-

FINANCIAL/BUDGET IMPLICATIONS

7. a) There are no direct Financial Implications of adopting the Code of Practice.

b) Treasury Management involves the management of all the Council’s Cash flows, its banking, money market and capital transactions, the effective management of the risks associated with those activities and the pursuit of optimum performance consistent with those risks.

LEGAL IMPLICATIONS

8. Adoption of the recommendations by an individual authority as part of its standing orders or financial regulations gives it the status of “a Code of Practice made or approved by or under any enactment” and hence proper practice under the provisions of the Local Government Housing Act 1989.

OPTIONS

9. a) To approve the CIPFA Code of Practice for Treasury Management, and the Treasury Strategy for 2003/04.

b) Not to approve the above documents.

EVALUATION/RISK MANAGEMENT

10. The Code of Practice and Treasury Strategy taken together are the instruments which provide for the identification, management, control of all risk associated with the Council’s treasury management activity and the pursuit of optimum performance consistent with those risks.

RECOMMENDATIONS

11. 1. To conform with the new Code of Practice, it is recommended that the Isle of Wight Council adopts the key recommendations of CIPFA’s Treasury Management in the Public Services Code of Practice.

2. a) In accordance with the above the Council agree a Treasury Management Policy Statement (Appendix A), stating the policies and objectives of its treasury management activities, and

b) Adopt suitable Treasury Management Practices (TMPs) setting out the manner in which the organisation will seek to achieve those policies and objectives, and prescribing how it will manage and control those activities. Proposed TMPs are attached as Appendix B.

The content of the Policy Statement and TMPs will follow the recommendations as contained in the code.

3. Approve the Treasury Strategy for the 2003/04 financial year as contained at Appendix C.

4. The Executive will receive reports on its policy practices and activities, including as a minimum, an annual strategy in advance of any year and an annual report after the close of each financial year. Such reports to be consistent with its agreed TMPs.

5. The Executive has responsibility for the implementation and monitoring of its treasury activities and practices. The Chief Financial Officer will have delegated authority to act in accordance with the Policy Statement, the TMPs and with CIPFA’s Standard of Professional Practice on Treasury Management.

The above are consistent with existing financial regulations and delegated authority and will be incorporated into the latter document.

BACKGROUND PAPERS

12. CIPFA Code of Practice for Treasury Management.

ADDITIONAL INFORMATION

13. The Treasury Strategy is normally considered with the Council’s Annual Budget. In order to present the new Code of Practice, a separate report has been produced to incorporate both the Code of Practice and the Treasury Strategy for 2003/04. For this reason the report did not appear individually on the Forward Plan documentation.

Contact Point : Mr G Hughes Tel. No. (01983) 823604

JOHN PULSFORD

Strategic Director

Finance and Information

R R BARRY

Portfolio Holder for Resources

APPENDIX A

TREASURY POLICY STATEMENT

BACKGROUND

The statement set out below proposes arrangements for the delegation of responsibility for Treasury Management by the Council.

Two major characteristics of Treasury Management need to be borne in mind when determining appropriate decision-making, monitoring and reporting processes.

First, Treasury Management involves risk. A simple decision to borrow a sum of money for a given period at an agreed rate of interest runs a series of risks on which judgments can be made with the benefit of hindsight. It is therefore important that this risk is managed, and that Treasury Management staff have clear guidelines and parameters within which they can operate.

Second, Treasury Management requires quick decisions on transactions. This speed of response precludes individual decisions being taken by a committee, and it is therefore necessary to delegate them. However, as a corollary it is vital to ensure good communications and understanding of roles, to have mechanisms for monitoring compliance with systems, and to put reporting procedures in place to ensure that performance is being properly assessed.

The statement of responsibilities below therefore provides for a considerable degree of delegation to the Chief Financial Officer, who is in the best position to assess risk and determine the parameters within which his staff can operate. The responsibilities are in line with those currently operated, but provide for a more formal reporting process to the Executive Committee.

CONTENT

The Isle of Wight Council defines its treasury management activities as:

“The management of the organisation’s cash flows, its banking, money market and capital market transactions (other than those of the Pension Fund), the effective management of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks”. The Council regards the successful identification, monitoring and management of risk to be the prime criteria by which the effectiveness of its treasury management activities will be measured. Accordingly, the analysis and reporting of treasury management activities will focus on their risk implications for the organisation.

