06-20-07 FPAC Minutes - Laserfiche WebLink

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provide a copy of their most recent report on internal controls(Statement of Auditing Standards No. • 70,or SAS 70). 3. Internal Controls The investment officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the [entity]are protected from loss,theft or misuse. Details of the internal controls system shall be documented in an investment procedures manual and shall be reviewed and updated annually. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that(1)the cost of a control should not exceed the benefits likely to be derived and(2)the valuation of costs and benefits requires estimates and judgments by management. The internal controls structure shall address the following points: • Control of collusion • Separation of transaction authority from accounting and recordkeeping • Custodial safekeeping • Avoidance of physical delivery securities • Clear delegation of authority to subordinate staff members • Written confirmation of transactions for investments and wire transfers • Dual authorizations of wire transfers • Development of a wire transfer agreement with the lead bank and third-party custodian Accordingly,the investment officer shall establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures or alternatively,compliance should • be assured through the [entity] annual independent audit. Alternative sample language. The investment officer shall establish a system of internal controls,which shall be documented in writing. The internal controls shall be reviewed by the investment committee,where present, and with the independent auditor. The controls shall be designed to prevent the loss of public funds arising from fraud,employee error,misrepresentation by third parties,unanticipated changes in financial markets,or imprudent actions by employees and officers of the [entity.] VII. Suitable and Authorized Investments 1. Investment Types Consistent with the GFOA Policy Statement on State and Local Laws Concerning Investment Practices,the following investments will be permitted by this policy and are those defined by state and local law where applicable: • U.S.Treasury obligations which carry the full faith and credit guarantee of the United States government and are considered to be the most secure instruments available; • U.S.government agency and instrumentality obligations that have a liquid market with a readily determinable market value; • Canadian government obligations(payable in local currency); • Certificates of deposit and other evidences of deposit at financial institutions, • Bankers'acceptances; • Commercial paper,rated in the highest tier(e.g.,A-1,P-1,F-1, or D-1 or higher)by a nationally recognized rating agency;