Cornerstone Bond Fund - SOP.pdf

Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024...

Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: CORNERSTONE BOND FUND Table of Contents Background information...........................................................................................................................................2 Flowchart.................................................................................................................................................................3 Procedures..............................................................................................................................................................4 Step 1: Preliminary information...........................................................................................................................4 1. Invoices........................................................................................................................................................4 2. Bond Documents.........................................................................................................................................4 3. Monthly Investment Statement....................................................................................................................4 4. Bank Statements.........................................................................................................................................4 Step 2: Prepare reporting packs..........................................................................................................................4 1. Alt Sub-Trust 5.............................................................................................................................................4 2. Cornerstone Bond Fund..............................................................................................................................5 3. Reports........................................................................................................................................................7 Step 3: Internal review.........................................................................................................................................8 Step 4: Issue packs to Trustee............................................................................................................................8 Step 5: Trustee’s approval...................................................................................................................................8 Page 1 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Background information Fund name Cornerstone Bond Fund Investment Fund Overview: Wholesale unit trust, SIV compliant. structure Trustee: One Funds Management Limited, Sydney. Operations and Termination: Established and terminated in 2016. Employees: No employees during the year. Asset Transfer: ALT Sub-Trust 5 transferred receivables, units to Fund. Control and Recovery: Direct management of loans to IPU. Financial Statements Authorization: Authorized and amendable by Trustee directors. Financial From 1 July to 30 June period Deliverables NAV Monthly, 14th and BAS Quarterly, 14th deadlines STI Annually, after NAV’s approval FS Annually, upon client’s request Person in Unity Fund Services Anthony Tran (preparer) charge Isac Lin (reviewer) Cornerstone Capital Investment Terminated Group Pty Ltd (Investment Manager) One Funds Management Limited David Lom ([email protected]) - (Trustee) Managing Director Steven Marsh ([email protected]) - Director Page 2 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Flowchart Step Flowchart Key person in charge Documents Isac Lin Invoices, Bond Preliminary information Documents, Monthly 1 Investment Statement Anthony Tran Bank statements Prepare reporting packs Monthly NAV Monthly BAS 2 Anthony Tran Annual FS Internal review Checklist 3 Isac Lin 4 Issue packs to Trustee Isac Lin Final packs 5 Trustee’s approval David Lom/Steven Email confirmation Marsh Page 3 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Procedures Step 1: Preliminary information 1. Invoices The invoices typically include, but are not limited to, the following: Accounting Fee: Issued by Unity Fund Services Consulting Fee: Issued by Levi Consulting Legal Fee: Issued by Piper Alderman Audit Fee: Issued by Bondy Montimer & Co These invoices pertain to the Cornerstone Bond Fund and are stored in the following directory: X:\UNITY FUND SERVICES\RA\Client Folders\Cornerstone\Cornerstone Bond Fund\3. Payments. The invoices should be received within the month corresponding to the period of the financial pack. 2. Bond Documents Coupon Advice: Pertaining to the current bond Net Settlement Advice: Issued when purchasing new bonds Contract Note: Issued when purchasing new bonds Maturity Advice: Issued upon the termination of matured bonds These documents should be received within the month corresponding to the period of the financial pack. They are relevant to the Cornerstone Bond Fund. 3. Monthly Investment Statement This statement pertains to the revaluation of bonds and should be received one week after the first business day (BD1) of the subsequent month following the period of the financial pack. This document is relevant to the Cornerstone Bond Fund. 4. Bank Statements There are two bank statements exported from St George Bank: ALT Sub-Trust No. 5: Account Name: ONE INVESTMENT ADMINISTRATION LIMITED ATF ALT SUB-TRUST NO. 5 Account Number: 000 0554 972 514 Cornerstone Bond Fund: Account Name: ONE FUNDS MANAGEMENT LIMITED ATF CORNERSTONE BOND FUND Account Number: 000 0554 494 399 Step 2: Prepare reporting packs 1. Alt Sub-Trust 5 To access the Reckon account, use the following credentials: Username: admin and Password: 1234. The journals for ALT Sub-Trust No. 5 typically include, but are not limited to, the following five entries: Page 4 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: a) Interest Received: Recording interest received from bank accounts. To record this entry, it is necessary to utilize the St George Bank statement. Subsequently, the Bank Reconciliation sheet should be updated to ensure that the balance in Reckon aligns with the balance on the bank statement. Entry 1: Debit: the respective bank account for the amount of interest received. Credit: the interest income account. b) Loan interest: To record interest payable, receivable, and impairment, it is necessary to update the “Accrued Interest – ALT5” sheet. Accrued Interest Payable: Recognizing accrued interest on rolled loan amounts. Entry 2: Debit: the loan interest expense account for the accrued interest. Credit: the accrued interest payable account. Loan Interest Receivable: Recording the receipt of loan interest payments from borrowers. Entry 3: Debit: the loan interest receivable account to recognize