Exhibit 99(b)
Form 10-K for 1999
File No. 333-74847
AT&T Capital Corporation
Management Assertion
In accordance with the terms of the Pooling and Servicing Agreement dated as of
August 1, 1999 ("Servicing Agreement") among AT&T Capital Corporation (the
"Company") as Servicer, and in its individual capacity, Newcourt Funding
Company, L.L.C. as the Depositor and The Chase Manhattan Bank as the Indenture
Trustee for the Newcourt Equipment Trust Securities 1999-1, the Company is
responsible for servicing the leases and loans that are the subject of the
Servicing Agreement.
The Company is responsible for establishing and maintaining effective controls
over the servicing of leases and loans. The controls are designed to provide
reasonable assurance to the Company's management and board of directors that
leases and loans are serviced in accordance with the Company's policies and
procedures as well as its responsibilities under the Servicing Agreement.
There are inherent limitations in any control, including the possibility of
human error and the circumvention or overriding of the controls. Accordingly,
even effective controls can provide only reasonable assurance with respect to
the achievement of any objectives of controls. Further, because of changes in
conditions, the effectiveness of controls may vary over time.
The Company has determined the objectives of control with respect to its
servicing responsibilities. These stated control criteria are set forth in
Exhibit I. The Company has assessed its controls in relation to these criteria
for the period from August 1, 1999 through December 31, 1999. Based upon this
assessment, the Company believes that its controls over servicing loans and
leases are effective in providing reasonable assurance that the Company complied
with its policies and procedures and responsibilities under the Servicing
Agreement except for controls II (g) and IV (g) described in Exhibit I. The
Company has determined that control procedure II (g) related to the resolution
of unidentified cash and procedure IV (g) related to the application of
liquidation proceeds, were not operating effectively in 1999 due to systems
conversions, personnel turnover and integration issues, and may have resulted in
an overstatement of delinquent amounts and net liquidations during the period
from August 1, 1999 through December 31, 1999. Management is currently
addressing the processing and controls surrounding aged suspense account
balances and the application of liquidation proceeds.
AT&T Capital Corporation, as Servicer
By:
Xxxxx X Xxxxx
Executive Vice President and
Treasurer
EXHIBIT I
AT&T Capital Corporation
Stated Lease/Loan Servicing Control Criteria
I. Segregation of Serviced Portfolio
The Company's systems segregate leases and loans between those owned by the
Company and those managed by the Company for each relevant owner by each managed
pool.
Lease/Loan Payments
Lease and loan payments, including scheduled interest and principal,
prepayments, liquidation proceeds, late fees, etc. (collectively, remittances)
are applied to the respective customer account on a daily basis, based on an
established payment hierarchy.
III. Accounting
The Company maintains financial records for the managed portfolios which are
periodically reconciled to the Company's systems.
IV. Delinquencies
The Company maintains and implements policies and procedures which govern the
collection efforts, monitoring and reporting for delinquent accounts.
V. Trustee Disbursements
Remittances received by the Company are transferred to the Trustee by the
Company's Treasury Group on a daily and monthly basis in accordance with the
time frame established within the Servicing Agreement.
VI. Trustee Accounting and Reporting
The Company's Investor Reporting Group generates a monthly servicing report to
the Trustee and investors which provides the cash activity, delinquency, and
defaults relating to the managed portfolio.
AT&T Capital Corporation
Stated Lease/Loan Servicing Control Procedures
I. Segregation of Serviced Portfolio
The Company's systems segregate leases and loans between those owned by the
Company and those managed by the Company for each relevant owner by each managed
pool. Selected control procedures include:
a) Transactions which have been securitized are identified with a special code
(flagged) within the servicing entity's lease accounting system to
segregate the cash activity and reporting relating to these transactions.
b) Corporate systems reviews the monthly extracts from the servicing entity to
ensure all contracts are accounted for.
c) The Company generates daily cash reports which segregate cash among owned
and managed portfolios based upon the systems codes that flag the
contracts.
d) The status indicator on a managed transaction is changed from active to its
new status (default, prepaid, rebook, maturity, or breach of rep) upon the
appropriate change to the lease record or notification of the status
change.
a) Lease/Loan Payments
Lease and loan payments, including scheduled interest and principal,
prepayments, liquidation proceeds, late fees, etc. (collectively, remittances)
are applied to the respective customer accounts on a daily basis, based on an
established payment hierarchy. Selected control procedures include:
b) Billing statements are prepared on a basis consistent with the terms of the
lease or loan and sent to customers based upon the records in the servicing
system.
c) Payments received at the lockbox electronically feed to the Company's lease
and loan accounting system on a daily basis and are posted to customer
records on the subsequent day.
