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California State Auditor Report Number : 2015-008

State of California
Statement of Securities Accountability of the State Treasurer’s Office December 31, 2014


Independent Accountant’s Report

We have examined the accompanying statement of securities accountability of the State of California’s State Treasurer’s Office as of December 31, 2014, and the related notes. The State Treasurer’s Office is responsible for the statement. Our responsibility is to express an opinion based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and accordingly, included examining evidence supporting the statement of securities accountability and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion.

In our opinion, the statement referred to above presents fairly, in all material respects, the securities accountability of the State of California’s State Treasurer’s Office as of December 31, 2014, in conformity with the basis of accounting described in Note 1.

Our report is intended solely for the purpose of providing information required by Section 13299.1 of the California Government Code and is not intended to be and should not be used for any other purpose.

CALIFORNIA STATE AUDITOR

JOHN F. COLLINS II, CPA
Deputy State Auditor

Date:
July 20, 2015

Staff:
Nicholas Kolitsos, CPA, MBA, Audit Principal
Dan Motta, CPA
Veronica Kaufman






State of California Statement of Securities Accountability of the State Treasurer’s Office
December 31, 2014
Account Title Securities in the State Treasurer’s Office Vault Securities on Deposit with Banks and Trust Companies Totals
Pooled Money Investment Account (Note 2) - $48,316,796,030 $48,316,796,030
Individual State Investment Accounts
California Housing Finance Agency - $159 $159
California State University, Dormitory Construction Fund - 777,281,845 777,281,845
Central Valley Water Project Construction Fund - 904,071,261 904,071,261
Central Valley Water Project Revenue Fund - 70,290,000 70,290,000
General Obligation Refunding Escrow - 2,411,813,220 2,411,813,220
Public Buildings Construction Fund - 2,287,045,265 2,287,045,265
State Compensation Insurance Fund* - 16,815,077,703 16,815,077,703
State Lottery Fund - 1,113,254,000 1,113,254,000
Total Individual State Investment Accounts $24,378,833,453 $24,378,833,453
Collateral to Secure Deposits or Investments Held in Banks
Agency Bank Deposits - $510,210,867 $510,210,867
Employment Development Department—Escrow - 21,076 21,076
Personnel Administration, Department of—Deferred Compensation - 2,947,576 2,947,576
State Treasurer’s Office—Fiscal Agents - 29,474,650 29,474,650
State Treasurer’s Office—Time Deposits $1,534,661,063 4,440,810,927 5,975,471,990
State Treasurer’s Office—Demand Deposits - 2,508,278,193 2,508,278,193
Total Collateral to Secure Deposits or Investments Held in Banks $1,534,661,063 $7,491,743,289 $9,026,404,352
Pledges Received by State Agencies
Business Oversight, Department of—Division of Corporations $1,551,000 - $1,551,000
Business Oversight, Department of—Division of Financial Institutions 592,977,000 $55,528,872 648,505,872
Consumer Affairs, Department of 18,973,295 - 18,973,295
Employment Development Department 220,383,128 - 220,383,128
Industrial Relations, Department of - 3,620,000 3,620,000
Insurance, Department of 266,400,679 9,470,392,700 9,736,793,379
State Lands Commission 9,037,139 - 9,037,139
Total Pledges Received by State Agencies $1,109,322,241 $9,529,541,572 $10,638,863,813
General Safekeeping
Water Resources, Department of - $162,000 $162,000
Total General Safekeeping - 162,000 162,000
TOTAL SECURITIES $2,643,983,304 $89,717,076,344 $92,361,059,648

Note: The accompanying notes beginning on page 3 are an integral part of this statement.

* The board of directors of the State Compensation Insurance Fund invests in common stock and the State Treasurer’s Office accounts for these items based on their number rather than their value. Thus, these items are excluded from the statement of securities accountability as described in Note 5.

A portion of the pledges contained in the State’s vault matured prior to December 31, 2014. In certain cases these may still hold value.

General safekeeping items listed here are on deposit with banks and trust companies. For general safekeeping items held in the vault at the State Treasurer’s Office, see Note 4.





NOTES TO THE STATEMENT OF SECURITIES ACCOUNTABILITY

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying statement of securities accountability was prepared for the purpose of providing information required by Section 13299.1 of the California Government Code. This statement presents securities owned by or pledged to the State directly, and securities held for safekeeping. The State Treasurer’s Office must account for all securities held in the treasury or other depositories. It does not account for securities owned by or pledged to the University of California, or for securities in other depositories owned by or pledged to the Public Employees’ Retirement System, the State Teachers’ Retirement System, the Legislators’ Retirement System, or the Judges’ Retirement System. The securities for which the State Treasurer’s Office is accountable are categorized as follows:

Valuation of Securities

For the purpose of the statement of securities accountability, the State Treasurer’s Office values securities as follows:

Securities in the State Treasurer’s Office Vault

Securities on Deposit With Banks and Trust Companies

The accompanying statement of securities accountability is not intended to report securities at fair value in accordance with accounting principles generally accepted in the United States of America.


Note 2

Pooled Money Investment Account—Securities

The State Treasurer’s Office reported a total value of $48,316,796,030 for the securities in the PMIA as of December 31, 2014. In its statement of cash accountability as of December 31, 2014, the State Treasurer’s Office reported a total value of $48,323,114,198 for these securities. The difference between the two values results because the State Treasurer’s Office values the PMIA securities in the statement of securities accountability according to the methods described in Note 1, but it values the same securities at book value for the statement of cash accountability.


Note 3

Personal Property

In addition to securities, state agencies deposit personal property in the vault of the State Treasurer’s Office. The following table lists entities having personal property in the vault as of December 31, 2014.


Entity Number of Items
Motor Vehicles, Department of 2,125
State Controller’s Office 1,340
State Treasurer’s Office 209
Total 3,674

Each item or sealed package of personal property is counted individually. However, because personal property items are not securities, they are excluded from the statement of securities accountability.

Note 4

General Safekeeping Securities and Bond Documents

In addition to securities the State Treasurer’s Office holds in the vault related to collateral requirements and pledges, it also separately holds certain securities and bond documents in the vault for general safekeeping. The securities consist of preferred and common stock shares that departments deposit with the State Treasurer’s Office. The bond documents consist of bearer bond stock that bondholders of registered bonds can exchange for if they desire.

Each preferred and common stock share or bond document in general safekeeping is counted individually. Because the State Treasurer’s Office has chosen to account for these items based on their number rather than their value, these items are excluded from the statement of securities accountability.

The following table lists entities having items on deposit for general safekeeping in the State Treasurer’s Office vault as of December 31, 2014.


Entity Number of Items
California State Library—Preferred and Common Stock 3,659
Developmental Services, Department of—Common Stock 270
Education, Department of—Preferred and Common Stock 5,463
State Treasurer’s Office—Bearer Bond Stock 2,979
Total 12,371

Note 5

Common Stock Held in Outside Depositories

Each common stock share held by outside depositories is counted individually. Because the State Treasurer’s Office has chosen to account for these items based on their number rather than their value, these items are excluded from the statement of securities accountability. As of December 31, 2014, outside depositories held 14,241,944 shares of common stock for the State Compensation Insurance Fund.



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