Reserve Funds has informed investors that due to a potential accounting error on Sept. 15, the Reserve Yield Plus Fund might have broken the buck at 99 cents.
The trouble is due to a $1,706,000 receivable from Reserve Management Co. Inc. (RMCI) that was recorded, perhaps erroneously, as an asset on Sept. 15. Counting it as an asset boosted the funds value by $0.0015 per share to $1.00 per NAV.
However, RMCI never paid the $1,706,000 to the fund and withdrew it from the accounting ledger on Oct. 3.
Outside fund counsel learned of the receivable on Nov. 26 and informed the board of trustees on Dec. 1, Reserve said in an announcement. The trustees immediately directed outside fund counsel to inform regulators and conduct a comprehensive review to determine the circumstances surrounding the authorization and posting of the receivable, and its subsequent reversal.
At present time, a forensic accounting firm is examining the books, and Reserve is postponing sending out its Sept. 30 semi-annual report to shareholders.