The management team should develop and approve a framework for investment processing and accounting. This will act as a guide to investment decisions. The framework should consist of details on types of permissible investments, proportion of investments to be made in each type, duration of investments and authorization procedures.
An ideal trade investment execution process covering the various steps of an equity transaction is set out in Appendix 5. It covers pre-trade and post-trade execution best practices that should be put in place to ensure smooth, error-free process flow.
Detailed steps for processing, accounting and redemption of investments are in Appendix 6.
Computing gains or losses on sale of investments is critical for establishing tax liabilities and computing net returns. Therefore, investments in various assets must be recorded correctly.unts.
The forecasted statement of cash flows should be compared with the actual cash flow statement for the period. Any large variances warrant a root-cause analysis for discrepancies and resolution.