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Home My WebLink AboutApproval of Treasury Policies & ProceduresX ) CITY OF PALM DESERT OFFICE OF THE CITY TREASURER STAFF REPORT REQUEST: Approval of City of Palm Desert Treasury Policies and Procedures, As Amended DATE: February 8, 2007 CONTENTS: Palm Desert Treasury Policies and Procedures Recommendation: By minute motion: That the City Council adopt the City of Palm Desert Treasury Policies and Procedures, as amended. Background: City policy requires that this manual be updated annually. This is the 2007 update Most of the changes this year are minor. Policy deletions are highlighted with striker; policy additions are highlighted with redlining. Some of the changes are: ➢ Individual names have been replaced with job titles due to possible turnover. ➢ The Finance Committee's name has been updated. • The Deputy City Treasurer's job title has been updated. ➢ GASB No. 31 has replaced GASB No. 3 (accounting regs on measuring investment risk) since it supersedes it. ➢ Individual bank, trustee, and custodian names have been replaced with generic names due to possible turnover. The Audit, Investment and Finance Committee has reviewed these changes, and has unanimously recommended them for adoption by the City Council. Staff Report Approval of Amended Treasury Policies and Procedures February 8, 2007 Page 2 of 2 Submitted By: Paul S. Gibson, CCMT, City Treasurer Approved By: Carlos L. Ortega, City Manager CITY COUNCIL, ACTION: APPROVED I DENIED RECEIVED OTHER MEETING DATE - g - D'7 AYES : fiert5on Ser9W5on F:ne4. sp e (, Ke i NOES: None, ABSENT: Awe_ ABSTAIN: None.. VERIFIED BY: Original on File . wit w1t ity Clerk's Office Opp(OVed BY RDA ON 2-0'7 VERIFIED BYd r Original on file with City Clerk's Office lipproV BY HOUSG AUTH ON 61 VERIFIED BY: Original on file with City Clerk's Office CITY tJF PALM DESERT TREASURY POLICIES AND PROCEDURES r �-..� . _ . . �.. . . , , City Council Richard S. Kelly Mayor Jean M. Benson Mayor Pro Tempore James C. Ferguson Council Member Cindy Finerty Council Member Robert A. Spiegel Council Member City Administration Carlos L. Ortega City Manager City of Palm Desert Treasury Policies and Procedures FOREWORD The "Statement of Investment Policy" for the City of Palm Desert, the Paim Desert Redevelopment Agency, the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") directs the City Treasurer to develop and to maintain an internal control structure that is designed to minimize the risk of the theft, loss, or misuse of public monies. The "Statement of Investment Policy" also directs the City Treasurer to retain an external auditor in order to determine whether or not the City`s investment program has been conducted in compliance with internal policies and procedures. This Treasury Policies and Procedures Manual t"Manual") is intended to respond to the aforementioned requirements, and to provide the framework for City Treasury operations. This Manual shall also provide documentation that the external auditor can use to review treasury staff compliance with internal controls. This Manual shall be updated by the City Treasurer on an ongoing basis as changes are made within the City Treasury. The City Treasurer shall review this Manual annually in order to ensure that it is accurate and current. PREPARED BY THE CITY TREASURER'S OFFICE Thomas W. Jeffrey, J.D., M.B.A. Deputy City Treasurer REVIEWED AND APPROVED BY Paul S. Gibson, C.C.M.T. City Treasurer City of Palm Desert Treasury Policies and Procedures TABLE OF CONTENTS Subj_ect Section TREASURY POLfCY DEVELOPMENT 1 STATEMENT OF INVESTMENT POLICY 2 INTERNAL CONTROLS 3 TRADING 4 COMPETITIVE OFFERINGS 5 CUSTODY AND SAFEKEEPING 6 DISMISSAL OF BROKERS 7 REQUESTS FOR PROPOSALS 8 BANK ACCOUNTS 9 SECURITY AGREEMENTS 10 CHECKS 11 STOP PAYMENTS 12 WIRE TRANSFERS 13 ACCESS TO TREASURY SYSTEMS 14 INTEREST ALLOCATION 15 CASH AND INVESTMENTS AUDIT 16 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 1 SUBJECT: "TREASURY POLICY DEVELOPMENT" POLICY The purpose of this document is to outline the policy and procedure on treasury policy development. