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City of Santa - Annual <br />Statement of Investment Policy Page 19 July 1, 2022 - <br />June 30, 2023 <br /> <br />Internal control procedures address: <br /> <br />• Control of collusion <br />• Control of fraud <br />• Control of misrepresentation by third parties <br />• Control of employee error <br />• Separation of transaction authority from accounting and record keeping <br />• Custodial safekeeping <br />• Delivery versus payment <br />• Clear delegation of authority <br />• Conformation of transactions for investment and wire transfers <br />• Written procedures for placing of investment transactions <br />• FMSA Investment Advisory Committee <br /> <br />In addition, cash balances are reconciled daily by non-investment employees and <br />reconfirmed by the City's accounting staff. Accounting staff also verifies investment activities <br />and holdings on a regular basis which are reviewed by the FMSA Investment Advisory <br />Committee. The Executive Director for FMSA, at his/her discretion, shall establish a process <br />for annual independent reviews by an external auditor to the extent contemplated by <br />generally accepted auditing standards, during the course of the City’s annual audit. <br /> <br />16.0 PERFORMANCE STANDARDS <br /> <br />The investment portfolio shall be managed to attain a market-average rate of return <br />throughout budgetary and economic cycles, taking into account the City's investment risk <br />constraints, cash flow, and policy towards the pre-payment of specific City debts or <br />contribution servicing obligations (when finically advantageous to the City). Investment <br />return becomes a consideration only after the basic requirements of investment safety <br />and liquidity have been met. Because the investment portfolio is designed to operate on <br />primarily a 'hold-to-maturity' premise, and because of the safety, liquidity, and yield <br />priorities, the performance goal that will be used by the Executive Director for FMSA <br />to determine whether market yields are being achieved shall be the average of the monthly <br />LAIF rate and the 12-month rolling average 2-Year Constant Maturity Treasury (CMT) <br />rate. Having a goal does not imply that the City Treasurer will add additional risk to <br />the Investment Portfolio in order to attain or exceed that goal.