This authority acknowledge that effective treasury management will provide support towards the achievement of its business and service objectives. It is therefore committed to the principles of achieving best value in treasury management, and to employing suitable performance measurement techniques, within the context of effective risk management.

The Executive is responsible for Treasury Management matters. It will consider all reports submitted by the Chief Financial Officer and will have specific responsibility for:

· consideration of the annual report by the Chief Financial Officer on the exercise of Treasury Management powers delegated to him,

· the recommendation of borrowing limits as in Section 45 of the Local Government and Housing Act 1989 (being limits on total external borrowing, temporary borrowing, and the proportion of interest paid at variable rates) to the Council at its annual budget meeting.

· the policy on the appointment of external advisers for the management of the Treasury function.

The Executive will delegate responsibility to the Chief Financial Officer for the determination of operating parameters, monitoring procedures and reporting arrangements for all Treasury Management matters within his department. In particular, the Chief Financial Officer will have delegated responsibility for:

· the formulation of Treasury Management strategies for the approval of the Executive Committee;

· the day to day management of the Council’s bank balances, except those balances in school bank accounts;

· the determination of approved methods of raising capital finance. Monitoring and reporting procedures must be maintained within the department to ensure that Treasury Management staff stay within the guidelines set;

· the determination of approved sources of financing;

· the setting of criteria for, and the maintenance and monitoring of, an approved list of organisations to which, the Council can lend; limits to be maintained on investments outstanding at any one time with individual organisations; monitoring and report procedures must ensure that Treasury Management staff adhere to the list as approved by the Chief Financial Officer.

Appendix B

TREASURY MANAGEMENT PRACTICES

1. TMPI TREASURY RISK MANAGEMENT

1.1 The Chief Financial Officer shall:

• Design, implement and monitor all arrangements for the identification, management and control of treasury management risk

• report at least annually on the adequacy/suitability thereof, and

• report, as a matter of urgency, the circumstances of any actual or likely difficulty in achieving the Council’s objectives in this respect, all in accordance with the procedures set out in TMP6 Reporting requirements and management information arrangements

• maintain supporting schedules to all aspects of adopted Treasury Management Practices

1.2 In respect of each of the following risks, arrangements which seek to ensure compliance with these objectives will be set out in schedules to this document as highlighted below.

1.2.1 Liquidity

Objective: Adequate but not excessive cash resources, borrowing arrangements, overdraft or standby facilities to enable the Council at all times to have the level of funds available to which are necessary for the achievement of its service objectives.

1.2.2 Interest rates

Objective: Management of the Council’s exposure to fluctuations in interest rates with a view to containment of its net interest costs, or securing its interest revenues, in accordance with the amounts provided in the Revenue Estimates in accordance with TMP6 Reporting requirement and management information arrangement.

1.2.3 Exchange rates

Objective: Management of the Council’s exposure to fluctuations in exchange rates so as to minimise any detrimental impact on its budgeted income/expenditure levels.

1.2.4 Inflation

Objective: Control of exposure to effects of inflation, insofar as they can be identified as impacting directly on its treasury management activities.

1.2.5 Credit and counter-parties

Objective: To secure the principal sums invested. A formal counter-party list will be maintained and the named organisations and limits will reflect a prudent attitude towards organisations with whom funds may be deposited, and will limit the Council’s investment activities to the instruments, methods and techniques referred to in TMP4 Approved Instruments, methods and techniques and listed in the schedule to this document. The need to have and maintain a formal counter-party policy in respect of those organisations from which it may borrow, or with whom it may enter into other financial arrangements.

1.2.6 Rescheduling and refinancing of debt

Objective: All borrowing, private financing and partnership arrangements will be negotiated, structured and documented, and the maturity profile of debt will be managed with a view to obtaining terms for renewal or refinancing, if required, which are competitive and as favourable to the organisation as can reasonably be achieved in the light of market conditions prevailing at the time.

Relationships with counter-parties in these transactions will be managed in such a manner as to secure this objective, and will avoid over-reliance on any one source of funding if this might jeopardise achievement of the above.

1.2.7 Legal and regulatory

Objective: Compliance with statutory power and regulatory for all treasury activities. The Council will demonstrate such compliance, if required to do so, to all parties with whom it deals in such activities.

