST Daily and INVEST Community Portfolios of the Treasury Department’s INVEST Program for Local Governments as of December 31, 2008, and the results of their operations, changes in their fiduciary net assets and financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Management’s discussion and analysis on pages 5 and 6 is not a required part of the financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance withGovernment Auditing Standardshave also issued our report dated, we March 30, 2010, on our consideration of the INVEST Program’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. March 30, 2010
JACK WAGNER Auditor General
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TREASURY DEPARTMENT INVEST PROGRAM FOR LOCAL GOVERNMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 MANAGEMENT’S DISCUSSION AND ANALYSIS This discussion and analysis of the INVEST Program’s performance provides an overview of the financial activities for calendar year 2008. Please read it in conjunction with the INVEST financial statements. The financial statements consist of the Statement of Fiduciary Net Assets, Schedule of Investments, Statement of Operations and Statement of Changes in Fiduciary Net Assets. Together these statements provide information about the activities of INVEST as a whole and present a longer term view of the program’s assets. These statements include all assets and liabilities using the accrual basis of accounting. All of the current year’s revenues and expenses are taken into account regardless of when the cash is received or paid. Comparative Condensed Statement of Net Assets (Decrease) Increase 2008 2007 Percent Amount (In Thousands) Daily and Community Pools Total Investments $798,179 $710,666 $87,513 12.31% Other Assets and Liabilities (181) (2,249) 2,068 -91.95% Total Net Assets $797,998 $708,417 $89,581 12.65% Total investments increased by 12.31% and total net assets increased by 12.65% during calendar year 2008. The increases are attributable to the continuation of an aggressive marketing initiative focusing on county government, resulting influx of deposits, particularly Allegheny and Erie Counties. The decrease in Other Assets and Liabilities is directly related to the decline in interest rates thereby decreasing Investment Income.
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