Separation of Duties.
Individuals who perform investment transactions shall not be responsible for the reconciliation of the accounts; furthermore, adequate separation of duties requires that persons who perform investment transactions should not also be responsible for writing checks or preparing bank deposit slips.
Duties and Responsibilities.
The Finance Director shall be responsible for the management of the City’s Investment Program, including the purchases and sales of securities, bank transfers, and wires. All such transactions must be authorized and signed off by the Finance Director.
The Chief of Staff shall review the reconciliation of all investment transactions and reports required in the “Monthly Financial Statement.”
Security Selection Process.
When purchasing an investment, the City shall select the security which provides the highest bond equivalent yield (BEY) for a given investment. For investments which require bidding, at least two (2) bids shall be secured. If no security is offered for the date(s) requested, the Finance Director may select the security with the highest BEY closest to the date(s) requested, or may rebid the investment.
On an exception basis, when in the determination of the Finance Director competitive bidding would inhibit the selection process, securities may be purchased utilizing the comparison to current market price method. Acceptable current market price providers include, but are not limited to:
1. The Bloomberg Information System;
2. The Wall Street Journal, or comparable nationally recognized financial publication; and
3. Market pricing provided by the City’s safekeeping institution.
Examples of when this method may by used include:
1. When time constraints due to unusual circumstances preclude the use of the competitive bidding process;
2. When no active market exists for the issue being traded due to the age or depth of the issue;
3. When a security is unique to a single institution, (i.e., as a result of a portfolio being purchased by a broker); and
4. When the transaction involves new issues “purchased at the window” or issues in the “when issued” market.
When selection is made based on comparison to market prices, the following information shall become part of the record of the security involved:
1. Reason for use of this method;
2. Source of the current market value used; and
3. Price and/or interest rate quoted by said source.
Safekeeping.
All settlements shall be executed by faxing a signed cover sheet and a settlement note from the successful bidder to the City’s safekeeping institution. All transactions, whether purchases or sales, shall require the signature of two (2) authorized signors.
Delivery versus Payment.
Settlements shall be on a delivery versus payment (“DVP”) basis and shall settle and be held at the City’s safekeeping institution. Except for Banker’s Acceptances (which are only deliverable in physical form), the City will not purchase any security requiring physical delivery.
Investment Accounting.
Following the execution and settlement of a transaction, all transaction documentation shall be utilized by the Director of Finance for preparation of the required journal entry.
Hard copy confirmations of all transactions shall be reviewed by the Chief of Staff to ensure they agree with the settlement note received by the City on the day of the transaction. Any deviation between the two documents must be immediately brought to the attention of the Finance Director for remediation.
On a monthly basis, all outstanding investments shall be reconciled by the Finance Director between:
the general ledger and the City’s investment software, and
the City’s investment software and the City’s safekeeping trust statement.
In addition, on a monthly basis, bank statements, investment reconciliations and investment journal entries shall be reviewed by the Chief of Staff for unusual or unauthorized transactions. Should there not be a reasonable explanation for any such transaction, same should be brought to the immediate attention of the Finance Director.
A listing of all outstanding investments shall be produced monthly and reviewed by the Finance Director and shall be contained in the “Monthly Financial Statement” and distributed to the Mayor, City Council and Chief of Staff.
Wire Transfer Agreements.
All wire transactions will be made in accordance with the procedures contained in the executed wire transfer agreement between the City and its safekeeping institution.
Repurchase Agreements.
While the City does not intend to utilize repurchase agreements (repos) directly as a component of its investment portfolio at this time, it is mindful that the majority of funds deposited into IPTIP are invested in repos. The City believes that IPTIP’s collateralization requirement (equal to 102% of the value of the repo at time of execution, and marked to market on a daily basis thereafter) makes it a prudent vehicle in which to place short term cash.
(Prior Code, Ch. 38, App. E) (Ord. 99-286, passed 12-14-1999)