06-20-07 FPAC Minutes - Laserfiche WebLink

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broker/dealers selected by creditworthiness (e.g., a minimum capital requirement of $10,000,000 and at least five years of operation). These may include "primary" dealers or • regional dealers that qualify under Securities and Exchange Commission (SEC)Rule 15C3-1 (uniform net capital rule). All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate: • Audited financial statements demonstrating compliance with state and federal capital adequacy guidelines • Proof of National Association of Securities Dealers (NASD) certification (not applicable to Certificate of Deposit counterparties) • Proof of state registration • Completed broker/dealer questionnaire (not applicable to Certificate of Deposit counterparties) • Certification of having read and understood and agreeing to comply with the [entity's] investment policy. • Evidence of adequate insurance coverage. An annual review of the financial condition and registration of all qualified financial institutions and broker/dealers will be conducted by the Treasurer. (See Appendix for the GFOA Recommended Practice on "Governmental Relationships with Securities Dealers.") VI. Internal Controls • 1.Internal Controls The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City 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: • Avoidance of physical delivery securities • Written confirmation of transactions for investments and wire transfers • Password protected authorizations of wire transfers • Development of a wire transfer agreement with the lead bank 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 City's annual independent audit. •