New best practices address cash flow analysis, investment policy.
The GFOA Executive Board approved two new best practices in addition to updating four other existing best practices at the September 2016 meeting. These documents provide recommendations to government finance officers in the areas of treasury and investment management, and retirement administration and benefits administration.
Cash-Flow Analysis recommends six essential elements of a cash flow analysis, an important tool to inform management decision making. State and local governments should perform ongoing cash-flow analysis to ensure sufficient cash liquidity to meet disbursement requirements while also limiting idle cash.
Investment Policy includes statements on eight key points, including the fact that an investment policy enhances the quality of decision making and demonstrates a commitment to the fiduciary care of public funds. As a result, a public fund's investment policy is the most important element in a public fund's investment program. GFOA recommends that all public entities establish a comprehensive written investment policy, adopted by the governing body, and update it annually.
Hybrid Retirement Plan Design was revised to reflect the evolution of hybrid plan designs.
Establishing and Administering an OPEB Trust includes a new recommendation that governments commit to funding promised benefits based on regular actuarial valuations, with a target funded ratio of 100 percent or more. GFOA also recommends creating a qualified trust fund to prefund OPEB obligations.
OPEB Governance and Administration aligns the best practice with the Sustainable Funding Practices for Defined Benefit Pensions and Other Postemployment Benefits, recommends conducting an audit of actuarial valuations to review the appropriateness of the actuarial methods, assumptions, and their application. Updated language addresses employers that issue periodic studies, experience studies, and periodic actuarial audits. GFOA recommends that sponsoring entities provide a clear, well-documented governance structure to guide governing bodies and plan administrators.
Educating Employees about the Adequacy of Retirement Benefits addresses elements of a sound educational program as well as guidance for employers and retirement systems that procure external providers of financial education and advice. GFOA recommends that public-sector employers and plan administrators inform and educate employees about future retirement income and the variables that may affect future retirement income, depending on the income source.
GFOA's best practices are available at www.gfoa.org.
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|Title Annotation:||News & Numbers|
|Publication:||Government Finance Review|
|Date:||Dec 1, 2016|
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