GAQC Alert No. 91 

    October 1, 2008 

    Educational Entities Liquidity in the Common Fund Short Term Fund Substantially Restricted

    DEAR CENTER MEMBERS

    CPAs serving or working with educational entities should be aware that on Monday, September 29, 2008, participants in the Common Fund Short Term Fund (the Short Term Fund) were notified as to Wachovia Bank’s decision to terminate the fund and initiate procedures for an orderly liquidation of the fund. (For those that may not be aware, the Common Fund for Nonprofit Organizations, also known as the Commonfund provides investment management products and related services exclusively to not-for-profit organizations and their related entities and is one of the largest managers of endowment and not-for-profit organization assets.)

    It has been reported that an estimated 1,000 educational entities, having $9.3 billion invested in the Short Term Fund, are directly affected by this decision. The Bank’s action has restricted each participant’s ability to liquidate or withdraw their account balance. More detailed information can be found at the Commonfund Web site at: www.commonfund.org. Specifically, to access the Commonfund announcement regarding this development, click here. You may also access a related conference call that was held by the Commonfund by clicking here.

    Educational entities and their auditors should consider the potential effects of this development on the financial statements of entities that participated in the Short Term Fund, especially for those financial statements to be issued for the year ended June 30, 2008. Consideration should be given to classification of assets held in the Common Fund Short Term Fund, subsequent event disclosure, going concern issues, and other resulting liquidity issues, as appropriate.

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    Sincerely,

    AICPA Governmental Audit Quality Center

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