Keeping a Pool within a Pool

Keeping a Pool within a Pool

In some circumstances a Pool (Pool A) may have investments in another Pool (Pool B), treating it as one of its Investment Accounts. In this situation a typical Investment Account record (representing investments in Pool B) is set up in Pool A.

When you set up Pool B, one of the participating Funds acts as a Dummy Fund, with assets equal to the assets of the Investment Account in Pool A. The Dummy Fund (which you must create in the Fund Management module) should have an alphabetically unique Division code so it is easily excluded from financial reports, since it represents a duplication of assets – the assets are already represented in General Ledger as part the Pooled Asset Accounts of the Funds invested in Pool A.

NOTE: You can also keep the balance of the Dummy Fund at zero by making Contra account entries. You can do this automatically by limiting the General Ledger for the Dummy Fund to two accounts – Assets in Pool B and Contra Assets (the offset account for all entries).

1. At the end of the Cycle, process Pool B first. The transfers to and from the Investment Account in Pool A must be entered in General Ledger as debits or credits to the Pool B asset account of the Dummy Fund (offset to the Contra account).

2. Before you post the FACTS allocation to General Ledger, run the Reconciliation Report for the Dummy Fund. This Reconciliation report becomes the Investment Account Statement for processing Pool A.

NOTE: Select the Include Fund Balances checkbox and enter the Dummy Fund ID when you run the report. Refer to Running the Reconciliation Report for more information.

3. Process Pool A, and run the Reconciliation. The net transfers to and from Pool B during the Cycle (already entered into General Ledger) are also recorded during account reconciliation as transfers to and from the Pool B Investment Account. The earnings and fees from the Dummy Fund’s Reconciliation Report are added to the Reconciliation tab for the Pool B Investment Account.

Tip: Using Pool Within a Pool to Manage Affiliate Investments

Sometimes an organization will provide financial and general information management for an affiliate in a separate FIMS database. Nevertheless they may wish to add the affiliate assets to their Pool, to maximize economies of scale. In this case, the affiliate becomes a Fund in the organizational database, and participates in the Pool. Again, it is helpful to run the Reconciliation Report before posting FACTS, in order to document the allocation to the affiliate Fund. In the organizational General Ledger, the Fund will have a distinct Division code, so it can be excluded from financial reports.

In the affiliate database, the assets invested in the organization are maintained as an Investment Account in a Pool. Use the Reconciliation report run in the organizational Pool for the Investment Account statement. The affiliate Pool is processed to allocate earnings equitably to each affiliate Fund, which, in effect, means that the affiliates Funds are all participating in the organization Pool.

Adding a Fund to an Existing Pool

You can easily add a Fund to an existing Pool at any time.

1. Add a Pooled Asset Account to the Fund’s Master Chart of Accounts. Refer to Maintaining the Master Chart of Accounts in the General Ledger module for more information.

2. Create and post a Journal entry to the Pooled Asset Account in the General Ledger Journal (or enter a Gift in the Gift Management module whose debit account is the Pooled Asset Account and post it to the General Ledger). This will automatically create a FACTS Transaction, which will establish the Fund in the Pool from the date of the Gift or Journal entry. Refer to Processing Journal Entries in the General Ledger module for more information about posting Transactions.