Item 24 - Annual Statement of Investment Policy

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City of Santa - Annual Page 19 July 1, 2021 - Statement of Investment Policy June 30, 2022 Internal control procedures address: • Control of collusion • Control of fraud • Control of misrepresentation by third parties • Control of employee error • Separation of transaction authority from accounting and record keeping • Custodial safekeeping • Delivery versus payment • Clear delegation of authority • Conformation of transactions for investment and wire transfers • Written procedures for placing of investment transactions • FMSA Investment Advisory Committee In addition, cash balances are reconciled daily by non-investment employees and reconfirmed by the City's accounting staff. Accounting staff also verifies investment activities and holdings on a regular basis which are reviewed by the FMSA Investment Advisory Committee. The Executive Director for FMSA, at his/her discretion, shall establish a process for annual independent reviews by an external auditor to the extent contemplated by generally accepted auditing standards, during the course of the City’s annual audit. 16.0 PERFORMANCE STANDARDS The investment portfolio shall be managed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City's investment risk constraints, cash flow, and policy towards the pre-payment of specific City debts or contribution servicing obligations (when finically advantageous to the City). Investment return becomes a consideration only after the basic requirements of investment safety and liquidity have been met. Because the investment portfolio is designed to operate on primarily a 'hold-to-maturity' premise, and because of the safety, liquidity, and yield priorities, the performance benchmark that will be used by the Executive Director for FMSA to determine whether market yields are being achieved shall be the average of the monthly LAIF rate and the 12-month rolling average 2-Year Constant Maturity Treasury (CMT) rate. However, since return on investment is the least important objective of the Investment Portfolio, the benchmark will be used only as a reference tool. The reporting of a benchmark does not imply that the City Treasurer will add additional risk to the Investment Portfolio in order to attain or exceed the benchmark.