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� The investment officer, acting in accordance with written procedures and exercising due diligence, shall not ��= be held personally responsible for a specific security's credit risk or market price changes, provided that �� these deviations are reported immediately and that appropriate action is taken to control adverse develop- � � � � ments. T� Monitorin� and Adjusting the Portfolio , The investment officer will routinely monitor the contents of the portfolio, the available markets and the �,:�� relative values of competing instruments and will adjust the portfolio accordingly. � � . Internal Controls � The Finance Director shall establish a system of internal controls, which shall be reviewed annually by an � independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, �� misrepresentation, unanticipated market changes, or imprudent actions. Investments shall be done on a ��.� pooled funds basis with interest allocated on a cash balance method. Those internal controls shall consist � of competitive bids on investments, and division of duties among the staff. � ❑ Investments made by investment officer � ❑ Records maintenance by a finance staff inember other than investment officer � ❑ Review and reconciliation by the assistant iinance director 1i � Portfolio Mana eg ment � Under the Council-adopted Fiscal Policies, it shall be the City's procedure to restrict investments to only � Repurchase Agreements with national or state chartered banks, U.S. Treasury and U.S. Government �� Agencies, Guaranteed Investment Contracts, and Bankers Acceptances. All investments shall carry a �� minimum credit rating of `AA'. An exception to these restrictions is permitted with regard to the �� investment of proceeds received from the 2011 and 2012 bonds due to extenuating economic circumstances � and their effect on financial institutions. Repurchase A�reements associated with the bonds can be placed � with any bank, bank holding compan_y, savings and loan association, trust companyo ur other financial institution includin� the trustee or anv of its affiliates. The financial institution shall carrv a credit ratin� of � `A' or better, and is required to pledge collateral from national or state chartered banks. , The procedures shall consist of yield curve analysis and implemented with the appropriate purchase of the � above investments. Maturity scheduling shall be within those investments and in a manner that will maximize yield and � liquidity and minimize interest rate rislc. T Competitive Selection of Investment Instruments �� Before the City invests any surplus funds, a competitive "bid" process shall be conducted. If a specific �� maturity date is required, either for cash flow purposes or for conformance to maturity guidelines, bids will � be requested for instruments that meet the maturity requirement. If no specific maturity is required, a z�� market trend (yield curve) analysis will be conducted to determine which maturities would be most z; advantageous. Bids will be requested from financial institutions for various options with regards to term z�. �- and instrument. The City will accept the bid that provides the highest rate of return within the maturity z��_ :: required and within the parameters of these procedures. z,; 2G� Page 5 of 7