ASCL

FINANCE COMMITTEE AUDIT & INVESTMENT GUIDELINES

Finance Committee Audit and Investment Guidelines
Resolution Adopted by the Board of Directors at the Society's 2004 Annual Meeting

1.    The Treasurer shall have overall control and responsibility for managing and investing the Society’s assets. In exercising these functions, the Treasurer shall take into account the policies provided in these guidelines.

2.    The President shall appoint a Finance Committee. The Treasurer and President of the Society shall be ex officio members of this Committee. The appointed members shall serve separately as the Audit Subcommittee.

3.    Unless proposed transactions are already approved by the Society, the Treasurer shall consult with the Finance Committee before executing any transaction involving more than ten percent of the Society’s assets.

4.    Within six months of the close of each fiscal year, the Treasurer shall report to the Finance Committee. That report shall include (1) the state of the past fiscal year-end portfolio including the rate of return for the portfolio as a whole and for the various classes of investments in the portfolio, (2) any significant changes in the portfolio from the previous year, and (3) any significant changes proposed for the current fiscal year.

5.    In addition to the communications in paragraphs 3 and 4, the Treasurer may consult with the Finance Committee with respect to any other decisions or practices within the Treasurer’s general responsibilities.

6.    Investment decisions shall be made in light of the following policies:

a.    Sufficient funds in cash or cash equivalents should be maintained at all times to cover expenses expected to be incurred in the balance of the fiscal year.
b.    An additional amount of at least $25,000 should be invested in interest bearing deposit accounts, certificates of deposit, high quality short-term bonds, or high quality short-term bond mutual funds.
c.    At least twenty percent of the remaining funds should be invested in bonds, fixed income instruments, or similar mutual funds. The principal criterion for choosing among fixed income investments should be generation of income consistent with preservation of capital.
d.    After the investment decisions made in 6(a), (b), and (c), the remaining funds should be invested in individual bonds or equities or in bond or equity mutual funds. The principal criterion for choosing among investments in individual equities or equity mutual funds should be the prospect of growth consistent with a reasonable level of risk.
e.    Investment in all categories should seek to reduce risk by diversification. Consequently, mutual funds should ordinarily be preferred to individual bond or equity investments. No single bond or equity investment should be allowed to exceed ten percent of the assets described in 6(b), (c), and (d) without the Finance Committee’s approval.
f.    No investments should be made in “high-yield” or “junk” bonds or funds, real estate, commodities, precious metals, futures, options, short sales, puts and calls, derivatives, or other similar high-risk investments.

7.    The Finance Committee annually shall consider the extent to which the Society's investments meet these guidelines and recommend prudent measures to rebalance the portfolio if necessary. In addition, the Committee may recommend ranges for the allocation of assets in subparagraphs 6(c) and (d) between fixed income and equity investments.

8.    The responsible editor in chief of the American Journal of Comparative Law shall submit a report on the Journal’s annual or periodic income and expenses, together with assets and liabilities, to the Finance Committee, preferably at least one month before the Society’s annual meeting. The Finance Committee may comment or make recommendations concerning this report.

9.    Consistent with a donor’s expressed wishes endowment funds may be maintained separately. Such funds should be invested in accordance with these guidelines unless such a policy is inconsistent with the donor’s expressed wishes.

10.    The Finance Committee may recommend to the Executive Committee that the Society secure and pay for an audit of the financial records of the Society.

11.    The Finance Committee may recommend amendments to these Guidelines to the Executive Committee, which shall have authority to approve, modify, or reject such amendments.

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