In framing its credit and counter-party policy under paragraph 1.2.5 above Credit and counter-party risk management, the Council will ensure that there is evidence of counter-parties’ powers, authority and compliance in respect of the transactions they may effect with the organisation with regard to duty of care and fees charged.

The Council will seek to minimise the impact of future legislative or regulatory changes on its treasury management activities so far as it is reasonably able to do so.

1.2.8 Fraud, error and corruption, and contingency management

Objective: Identification of circumstances which may expose the Council to the risk of loss through fraud, corruption or other eventualities in its treasury management dealings. Design and implementation of suitable systems and procedures and maintenance of effective contingency management arrangements to counter such risks.

1.2.9 Market risk

Objective: Protection from adverse market fluctuations in the value of the principal sums invested

2. TMP2 BEST VALUE AND PERFORMANCE MEASUREMENT

2.1. The Council actively works to promote best value in its treasury management activities. The treasury management function will be the subject of regular reviews of performance to identify scope for improvement.

3. TMP3 DECISION-MAKING AND ANALYSIS

3.1 Full records will be maintained of its treasury management decisions, and of the processes and practices applied in reaching those decisions to demonstrate that reasonable steps have been taken to ensure that all issues relevant to those decisions were taken into account. The issues to be addressed and processes and practices to be pursued in reaching decisions will be included in supporting schedules.

4. TMP4 APPROVED INSTRUMENTS, METHODS AND TECHNIQUES

4.1 Only approved instruments, methods and techniques will be used, within the limits defined in TMP1, “Risk Management”.

5. TMP5 ORGANISATION, CLARITY AND SEGREGATION OF RESPONSIBILITIES, AND DEALING ARRANGEMENTS

5.1. Treasury management activities will be properly structured in a clear and open fashion and a rigorous discipline of segregation of duties will be enforced to ensure effective control and monitoring of its treasury management activities, for the reduction of the risk of fraud or error, and for the pursuit of optimum performance.

5.2 The principles on which this will be based is a clear distinction between those charged with setting treasury management policies and those charged with implementing and controlling these policies, particularly with regard to the execution and transmission of funds, the recording and administering of treasury management decisions, and the audit and review of the treasury.

5.3 If and when this organisation intends, as a result of lack of resources or other circumstances, to depart from these principles, the Chief Financial Officer will ensure that the reasons are properly reported in accordance with TMP6 Reporting requirements and management information arrangements, and the implications properly considered and evaluated.

5.4 The Chief Financial Officer will ensure that there are clear written statements of the responsibilities for each post engaged in treasury management, and the arrangement for absence cover.

5.5 The Chief Financial Officer will ensure there is proper documentation for all deals and transactions, and that procedures exist for the effective transmission of funds. The present arrangements will be detailed in the schedules.

5.6 The delegations to the Chief Financial Officer in respect of treasury management will be set out in the schedules. The Chief Financial Officer will fulfill all such responsibilities in accordance with Isle of Wight Council’s policy statement and TMPs and if a CIPFA member, the Standard of Professional Practice on Treasury Management.

6. TMP6 REPORTING REQUIREMENTS AND MANAGEMENT INFORMATION ARRANGEMENTS

6.1 Regular reports will be prepared for consideration by the Chief Financial Officer on:

• the implementation of its treasury management policies

• the effects of decisions taken and the transactions executed in pursuit of those policies

• the implications of changes resulting from regulatory, economic, market or other factors affecting its treasury management activities; and

• the performance of the treasury management function

6.2 As a minimum, the Executive will receive:

· an Annual Report on the strategy and plan to be pursued in the forthcoming year

· an Annual Report on the performance of the treasury management function in the previous year and on any circumstances of non-compliance with the organisation’s Treasury Management Policy Statement and TMPs

7. TMP7 BUDGETING, ACCOUNTING AND AUDIT ARRANGEMENTS

7.1 The Chief Financial Officer will prepare and the full Council will approve and, if necessary, from time to time will amend, an annual budget for treasury management, which will bring together all of the costs involved in running the treasury management function, together with associated income.

7.2 The matters to be included in the budget will at a minimum be those required by statute or regulation, together with such information as will demonstrate compliance with TMP1 Risk management, TMP2 Best Value and performance measurement, and TMP4 Approved instruments, methods and techniques. The Chief Financial Officer will exercise effective controls over this budget, and will report upon and recommend any changes required in accordance with TMP6 Reporting requirements and management information arrangements.

