Foreign Exchange (Hedging) Specific to Research Contracts Policy
This policy applies to researchers and University staff members who are involved in research contracts denominated in currencies other than NZD.
To provide a framework for the management of foreign exchange risk arising from the granting of funds in other than NZD where the cost of the research undertaken is principally in NZD.
Certain research contracts are awarded in currencies other than NZD and are not adjusted during the life of the project.
Commonly the costs for these project are incurred in NZD and therefore the project is exposed, either positively or negatively, to the risk of the movement in the FX rate between the date of granting and the conclusion of the project.
It is the intention of the policy that the PI and research project are insulated from this risk, however, the risk is managed at a University level by application of the Universities hedging policies.
1. At the time of developing a proposal budget for an international grant (anything denominated in non NZD), the Research Programme Manager or the Research Programme Coordinator is to obtain a foreign exchange rate from Treasury.
a. Treasury will provide the rate to convert the foreign denominated budget into NZD at spot rate, which will apply for the length of the contract
b. This advice is independent of whether an external hedging contract is entered into
2. The NZD equivalent is to be used in all research reporting such as the Budget Availability Report such that from research team perspective the project is managing a NZD denominated grant.
3. When an international grant (anything denominated in non NZD) is awarded, the Treasurer is to be advised and, consistent with the University Treasury policy, enters into external hedging contracts if required.
4. Treasury must undertake the financial reporting to translate the impact of hedge accounting and must reflect the outcome in the ‘right’ cost centre, such that the FX gain or loss is reflected in the financial statements of the UoA.
The following definitions apply to this document:
Staff member refers to an individual employed or contracted by the University on a full or part time basis.
University means the University of Auckland and includes all subsidiaries.
Key relevant documents
Include the following:
Document management and control
Owner: Deputy Vice-Chancellor (Operations)
Content manager: Chief Financial Officer
Approved by: Vice-Chancellor
Date approved: 23 March 2018
Review date: 31 December 2022