the interest income. Credit: the loan interest received account. Impairment of Interest Receivable: Recording impairment losses on interest receivable. Entry 4: Debit: the impairment loss account for the interest receivable that is impaired. Credit: the impairment account for loan interest receivable. Additional Procedure for January and July: Recording impairment losses on interest receivable from capitalized loan interest. Entry 5: Debit: the capitalized loan interest account for the impaired amount. Credit: the loan interest receivable account for the impaired amount. Debit: the impairment account for the loan interest receivable. Credit: the provision for impairment loss account. General Guidelines: Verification: Ensure all interest calculations are verified for accuracy before recording. Documentation: Maintain all relevant documentation, such as bank statements and loan agreements, for audit purposes. Consistency: Follow a consistent method for recording similar transactions to ensure accuracy and compliance with accounting standards. Review: Periodically review and reconcile interest receivable and payable accounts to ensure all transactions are recorded and accounted for correctly. 2. Cornerstone Bond Fund a) Invoices Import AP Invoices: Import Accounts Payable (AP) invoices into Reckon. The AP invoices typically relate to professional fees. Page 5 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Record Corresponding Payments: Enter the corresponding payments for the AP invoices into Reckon. Account for Associated Bank Charges: Include any associated bank charges related to these professional fees in Reckon. b) ATO refund Reference Previous Month's GST Balance: Obtain the GST account balance from the previous month's reporting pack. Compare with Bank Statements: Compare the GST account balance with the corresponding amount in the bank statements. Record Differences: Identify any differences between the two amounts. Record these differences as bank charges in Reckon, typically attributed to rounding adjustments. Clear Previous Month's GST Balance: Ensure the GST balance from the previous month's reporting pack is cleared. c) FIIG Coupon Recording Coupon Interest Received: Record the coupon interest received for the specified bond. Debit: the St George Bank account with the amount of the coupon interest received. Credit: the Coupon Interest Received account with the same amount. Recording Custody Fee (if applicable): Record the custody fee related to the specified bond. Debit: the St George Bank account with the total custody fee amount. Debit: the Amortisation Expenses account for the portion of the custody fee that applies to amortisation. Credit: the Tax Payable account for the applicable tax portion of the custody fee (RITC 75%). d) Interest Received: Recording interest received from bank accounts. To record this entry, it is necessary to utilize the St George Bank statement. Subsequently, the Bank Reconciliation sheet should be updated to ensure that the balance in Reckon aligns with the balance on the bank statement. Debit: the respective bank account for the amount of interest received. Credit: the interest income account. e) Bank reconciliation After documenting all transactions in the bank statements, the balances on Reckon should align with these reports. The preparer needs to capture screenshots of the bank statements. f) Accrued charges The accrual typically includes, but is not limited to, the following fees: Trustee Fee (RITC 55%): Subject to a minimum fee of $5,000. Registry Fees (RITC 55%): Related to the maintenance of the registry. Audit Fee (RITC 55%): Associated with auditing the fund. Admin and Accounting Fee (RITC 75%): Pertains to administrative and accounting services. General guidelines: Page 6 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Calculation of fees based on Gross Asset Value. Application of GST and determination of RITC. Identification of Non-Claimable GST. Monthly recording of charges and updating of payments and balances. Maintenance of accurate and comprehensive records for audit and review purposes. Verification of all calculations and entries for accuracy. g) Loan interest Loan Interest Receivable: Recording the receipt of loan interest payments from borrowers. Debit: the loan interest receivable account to recognize the interest income. Credit: the loan interest received account. Impairment of Interest Receivable: Recording impairment losses on interest receivable. Debit: the impairment loss account for the interest receivable that is impaired. Credit: the impairment account for loan interest receivable. Additional Procedure for January and July: Recording impairment losses on interest receivable from capitalized loan interest. Debit: the capitalized loan interest account for the impaired amount. Credit: the loan interest receivable account for the impaired amount. Debit: the impairment account for the loan interest receivable. Credit: the provision for impairment loss account. h) Bond interest Record Coupon Interest Receivable: Debit: Coupon Interest Receivable account. Credit: Interest Received - Bond account. Record Amortization Expenses: Debit: Amortization Expenses account. Credit: Investment Portfolio - Bond account. i) Fair value adjustment of bond The preparer records the fair value adjustment of bonds based on the Monthly Investment Statement. 3. Reports After completing the journal entries, the preparer has several reports to finalize: Monthly Tasks: Compile the Profit and Loss Statement (PL), Balance Sheet (BS), Cash Flow Statement (CF), Trial Balance (TB), and General Ledger (GL). Calculate the Net Tangible Assets (NTA). Quarterly Tasks: Complete the Goods and Services Tax (GST) and Business Activity Statements (BAS). Yearly Tasks: Page 7 of 8 Cornerstone Bond Fund Unity Fund Services  Document No: 1 Cornerstone Bond Fund Issue Date: June 24th, 2024 Revision #: 1 Prepared by Anthony Tran Reviewed by Isac Lin Revision Date: Calculate the Short-Term Incentives (STI) for review by the tax team. Prepare the annual financial statements. Step 3: Internal review Initially, our reviewer will provide comments via email. The preparer will subsequently address these comments and update the reports based on the feedback. Once the reviewer confirms that all issues have been resolved, the reports are ready to be issued to the Trustee. The preparer and reviewer should complete the checklists in accordance with Unity Fund Services' internal processes. Step 4: Issue packs to Trustee The reviewer should conduct an additional review of the report before it is issued to the Trustee. This will ensure the report is comprehensive, accurate, and user-friendly. Step 5: Trustee’s approval Upon receiving the pack, the Trustee will review it and send an email confirmation. Page 8 of 8 Cornerstone Bond Fund Unity Fund Services