There are a number of entities that can administer revolving funds, but here we focus on government-sponsored and managed RLFs. These programs often focus on financing the cost of efficiency upgrades, such as appliances, lighting, insulation, and heating and cooling system upgrades. Depending upon each government's situation and need, RLFs can be capitalized through a variety of sources, including state bond proceeds, treasury investments, ratepayer funds, and other special funds.
To date, more than 30 states have established loan programs for energy efficiency and renewable energy improvements. However, the ability of the states to attract borrowers has varied widely due to numerous factors, including interest rates, loan terms, credit requirements, and marketing effectiveness. Program administrators typically set the interest rate for RLFs either by pegging the rate to their own borrowing rate, or by using program funds to buy down the interest rate to more attractive levels.
The majority of loan terms are shorter than 10 years. Some programs require loans to be secured by additional collateral, while others create loan loss reserve funds to serve as a cushion for potential defaults.
It is important to note that simple RLFs funded directly with public funds do not leverage private capital; they also tend to "revolve" quite slowly depending on the loan term length. This means that public dollars can have a relatively limited impact in the near term compared to the opportunity to leverage private funds by using the public funds as a credit enhancement. These funds may be established with the intent of maintaining a balance or they may be established with the expectation that the balance will be reduced by the authorized transactions.
The Statement of Condition is a reconciliation of the balance in the revolving or change fund to the approved amount as recorded in the General Ledger Fund. Monthly , the revolving fund custodians must complete, sign, and forward a Statement of Condition or a reasonable facsimile to the Banking and Investments Assistant by the 20th of the month following the month end for which the statement is being prepared. January 31st report is due by February 20th Each report must include the Revolving Fund Number for identification purposes, the Custodian's name, the month it's for, the preparer's signature, and a copy of the bank statement.
No reimbursements or increases will be made if a current Statement of Condition is not on file. The Statement of Condition should identify the acknowledged revolving fund balance, cash on hand, reimbursement request s in process, and receipts not yet processed. A list of all checks aged over 60 days should be attached to the Statement of Condition or included on the statement itself.
If any outstanding checks are aged over two years, contact Accounting Services. Statement of Condition. If the custodian is unable to sign the statement of condition, it should be delegated in writing to someone else. The written delegation form should be on file with the Banking and Investments Assistant in Accounting Service.
January 31st report is due by February 20th. The custodian must verify the amount, sign the statement, and return it to the Banking and Investments Assistant. Complete all items in red. Change Fund Verification Form. If the custodian is unable to sign the Change Fund Balance of Record Statement, it should be delegated in writing to someone else. Change fund custodian signature form. Revolving fund custodian signature form. If money from a revolving fund or change fund is lost or stolen, the University Police and Internal Audit should be notified immediately.
An Invoice Voucher must be processed to replenish the fund to the amount of the original advance. The charge will be against a departmental fund and cost center using expense GL Account. The revolving fund custodian is responsible for maintaining the fund in a business-like manner so that it may be audited at any time by Internal Audit or by the field examiners of the Indiana State Board of Accounts.
Bank statements, canceled and voided checks, check books, and other pertinent information should be retained until audited and authorized to be destroyed as outlined in the record retention policy. The custodian is responsible for accounting for any advanced funds. The Banking and Investments Assistant may be contacted to obtain an expected balance of the revolving fund.
When a revolving fund or a change fund is no longer needed the custodian should prepare a final Statement of Condition and complete the following procedures. Prepare a Journal Voucher to record any expenses not yet reimbursed and attach original receipts.
Credit GL Account on the appropriate General Ledger Fund and debit the appropriate expense fund and cost center. If you wish to close a bank account for a revolving fund, contact the Office Treasury Operations.
They will instruct you on the proper procedures to close an existing bank account that has been created in the name of the University. Trouble with this page? Disability-related accessibility issue? Please contact treasweb purdue. Quick Links. Accounting Services. Revolving and Change Funds A.
The definitions of each are as follows: Revolving Fund Checking Account -- uses pre-numbered checks for handling disbursements. Normally, checks are written to vendors; no checks may to be written to cash, employees or independent contractors without specific pre-approval Cash Fund -- for handling purchases on a cash basis. Normally, the amount of the fund is much smaller than those in checking accounts. The revolving fund is vital for its borrowers as they get easy and convenient finance.
Similarly, it is essential for the users as they get the return on investment and borrowing option in case of need and that too at affordable rates. In the case of non-profit making organizations, it is essential as they get the return on funds provided by the borrower, and that is also used for that specific purpose. And if managed properly, revolving funds build self-sufficiency. The revolving fund is established by its investors for some specific purpose. The initial fund investment is collected from members, and members will decide the managing authority, and managing authority will decide whether to lend funds or invest the fund or expend the fund for some specific purpose.
The sustainability of funds depends upon members and management. If properly managed, the fund becomes self-sufficient after a specific period. This article has been a guide to revolving fund and its meaning. Here we discuss the structure, sustainability, and how does revolving fund work along with its importance.
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