As-Of Adjustments
As-of adjustments, or deposit analysis adjustment, are memorandum items applied to a depository institution's end-of-the-day clearing balance for a particular maintenance period. The adjustments are made primarily to offset the effect of errors on the institution's cumulative position, thus resolving accounting transactions processed or not processed in error by a Reserve Bank, DI errors, or floats incurred by an institution. Debit and credit as-of adjustments can affect not only the current period's position but also a prior period's position, and thereby, any excess or deficiency, as well as even a future period's position.
The dollar value of as-of adjustments is an important factor to consider when implementing monetary policy. As-of adjustments can affect overall reserve positions in the banking system. It is important, therefore, that two-sided, as-of adjustments be applied on the same day, when feasible, so that aggregate reserve positions are not affected. Moreover, to further reduce the impact of as-of adjustments on the data used to conduct Open Market Operations, especially at the end of the reserve maintenance period, timely and accurate information about the total value of adjustments to be applied must be made available to the Desk to assist it in meeting reserve objectives.
In order to address the operational costs to all parties associated with as-of adjustment processing for smaller dollar transactions, the Federal Reserve System changed the criteria for automatically issued, transaction-based as-of reserve adjustments.
Reserve Banks now determine the transactions based on the following two factors:
- The dollar value of the base transaction must be $25,000 or greater.
- The aggregate amount (base transaction multiplied by number of days outstanding) must be $250,000 or greater.
Depository institutions may request as-of adjustments for amounts less than the established minimums on a case-by-case basis.
A tutorial, containing an overview, life cycle, and examples describing how and why an as-of adjustment is generated and what affect it has on an institution's account management practices, is available. Those calculating these adjustments are encouraged to utilize this tool.
