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the release of funds. Securities will be held by a third -party custodian as <br />evidenced by safekeeping receipts. <br />C. Bid Requirements <br />Investments will be chosen based on liquidity needs and market conditions. The <br />investments will be competitively bid when feasible and appropriate. Except as <br />required by law, the bid deemed to be the most responsive to the needs of the <br />City must be selected. <br />D. Internal Controls <br />The Finance Director is responsible for establishing and maintaining an internal <br />control structure designed to ensure that the assets of the City are protected from <br />loss, theft or misuse. The internal control structure shall be designed to provide <br />reasonable assurance that these objectives are met. The concept of reasonable <br />assurance recognizes that the cost of a control should not exceed the benefits <br />likely to be derived and the valuation of costs and benefits requires estimates and <br />judgments by management. <br />Accordingly, the Finance Director shall establish a process for an annual <br />independent review as part of the annual financial audit to ensure compliance <br />with the policies and procedures. The internal controls shall address the following <br />points: <br />1. Control of collusion - Collusion is a situation where two (2) or more employees are <br />working in conjunction to defraud their employer. <br />2. Separation of transaction authority from accounting and record keeping - By <br />separating the person who authorizes or performs the transaction from the <br />people who record or otherwise account for the transaction, a separation of <br />duties is achieved. <br />3. Custodial safekeeping - All securities, with the exception of certificates of <br />deposit, shall be held with a third -party custodian; and all securities purchased <br />by, and all collateral obtained by the City should be properly designated as an <br />asset of the City. The securities must be held in an account separate and <br />apart from the assets of the financial institution. No withdrawal of such <br />securities, in whole or in part, shall be made from safekeeping except by the <br />Finance Director as authorized herein, or by their respective designee. <br />4. Certificates of Deposit issued by a local bank or savings and loan association <br />may be held in safekeeping at that institution. The institution shall issue a <br />copy of the certificate of deposit, a safekeeping receipt, or some other <br />confirmation of the purchase that is satisfactory to the Finance Director. This <br />will be kept on file in the Finance Department and will indicate the amount, <br />interest rate, issue date and maturity date of the certificate of deposit. <br />5. Avoidance of physical delivery securities - Book entry securities are much <br />easier to transfer and account for since actual delivery is never taken. <br />47, <br />