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Accounting for Consolidated Money Pools
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    Question: What are the proper accounting treatment and related documentation requirements for money pool arrangements involving jurisdictional entities?
    Answer: Public Utilities and Licensees, Natural Gas Companies and Oil Pipeline Companies must account for money pool arrangements and maintain the following documentation for these arrangements under the Commission's Uniform Systems of Accounts as discussed below:

    Public Utilities, Licensees and Natural Gas Companies

    Amounts deposited with money pools are to be recorded in Account 145, Notes receivable from associated companies, or Account 146, Accounts receivable from associated companies, unless such amounts deposited are evidenced by notes with maturities of more than one year from date of issue. If the notes have maturities of more than one year from date of issue, they shall be recorded in Account 123, Investment in associated companies, or Account 123.1, Investment in subsidiary companies.

    Borrowings from money pools shall be credited to Account 233, Notes payable to associated companies, or Account 234, Accounts payable to associated companies, unless such borrowings are evidenced by notes with maturities of more than one year from date of issue. If the notes have maturities of more than one year from date of issue, they shall be credited to Account 223, Advances from associated companies.

    Interest earned on deposits with money pools shall be credited to Account 419, Interest and dividend income. Interest expense incurred on borrowings from money pools shall be charged to Account 430, Interest on debt to associated companies.

    Oil Pipeline Companies

    Amounts deposited with money pools are to be recorded in Account 13, Receivables from affiliated companies, unless such investments are evidenced by notes with maturities of more than one year from date of issue. If the notes have maturities of more than one year from date of issue, they shall be recorded in Account 20, Investments in affiliated companies.

    Borrowings from money pools shall be credited to Account 50, Notes payable, or Account 51, Payables to affiliated companies, unless such borrowings are evidenced by notes with maturities of more than one year from date of issue. If the notes have maturities of more than one year from date of issue, they shall be credited to Account 60, Long-term debt payable after one year.

    Interest earned on deposits with money pools shall be credited to Account 630, Interest and dividend income. Interest expense incurred on borrowings from money pools shall be charged to Account 650, Interest expense.

    Documentation Requirements

    All jurisdictional entities participating in money pool arrangements shall maintain supporting documentation for all deposits into, borrowings from, interest income from, and interest expense to such money pools. The written documentation shall include evidences of:

    1. individual deposits with money pools, including the date of the deposit, the amount of the deposit, the maturity date, if any, of the deposit, and the interest earning rate on the deposit.
    2. borrowings from money pools, including the date of the borrowing, the amount of the borrowing, the maturity date, if any, of the borrowing, and the interest rate on the borrowing.
    3. the security provided by the money pool for repayment deposits into the money pool and required by the money pool in support of borrowings from the money pool.
    4. daily balances of deposits with and borrowings from money pools for each individual deposit or borrowing. Cash deposits and borrowings may not be netted.

    All jurisdictional entities shall also maintain current and up-to-date copies of the documents authorizing the establishment of the money pool that specifies the:

    1. duties and responsibilities of the money pool, its administrator and the other participants in the money pool.
    2. restrictions on deposits or borrowings by pool members.
    3. method used to determine the interest earning rates and interest borrowing rates by pool members.
    4. method used to allocate interest income and expenses among the pool members.


John Delaware
Deputy Executive Director
and Chief Accountant

Effective:
August 1, 2002




Updated: June 28, 2010