7.3 The Council will account for its treasury management activities in accordance with appropriate accounting practices and standards, and with statutory and regulatory requirements.

7.4 The Council will ensure that its auditors, and those charged with regulatory review, have access to all information and papers supporting the activities of the treasury management function as are necessary for the proper fulfillment of their roles, and that such information and papers demonstrate compliance with external and internal policies and approved practices.

8. TMP8 CASH AND CASH FLOW MANAGEMENT

8.1 All Council monies shall be aggregated for treasury management purposes and will be under the control of the Chief Financial Officer. Cash flow projections will be prepared on a regular and timely basis, and the Chief Financial Officer will ensure that these are adequate for the purposes of monitoring compliance with TMP1 Liquity risk management. The present arrangements for preparing cash flow projections, and their form, will be set out in supporting schedules.

9. TMP 9 MONEY LAUNDERING

9.1 Procedures will be enforced for verifying and recording the identity of counter-parties and reporting suspicions and will ensure that staff involved in this area are properly trained. The present arrangements, including the name of the officer to whom reports should be made, will be detailed in the schedules.

10. TMP 10 STAFF TRAINING AND QUALIFICATIONS

10.1 The Council will seek to appoint individuals to the treasury management function who both capable and experienced and will provide training for staff to enable them to acquire and maintain an appropriate level of expertise, knowledge and skills. The Chief Financial Officer will recommend and implement the necessary arrangements. The present arrangements will be detailed in supporting schedules.

11. TMP 11 USE OF EXTERNAL SERVICE PROVIDERS

11.1 Treasury Advisers have been employed by the Council to:

- forecast movements in long term and short term interest rates

- advise on long term borrowing and debt maturity profiles

- advise on leasing and capital finance legislation

- restructuring of PWLB debt.

- advise on future interest rate movements (including PWLB) and other market developments.

The Chief Financial Officer has responsibility for the review of future provision of such advice, and to amend the conditions or appoint different advisers as appropriate.

12 TMP 12 CORORATE GOVERNANCE

12.1 Isle of Wight Council is committed to the pursuit of proper corporate governance throughout its businesses and services, and to establishing the principles and practices by which this can be achieved. Accordingly, the treasury management function and its activities will be undertaken with openness and transparency, honesty, integrity and accountability.

12.2 The Council has adopted and has implemented the key recommendations of the Code. This, together with the other arrangements detailed in the schedules, are considered vital to the achievement of proper corporate governance in treasury management, and the Chief Financial Officer will monitor and, if and when necessary, report upon the effectiveness of these arrangements.

APPENDIX C

TREASURY STRATEGY 2003-2004

1. TREASURY POLICY

1.1 This Strategy is pursuant to the new Treasury Policy as contained in Appendix A and in accordance with CIPFA’s revised Code of Practice for Treasury Management in Local Authorities.

2. TREASURY MANAGEMENT

2.1. The Council’s Treasury Management activities may include the following activities:

1) Cash Flow (daily balances and longer term forecasting)

2) Investing surplus funds

3) Borrowing to finance day to day cash fluctuations

4) Funding of capital payments through borrowing, capital receipts, grants or leasing

5) Management of debt (including restructuring and monitoring an even maturity profile)

6) Interest rate exposure management

7) Dealing procedures with brokers, bank and Public Works Loan Board (PWLB).

3. OBJECTIVES

The major objectives to be followed in 2003-2004 are:

3.1. BORROWING

a) To minimise the revenue costs of debt

b) To manage the Council’s debt maturity profile, i.e. to leave no one future year with a high level of repayments that could cause problems in re-borrowing

c) To affect funding in any one year at the cheapest cost commensurate with future risk

d) To forecast average future interest rates and borrow accordingly (i.e. short term and/or variable when rates are “high”, long term and fixed when rates are “low”). Similarly maturity loans can be taken when rates are relatively low, to lock in the principal for the maximum period, and possibly annuity loans or equal installments of principal loans when rates are considered higher.

e) To monitor and review the level of variable interest rate loans in order to take advantage of interest rate movements.

f) To restructure debt in order to take advantage of potential savings as interest rates change.

