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Accounting for Consolidated Money Pools
Question:
What are the proper accounting treatment and related documentation
requirements for money pool arrangements involving jurisdictional
entities?
Answer:
Public Utilities
and Licensees, Natural Gas Companies and Oil Pipeline Companies
must account for money pool arrangements and maintain the following
documentation for these arrangements under the Commission's Uniform
Systems of Accounts as discussed below:
Public
Utilities, Licensees and Natural Gas Companies
Amounts deposited
with money pools are to be recorded in Account 145, Notes receivable
from associated companies, or Account 146, Accounts receivable
from associated companies, unless such amounts deposited are evidenced
by notes with maturities of more than one year from date of issue.
If the notes have maturities of more than one year from date of
issue, they shall be recorded in Account 123, Investment in associated
companies, or Account 123.1, Investment in subsidiary companies.
Borrowings
from money pools shall be credited to Account 233, Notes payable
to associated companies, or Account 234, Accounts payable to associated
companies, unless such borrowings are evidenced by notes with
maturities of more than one year from date of issue. If the notes
have maturities of more than one year from date of issue, they
shall be credited to Account 223, Advances from associated companies.
Interest earned
on deposits with money pools shall be credited to Account 419,
Interest and dividend income. Interest expense incurred on borrowings
from money pools shall be charged to Account 430, Interest on
debt to associated companies.
Oil
Pipeline Companies
Amounts deposited
with money pools are to be recorded in Account 13, Receivables
from affiliated companies, unless such investments are evidenced
by notes with maturities of more than one year from date of issue.
If the notes have maturities of more than one year from date of
issue, they shall be recorded in Account 20, Investments in affiliated
companies.
Borrowings
from money pools shall be credited to Account 50, Notes payable,
or Account 51, Payables to affiliated companies, unless such borrowings
are evidenced by notes with maturities of more than one year from
date of issue. If the notes have maturities of more than one year
from date of issue, they shall be credited to Account 60, Long-term
debt payable after one year.
Interest earned
on deposits with money pools shall be credited to Account 630,
Interest and dividend income. Interest expense incurred on borrowings
from money pools shall be charged to Account 650, Interest expense.
Documentation
Requirements
All jurisdictional
entities participating in money pool arrangements shall maintain
supporting documentation for all deposits into, borrowings from,
interest income from, and interest expense to such money pools.
The written documentation shall include evidences of:
- individual
deposits with money pools, including the date of the deposit,
the amount of the deposit, the maturity date, if any, of the
deposit, and the interest earning rate on the deposit.
- borrowings
from money pools, including the date of the borrowing, the amount
of the borrowing, the maturity date, if any, of the borrowing,
and the interest rate on the borrowing.
- the security
provided by the money pool for repayment deposits into the money
pool and required by the money pool in support of borrowings
from the money pool.
- daily balances
of deposits with and borrowings from money pools for each individual
deposit or borrowing. Cash deposits and borrowings may not be
netted.
All jurisdictional
entities shall also maintain current and up-to-date copies of the
documents authorizing the establishment of the money pool that specifies
the:
- duties
and responsibilities of the money pool, its administrator and
the other participants in the money pool.
- restrictions
on deposits or borrowings by pool members.
- method
used to determine the interest earning rates and interest borrowing
rates by pool members.
- method
used to allocate interest income and expenses among the pool
members.
John
Delaware
Deputy Executive Director
and Chief Accountant
Effective:
August 1, 2002
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