-116- between the administrative costs adjustments for the current quarter and the previous quarter was the amount that FNBC claimed on its books as a portfolio adjustment for the current quarter’s deferral. C. Preparation for the Adjustment The starting point in calculating the administrative costs adjustment was the swap department’s annual budget, as approved by the swap department’s senior management. In order to arrive at the amount of salaries, bonuses, and benefits (collectively, personnel costs) to allocate to its administrative costs adjustment calculation, FNBC multiplied its personnel costs by a fraction. The fraction’s numerator equaled the number of full-time equivalent employees (FTEs) estimated to be required to maintain the portfolio to maturity.37 The fraction’s denominator equaled the total budgeted trading department FTEs. FNBC also allocated to the management of the existing swap portfolio the same percentage of direct costs. The number of FTEs estimated necessary to maintain the current portfolio to maturity changed during the relevant years as shown below: 37 The finance department ascertained the level of staffing needed to manage the existing portfolio by interviewing primarily the head of the trading desk.Page: Previous 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 Next
Last modified: May 25, 2011