3.2. INVESTMENT

1. To invest such monies as are temporarily surplus to requirements

2. To maintain capital security

3. To achieve a level of return equal to or greater than would be secured by internal investment

4. To maintain policy flexibility.

5. The Council is estimated to have investments of £20 million as at 31^st March 2003. This represents the investment of reserves, temporary surpluses on cash flow, and any advance drawdown of loans to finance the capital programme.

4. FORECAST OF INTEREST RATES FOR 2003-2004

Bank base rate has remained at 4.0% since 8^th November 2001, the longest incidence of no movement in base rate for some decades. Given current uncertainties around world economic recovery, and the prospect of conflict in the Middle East it is assured that current rates will prevail at least in the shorter term.

5. STRATEGY

5.1. CAPITAL FINANCE

To maximise the use of Basic and Supplementary Credit Approvals, to maximise the use of capital grants and to utilise available capital receipts and leasing to finance a capital programme consistent with the Council’s revenue budget.

5.2. BORROWING

The strategy will in general be:

i to borrow long term when interest rates are relatively low and to borrow short term when interest rates are judged to be high.

ii to keep a reasonable balance between short term and long term loans so that

o there is not an unreasonable exposure to short term loans with corresponding risk of increased interest charges; or

o over reliance on long term loans which could restrict flexibility in renewing debt at advantageous interest rates.

iii to aim generally to be in a net day to day borrowing position so that the need for investment of temporary excess funds is avoided as far as possible.

This will be subject to variation in order to take advantage where appropriate of prevailing market conditions.

For 2003-2004 the strategy will be to continue to borrow medium to long term at fixed interest rates, having regard to the low interest rates that are currently available.

5.3. TEMPORARY INVESTMENTS

To invest funds temporarily surplus so as to produce the maximum return.

5.4. DEBT RESTRUCTURING

To use available PWLB quota to take advantage of opportunities to redeem PWLB debt or convert from fixed to variable rates or vice versa and replace debt so as to smooth the pattern of debt repayment and/or minimise overall long term capital financing costs. Consideration will be given to the availability and attractiveness of loans other than PWLB for debt restructuring purposes.

6. RAISING CAPITAL FINANCE

6.1. The following list specifies which borrowing instruments, on and off-balance sheet, can be adopted. Only those marked a are currently used by the Council.

Fixed Variable

PWLB a a

Market Long-term a a

Market Pooled Funds a a

Market Temporary a a

Local Bonds

Overdraft a

Negotiable Bonds

Stock Issues

Internal (capital receipts and revenue balances) a a

Leasing a a

Bills

7. SOURCES OF FINANCING

The following list specifies which borrowing instruments the Council may adopt.

7.1. PUBLIC WORKS LOAN BOARD (PWLB)

1) The main source of longer term borrowing for the Council for many years has been from the Government through the Public Works Loan Board.

2) It is still likely that the PWLB will remain the major source of the Council’s long term borrowing requirements. The 2003-2004 quota for the Council is estimated to be £19.2 million.

3) Forecasts are that interest rates on long-term loans (including long term PWLB loans) will be stable in the near future, and the timing of borrowing will therefore take account of this forecast.

7.2. MONEY MARKET LOANS - LONG TERM AND POOLED FUNDS

The availability of PWLB loans has become easier and their rates of interest are expected to remain competitive. Loans are also available through the London money market in particular longer term loans (40 years) which carry a low initial period of interest, but where the lender has the option to raise the rate after this period. If that option is taken, the Council is free to repay if it so chooses without penalty. These Lenders Option: Borrowers Option (LOBO) loans carry the necessary security ratings and can be an effective complement to PWLB borrowing in structuring the loan portfolio and debt rescheduling.

7.3. MONEY MARKET LOANS -TEMPORARY (LOANS UP TO 364 DAYS)

Short term loans are used to avoid any unforeseen overdrawn position with the bank.

7.4. OVERDRAFT

An overdraft limit of £3m is available with the Council’s bankers. This facility will be used on occasions when temporary borrowing is difficult, or for amounts of under £250,000 wherever the transaction costs outweigh any benefits from using the money market.

7.5. INTERNAL

Internal funds include “reserved” or “set-aside” capital receipts which are to be used to repay debt as a substitute for new borrowing. There is no provision in legislation to compel authorities to use such receipts in the year they are received, and those funds are normally used internally thereby reducing the need for external borrowing but they could be externalised and new borrowing taken up if conditions merit such an approach.