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; :� Palm Desert Financing Authority; and the ➢ City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that treasury operations shall be governed by policies and procedures that have been approved by the Palm Desert City Council ("City Council"1, the Palm Desert Redevelopment Agency Board ("Redevelopment Agency Board of Directors"1, and the Palm Desert Housing Authority Commission ("Housing Authority Commission"), the Palm Desert Financing Authority Commission 1"Financing Authority Commission"), and the Palm Desert Recreational Facilities Corporation Board of Directors ("Recreational Facilities Corporation Board of Directors"). Policy may be defined as a written statement of administrative principle that is developed in very broad terms. It is meant to guide employee behavior and constitutes the standard against which the propriety of such behavior is measured. Policy must be fol%wed; deviation from it will not be allowed. Policy should always precede procedure so that employees will understand what procedure is meant to accomplish. Procedure may be defined as a written series of steps that are the accepted way to implement policy. Procedure should be written in the active tense and should answer "who, what, when, where, and how." A procedure for wire transfers, for example, would describe how the policy would be implemented, as opposed to stating the policy itself. 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 1: "Treasury Policy Development" Adopted: 1 .0 Policy Drafting Requests Treasury policies and procedures, or any amendments thereto, may be drafted at the request of: 1 .1 A majority of City Council, Redevelopment Agency Board, Housing Authority Commission, Financing Authority Commission, or Recreational Facilities Corporation Board members at a duly convened meeting of their respective bodies; 1 .2 A majority of Audit, Investment, and Finance Committee members at a duly convened Committee meeting; 1 .3 The City Attorney; 1 .4 The City Treasurer; or 1 .5 The Deputy City Treasurer. 2.0 Changes in Text The text of an approved treasury policy and procedure cannot be changed unless the City Council, the Redevelopment Agency Board, the Housing Authority Commission, and the Financing Authority Commission, and the Recreational Facilities Corporation Board have approved a subsequent amendment. Treasury policies and procedures shafl have full force and effect as of their date of adoption. 3.0 Annual Review The City Treasurer shall review all treasury policies and procedures annually in order to ensure that they are still current and accurate. The City Treasurer shall notify the City Council when the annual review has been completed. 2of3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 1: "Treasury Policy Development" Adopted: PROCEDURE 1. Drafting. The Deputy City Treasurer shall have the primary responsibility for drafting all treasury policies and procedures, and any amendments thereto. 2. Ci_t�[_Treasurer Review. The Deputy City Treasurer shall present a draft of the proposed treasury policy and procedure to the City Treasurer for review. The Deputy City Treasurer shall revise the draft in accordance with the City Treasurer's recommendations, if any. 3. Finance Committee Review. The Deputy City Treasurer shall then present the proposed treasury policy and procedure to the ' Audit, Investment, and Finance Committee for review and approval. The Deputy City Treasurer shall revise the draft in accordance with the Committee's recommendations, if any. The City Attorney must have reviewed the policy draft before it can proceed to the next step in the review process. 4. City Council Review. The City Treasurer shall then present the proposed treasury policy and procedure to the City Council for review and approval. The policy draft shall be deemed to be approved if a majority of the City Council votes to adopt it at a duly convened City Council meeting. Otherwise, the Deputy City Treasurer sha�l revise the policy draft in accordance with the City Council's recommendations, and the City Treasurer shall then resubmit it to the City Council for approval. 5. Commission and Board Review. The City Treasurer shall then present the proposed treasury policy and procedure to the Redevelopment Agency Board of Directors, the Housing Authority Commission, and the Financing Authority Commission, and the Recreational Facilities Corporation Board of Directors for review and approval. 6. Publicatio_n. The Deputy City Treasurer shall be responsible for publishing, numbering, reproducing, disseminating, and filing all approved treasury policies and procedures. All documents relating to an approved treasury policy and procedure, including revised drafts, shall be filed in chronological order in a Presstex classification folder. All policy and procedure folders shall be stored in a file cabinet in the Deputy City Treasurer's office. 3of3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 3 SUBJECT: "INTERNAL CONTROLS" POLICY The purpose of this dacument is to outline the policy on internal controls. