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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY JULY 2012-2013 SAFEKEEPING OF SECURITIES: To protect against potential losses caused by collapse of individual securities dealers, all securities owned by the City except securities used as collateral for repurchase agreements, shall be kept in safekeeping with "perfected interest" by a third party bank trust department, acting as agent for the City under the terms of a custody agreement executed by the bank and by the City. All securities will be received and delivered using standard delivery versus payment procedures. INTERNAL CONTROLS: The Executive Director, Finance and Management Services is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The Executive Director, Finance and Management Services has developed a system of internal investment controls and a segregation of responsibilities of investment functions in order to assure an adequate system of internal control over the investment function. Internal control procedures address wire controls, separation of duties, delivery of securities to a third party for custodial safekeeping, and written procedures for placing investment transactions. Cash balances are reconciled daily by non-investment employees and reconfirmed by the City's accounting staff. In addition, the City's accounting staff also verifies investment activities and holdings on a monthly basis. The Executive Director, Finance and Management Services shall establish a process for annual independent review by an external auditor to the extent contemplated by generally accepted auditing standards. REPORTING: Under the provisions of Section 53646 of the Government Code, the Executive Director, Finance and Management Services shall render a report to the City Council, City Manager, and the internal auditor containing detailed information on all securities, investments, and moneys of the City. The report will be submitted on at least a quarterly basis and provided to the Council within thirty (30) days following the end of the quarter. The report will contain the following information on the funds that are subject to this investment policy: 1) the type of investment, name of the issuer, date of maturity, par and cost in each investment, 2) the weighted average maturity of the investments, 3) any investments, including loans and security lending programs, that are under the management of contracted parties, 4) the market value and source of the valuation, 5) a description of the compliance with the statement of investment policy, and 6) a statement denoting the City's ability to meet its pool's expenditure requirements for the next six months. 55D-11