Calculator

VNAV Implementation Cost Calculator for Corporations and Institutional Investors

Through interviews with dozens of our corporate clients, Treasury Strategies has identified several areas/activities in corporate treasury that could possibly be impacted by proposed VNAV regulation.  The cost calculator below is a convenient tool for you to anonymously compute the initial impact on your corporation in the following areas: 

  • Investment Policy Development
  • Investment Process Reengineering
  • Accounting
  • Tax Reporting
  • System Reengineering
  • Other

After you finish filling out the information, hit the CALCULATE button to see the impact of this regulation. Then, hit the PRINT/PDF button to receive your results. Alternatively, download the cost calculator in spreadsheet form to do analysis offline. Treasury Strategies will not save, store, or manipulate this data in any way.

Finally, if you feel that the financial impact of the proposed VNAV regulation is burdensome, we encourage you to use the links on this site and contact your appropriate regulators and legislators.

The deadline for your comments to the SEC is September 17, 2013.  Please evaluate the impact to your organization and contact the SEC with your concerns.

Additional Calculator Instructions

Impact Category
Cost
Description
Hourly Rate
Hourly Estimate
Cost Estimate
Investment Policy Development
Current investment policy assessment
Identifying how a change in policy regarding MMFs will affect your investment policy. For instance, many corporate investment policies contain wording around investments with stable NAVs.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 4 to 18 hours
Counterparty risk management policy assessment
Identifying how a change in policy regarding MMFs will affect your risk management policy. For instance, many risk management policies contain wording around stable NAV investments and counterparty exposure.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 4 to 18 hours
Policy redraft
This will consist of redrafting any investment policy sections regarding MMFs to address changes in counterparty risk, investment instruments, investment limits, NAV fluctuation parameters, etc.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 16 to 72 hours
Policy circulation and approval, including board review
This group generally includes senior management and executive board members.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 24 to 108 hours
List other costs of investment policy development.
Client sample indicated a range of $92 to $138 per hour
Subtotal - Investment Policy Development
Investment Process Reenginee- ring
Investment purchase process reengineering - reference Chart 1
This will include procedures such as assessing the NAV positions to ensure compliance with investment policy and the process of receiving, reviewing, and accepting price confirmations from fund managers.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 74 to 336 hours
Investment redemption process reengineering - reference Chart 2
This will include procedures such as identifying any gains or losses and the process of confirming both the interest and settlement amount.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 74 to 336 hours
Intraday liquidity management implication assessment
Assessing how a policy change to MMFs will affect intraday liquidity management. Policy changes may leave financial institutions unable to accommodate intraday settlements.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 54 to 240 hours
Daily reporting modification
Modifying the daily reporting procedures to account for policy changes to MMFs. Restrictions that reduce MMF liquidity will affect how daily balances are reported.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 86 to 384 hours
List other costs of investment process re-engineering.
Client sample indicated a range of $60 to $90 per hour
Subtotal - Investment Process Reengineering
Accounting
MMF gain / loss and MTM accounting/recordkeeping procedural assessment
MMF instruments will change from cash equivalent instruments to available-for-sale securities under GAAP, meaning that the mark-to-market value must be reported.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 118 to 528 hours
MMF gain/loss and MTM reporting development
Policy changes will require mark-to-market reporting for MMF instruments which will no longer be treated as cash equivalent instruments.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 192 to 864 hours
Internal audit review of new MMF transaction processing and recordkeeping procedures
This process will involve testing and validating controls and gaining approval from the necessary internal resources in order to implement new accounting procedures.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 74 to 336 hours
Debt covenant reassessment - confirm how debt covenants will be impacted by a change in accounting treatment for floating NAV funds, i.e. may no longer treated as cash, instead available for sale securities
Some debt covenants require explicit levels of cash equivalents which may require MMF securities to be replaced by other cash equivalent vehicles.
Client sample indicated a range of $60 to $90 per hour
Client sample indicated range of 54 to 240 hours
List other costs of accounting related changes
Client sample indicated a range of $60 to $90 per hour
Subtotal - Accounting
Tax
Taxable event reporting procedural assessment
The change to VNAV will make all MMF share sales tax-reportable events, requiring Treasury and Tax departments to develop new, specific reporting techniques.
Client sample indicated a range of $52 to $78 per hour
Client sample indicated range of 64 to 288 hours
Tax reporting modification, ability to capture MMF transactions as taxable events
This may require significant customization of treasury management reporting software in addition to process changes as many standard software packages do not support the necessary requirements.
Client sample indicated a range of $52 to $78 per hour
Client sample indicated range of 112 to 504 hours
List other costs of tax related changes
Client sample indicated a range of $52 to $78 per hour
Subtotal - Tax
System Reenginee- ring
System functionality assessment. Determine required functionality upgrades required.
The process of evaluating internal systems such as a Treasury Management System (TMS) and/or Enterprise Resource Planning (ERP) system to determine their ability to address policy changes to MMFs.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 74 to 336 hours
System transaction reporting functionality modification and / or development
The process of modifying internal systems to handle new transaction requirements that come out of MMF policy changes. New interfaces may have to be developed or modified to include VNAV.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 192 to 864 hours
System reporting functionality modification and / or development
This may include developing new journal entry formulas within existing accounting software for MMFs. Systems may also require configuration for mark-to-market position reports.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 132 to 600 hours
System or additional module purchase/licensing
In some cases, current software will not be able to support the new transaction reporting and may require the purchase of an additional module or development/customization efforts requiring vendor support.
New system/functionality training for system users
The process of training all users of the reengineered systems to ensure proper operation.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 86 to 384 hours
System vendor training costs
In some cases, system vendor resources are required to train internal resources on platform changes. The costs of this process, if required, should be estimated here.
New interface establishment, i.e. the establishment of an interface with NAV values multiple times per day
The process of establishing a new system interface that will provide NAV values multiple times a day.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 128 to 576 hours
Third party system implementation consulting assistance, i.e. system vendor or third party consulting experience
The cost of 3rd party vendor/external consulting support required to assist in the implementation of a new system or major system changes.
Client sample indicated a range of $92 to $138 per hour
Client sample indicated range of 90 to 408 hours
List other costs related to systems reengineering
Client sample indicated a range of $92 to $138 per hour
Subtotal - System Reengineering
Other
Subtotal - Other
Grand
Total