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; � Patm Desert Housing Authority; �= Palm Desert Financing Authority; and the :� City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that the City Treasurer shall establish and maintain an internal control structure that minimizes the risk of the theft, loss, or misuse of public monies. This internal control structure shall be embodied in treasury policies and procedures. The internal control structure shall be designed to provide a "reasonable assurance" that the aforementioned objectives are met. The concept of reasonable assurance recognizes that: (1 ) the cost of a control should not exceed the benefits that are likely to be derived; and (2) the valuation of costs and benefits requires management to make judgements and estimates. The internal control structure for the City Treasurer's Office shall be premised upon the following three elements: 1 .0 Segregation of Duties If two parts of a transaction are done by different employees, then embezzlement, fraud, or concealment of errors can only occur through collusion. Consequently, the following four duties shall be segregated from one another in order to create a system of dual controls: 1 of 3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: 1 .1 Approving the purchase and sale of securities. 1 .2 Buying and selling securities, including the execution of wire transfers. 1 .3 Having custody of cash and investments. 1 .4 Making general ledger entries, and receiving and reconciling monthly bank statements. 2.0 Procedure Controls Internal controls in the form of procedures are intended to ensure that: 2.1 The City only acquires investments that are permitted by law. 2.2 The City investment program is integrated with City cash management and expenditure requirements. 2.3 The level and nature of approvals that are required to purchase or sell investments are specified. 2.4 The City Treasurer's Office seeks competitive quotes for investment purchases. 2.5 Access to bank accounts, wire transfers, and cash and investments are limited only to specified public employees. Outside investment advisors and �'�"Lar .+o..�o�� securities brokers s#a�-r�e�be are not authorized to initiate wire transfers on the City's behalf. 2.6 Public employees who are in treasury operations are insured or bonded. 2.7 Yields on investments are maximized, after safety and liquidity have been considered. 2of3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: 3.0 Custody Controls These internal controls, which relate to the possession and transfer of securities that the City has bought or sold, are intended to ensure that: 3.1 All of the City's securities purchases are done on a receipt- versus-payment ("RVP") basis. 3.2. All of the City's securities sales are done on a delivery-versus- payment ("DVP") basis. 3.3 All of the securities that the City owns are registered in its name. 3.4 Two signatures (passwords) are required for log-in access to City electronic banking and investment systems. 3.5 Two signatures are required for a release from safekeeping or for access to City safe deposit boxes. 3of3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 4 SUBJECT: "TRADING" POLICY The purpose of this document is to outline the policy and procedure on securities trading. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the ➢ City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City"► that sufficient internal controls shall be integrated into securities trading on behalf of the City so that the risk of costly trade errors or of theft, loss, or misuse of public monies, shall be minimized. The City shall hold competitive offerings whenever it must invest the gross proceeds of tax-exempt bonds. This is due to the severe financial penalties that could result if the City were perceived to be involved in "yield burning". In all other cases, the City may purchase securities on a non-competitive basis. The key difference between a competitive offering and a non-competitive offering, is the role of price. In a competitive offering, acceptance of an offer must be based solely upon price. In a non-competitive offering, acceptance of an offer may be based upon both price and a desire to "spread the business". 1 .0 Authority to Trade The only City employees who shall be authorized to buy and sell securities on behalf of the City shall be: 1 .1 The City Treasurer. 1 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: 1 .2 The Deputy City Treasurer. Whenever practical, the City Treasurer and the Deputy City Treasurer shall engage in collective decisionmaking and consultation on all trades in order to make the best possible investment decisions. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. Each trade shall be done in conformance with all applicable policies and procedures, and shall be defensible in its own right. 