d) Systems security has been established to restrict modifications to the
system controlled payment hierarchy.
e) A formal, or at a minimum, an informal daily cash reconciliation is
performed by the servicing entities of the cash received at the lockboxes
to ensure a complete accounting of all cash (owned and managed).
f) There is proper segregation of duties between the personnel responsible for
the posting of payments (systems for electronic transmissions and
operations for manual adjustments) and reconciling the cash activity to the
general ledger (accounting).
g) Suspense cash systems modules/accounts are utilized to monitor cash not
systematically applied to customer accounts (rejects, unidentified and
unknowns).
h) Operations personnel review the clearing of suspense cash activity to
ensure timely application of such activity. Unapplied cash was not applied
to customer accounts in accordance with the timeframes prescribed by
management due to personnel turnover and systems conversions. Management is
currently addressing the processing and reconciliation controls related to
aged suspense account balances.
i) A monthly cash comparison between the summary of daily cash transferred for
the securitized contracts and the monthly servicing data files received by
Corporate Systems Group is prepared by the Investor Reporting Group and
reviewed by the Portfolio Accounting Group.
j) Scheduled monthly lease and loan remittances received by the Company are
separately identified and transferred to the securitization Trust on a
daily and monthly basis.
k) The Company generates daily cash reports which segregate the total cash
received within a given period for the managed portfolios based upon the
systems codes that flag the contracts.
III. Accounting
The Company maintains financial records for the managed portfolios which are
periodically reconciled to the Company's systems. Selected control procedures
include:
a) Segregation of duties have been established between the personnel
responsible for record maintenance on the lease and loan accounting systems
(the Operations Group) and personnel responsible for investor reporting
(the Investor Reporting Group).
b) A system reconciliation at the lease and loan level is performed between
the contract principal balance and the required payoff amount calculated by
the Corporate Systems Group to the corresponding figures provided by the
respective servicing entity.
IV. Delinquencies
The Company maintains and implements policies and procedures which govern the
collection efforts, monitoring and reporting for delinquent accounts. Selected
control procedures include:
a) Policies and procedures exist for the periodic reviews of delinquent
transactions, generation of delinquency reports and collection efforts.
b) Account delinquency status is system calculated and generated.
c) The Arrears Management Group performs periodic reviews of the delinquency
reporting and collection activity at the servicing entities.
d) Delinquency reporting is reviewed by the servicing entities' Credit Head,
Portfolio Quality Leader and the Operations Manager.
e) The Investor Reporting Group reviews delinquency status and notifies the
Portfolio Accounting Group for unusual trends.
f) Write-offs generated from the servicing entity's system are reconciled
monthly to the write-offs in the servicer report by the Investor Reporting
Group. For one servicing system the Investor Report Group noted that
liquidation proceeds were not being identified properly and remitted to the
trust. Management is currently addressing the processing and controls
related to the identification of liquidation proceeds.
V. Trustee Disbursements
Remittances received by the Company are transferred to the Trustee on a daily
and monthly basis in accordance with the time frame established within the
Servicing Agreement. Selected control procedures include:
a) The Company has written policies and procedures for the transfer of
funds to the Trustee on a daily and monthly basis.
b) Appropriate approvals in writing are required to initiate a wire transfer
of funds to the Trustee account.
c) A monthly reconciliation of cash activity is performed by the servicing
entity from its general ledger to the Treasury Group's cash system. The
servicing entities periodically reviews the cash transfers recorded by the
Treasury Group in the cash management system.
d) The company's bank reconciliations are performed periodically at the
servicing entities.
VI. Trustee Accounting and Reporting
The Company's Investor Reporting Group generates a monthly servicing report to
the Trustee and investors which provides the cash activity, delinquency, and
defaults relating to the managed portfolio. Selected control procedures include:
a) Monthly data extract files at a lease and loan level are transmitted
electronically from the servicing entity to the Corporate Systems Group
where edits are performed to ensure a complete accountability of the
securitized portfolio as well as to check for errors in various data
elements by performing recalculations of amounts provided by the servicing
entities.
b) Through the system edit process, reports and files are generated for the
exception reporting which is provided to the respective servicing entity
for investigation and subsequent corrections.
c) A monthly cash reconciliation is performed between the Corporate Treasury
Group cash records and the monthly servicing report produced by the
Investor Reporting Group.
d) Back up is maintained over the Corporate System applications used for
securitization.
e) The Investor Reporting Group's management performs an informal analytical
review on the monthly servicing report.
f) The servicing entities are provided with workpapers supporting the servicer
report for their review and approval before submission by the Investor
Reporting Group to the Trustee.
