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168 The investment officer, acting in accordance with written procedures and exercising due diligence, shall not 169 be held personally responsible for a specific security's credit risk or market price changes, provided that 170 these deviations are reported immediately and that appropriate action is taken to control adverse develop - 171 ments . 172 173 Monitoring and Adjusting the Portfolio 174 The investment officer will routinely monitor the contents of the portfolio, the available markets and the 175 relative values of competing instruments and will adjust the portfolio accordingly. 176 177 Internal Controls 178 The Finance Director shall establish a system of internal controls, which shall be reviewed annually by an 179 independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, 180 misrepresentation, unanticipated market changes, or imprudent actions. Investments shall be done on a 181 pooled funds basis with interest allocated on a cash balance method. Those internal controls shall consist 182 of competitive bids on investments, and division of duties among the staff. 183 184 ❑ Investments made by investment officer 185 ❑ Records maintenance by a finance staff member other than investment officer 186 ❑ Review and reconciliation by the assistant finance director 187 188 Portfolio Management 189 Under the Council- adopted Fiscal Policies, it shall be the City's procedure to restrict investments to only 190 Repurchase Agreements with national or state chartered banks, U.S. Treasury and U.S. Government 191 Agencies, Guaranteed Investment Contracts, and Banker's Acceptances. 192 193 The procedures shall consist of yield curve analysis and implemented with the appropriate purchase of the 194 above investments. 195 196 Maturity scheduling shall be within those investments and in a manner that will maximize yield and 197 liquidity and minimize interest rate risk. 198 199 Competitive Selection of Investment Instruments 2oo Before the City invests any surplus funds, a competitive "bid" process shall be conducted. If a specific 201 maturity date is required, either for cash flow purposes or for conformance to maturity guidelines, bids will 202 be requested for instruments that meet the maturity requirement. If no specific maturity is required, a 203 market trend (yield curve) analysis will be conducted to determine which maturities would be most 204 advantageous. Bids will be requested from financial institutions for various options with regards to term 205 and instrument. The City will accept the bid that provides the highest rate of return within the maturity 206 required and within the parameters of these procedures. 207 208 Bids for purchases through the treasury auctions are not required. 209 210 Records will be kept of the bids offered, the bids accepted and a brief explanation of the decision that was 211 made regarding the investment. 212 213 Page 5 of 7