7.6. LEASING

Operating Leases fall outside capital expenditure controls, and therefore this form of finance will be used where appropriate and economically viable (eg for the purchase of equipment and vehicles), and where the transaction costs are within available resources and show no material cost over that of borrowing.

8. BORROWING

8.1. The Council will have an estimated borrowing requirements in 2003-2004 of £19.2 million, in order to finance new capital expenditure covered by Credit Approvals.

The estimated requirements of £19.2m may be met as follows: £M

Total Requirement 19.2

Less: movement in amounts set aside 3.5

Minimum External Borrowing Requirement 15.7

9. APPROVED ORGANISATIONS FOR INVESTMENT

9.1. The current policy is that the investment of surplus funds is limited to:

Major British Clearing Banks and Subsidiaries

Larger Merchant Banks

Top Building Societies

Other Local Authorities

9.2. The Council will also use Pooled money resources that may become available through the auspices of approved organisations for Investment, as contained above and to include H M Treasury. The limit of such investment to be placed at £8 million per each approved source and varied at the discretion of the Chief Financial Officer. The exercise of such discretion to be reported to the Executive as part of the Annual Reporting requirement as contained under TMP6.

9.3. There may be exceptions to this approved list from time to time depending on individual circumstances. The list of above organisations is continually reviewed monthly having regard to their credit ratings.

Apart from the Council’s own bank not more than £8 million may be loaned to any single institution on one date. Not more than £3 million may be loaned to any subsidiary of one of the clearing banks and no such loan may exceed 1 month. A maximum advance of £8 million may be loaned to Building Societies with appropriate credit ratings for a period of up to three months.

9.4. Approved organisations will be continually reviewed taking into account credit rating and other relevant information and amended by the Chief Financial Officer or his deputy for this purpose.

10. SECTION 45 OF THE LOCAL GOVERNMENT AND HOUSING ACT 1989

10.1. POLICY ON INTEREST RATE EXPOSURE

1) Section 45 of this Act requires the Council to fix each year the maximum proportion of interest on borrowing which is subject to variable rate interest.

2) In order to take advantage where appropriate of low short-term interest rates it is proposed that for the financial year 2003-2004.

the limit on the proportion of interest payable by the Council which is at a rate or rates which can be varied by the person to whom it is payable or by reference to any external factors be 20%.

10.2. OVERALL BORROWING LIMIT

Taking account of existing debt and the requirements for 2003/04 and the borrowing powers available:

the maximum amount which the authority may have outstanding by way of borrowing be £130 million.

10.3. SHORT TERM BORROWING LIMIT

Taking account of the need for flexibility in borrowing and in order to take advantage of low short term interest rates as appropriate:

the maximum amount which the authority may have outstanding by way of short term borrowing (being part of the overall borrowing limit) be £40 million.

11. POLICY ON EXTERNAL ADVISERS

11.1. Treasury Advisers have been employed by the Council to:

· forecast movements in long term and short term interest rates

· advise on long term borrowing and debt maturity profiles

· advise on leasing and capital finance legislation

· restructuring of PWLB debt

· advise on future interest rate movements (including PWLB) and other market developments

The Chief Financial Officer has responsibility for the review of future provision of such advice, and to amend the conditions or appoint different advisers as appropriate.

12. BUDGET FOR BORROWING COSTS 2003-2004

12.1. The estimated average cost of borrowing for the Council in 2003-2004 is 5.6%, and the estimated cost of interest payable on long term borrowing is £6.5 million. Interest receipts from temporary investments are anticipated to be around £700,000, resulting in net interest expenditure of £5.8 million in respect of loans and investments. The latest CIPFA statistics on local authority Capital Expenditure and Treasury Management indicate that the Isle of Wight Council average interest rate on external borrowing remains in the lowest ten of sixty-eight Unitary Authorities in England and Wales. These statistics show a Council average of 6.4% compared with an average for all Unitary Authorities of 7.36%. On the Council’s current loan portfolio of £109 million this would represent approximately £1,046,000 less in annual interest payments compared to the average authority with a similar size portfolio (equivalent to a 2% increase on Council Tax).

REPORT TO THE EXECUTIVE

BACKGROUND