2.0 Location of Trading All securities trading on behalf of the City shall be done in the Deputy City Treasurer's office. It shall serve as a dedicated trading site since all of the information resources (e.g., banking and investment computer systems, trade files, public finance manuals) that are needed to support trading operations are located there. Trading shall not be done from off-site locations unless a disaster or circumstance has rendered the Deputy City Treasurer's office unusable, or a trading advantage can be gained, in which case the City Treasurer must expressly authorize trading from an off-site location in advance. 3.0 Development of Trading Strategies The City Treasurer and the Deputy City Treasurer shall consider the following �i�e three factors while developing the City's trading strategies: 3.1 . 3.2 The "Statement of Investment Policy" that identifies approved transactions, instruments, issuers, maturity limits, and concentration limits. 3.3 . 3.4 The present City portfolio structure. 3.5 The interest rate outlook. 2 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: These factors should be evaluated within the overall context of passive portfolio management, although selective active management may occasionally be required. 4.0 Segregation of Duties The cornerstone of the internal contro/structure for trading sha//be a separation of the transaction and the recordkeeping functions. The duties of executing trades; approving trades; and confirming and recording trades, shall not be concentrated in a single employee. A system of checks and balances shall be established by separating the functions of treasury from those of accounting. To that end, the following five public employees shall have separate and distinct duties with respect to securities trading: 4.1 City Treasurer. The City Treasurer shall be responsible for: 4.1 .1 Reviewing and approving all trades. 4.2 Assistant Finance Director. If the City Treasurer is not available, then the Assistant Finance Director shall be responsible for: 4.2.1 Reviewing and approving all trades. 4.3 DeputY City Treasurer. The Deputy City Treasurer shall be responsible for: 4.3.1 Soliciting, negotiating, executing, and documenting trades. 4.3.2 Receiving Trade Tickets. 4.3.3 Verifying Trade Terms. 4.3.4 Interfacing with the City custodian and with the City trustee on trades. 4.3.5 Entering trades into the SymPro investment portfolio program. 4.3.6 Storing trade documentation. 3of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: 4.4 Senior Financial Analyst. The Senior Financial Analyst shall be responsible for: 4.3.1 Entering trades into the accounting system. 4.5 Accounting Technician. The Accounting Technician shall be responsible for: 4.5.1 Receiving, filing, and verifying custodial safekeeping statements. 4.5.2 Reconciling monthly bank, trustee, and custodial statements with cash-based SymPro investment portfolio reports. If one of the above employees is not available, then Finance Department management may substitute another employee so long as it does not violate policy restrictions on trading authority. 5.0 Trade Documentation All executed trades shall be supported by the following #et� three documents: 5.1 Bloomberg Trade Ticket. The Bloomberg Trade Ticket is a confirmation of trade execution and trade terms. The broker that is buying or selling a security generates the related Trade Ticket from Bloomberg Services. The City's custodian or trustee cannot settle a security transaction on behalf of the City until it has received a related Bloomberg Trade Ticket which has been signed by either the City Treasurer or the Assistant Finance Director. 5.2 Bloomberg Security Description. The Bloomberg Security Description is generated from Bloomberg Services, and describes the features and history of a security. This is necessary for data +�� entry intp the SymPro investment �a�#e�ie reporting program. 5.3 Broker Trade Confirmation. The Broker Trade Confirmation is a formal statement from the broker confirming both the trade and the terms of the trade. The City requires this statement for internal control purposes. 4 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: 6.0 Trade and Settlement Dates "Trade date" is the date of trade execution. "Settlement date" is the date of a receipt-versus-payment ("RVP") or delivery-versus-payment ("DVP") transaction (the simultaneous exchange of money for securities through an electronic funds transfer system). Settlement date is usually represented in one of five ways: 6.1 "Cash" (trade day) 6.2 "Regular" (trade day + one business day) 6.3 "Skip" (trade day + two business days) 6.4 "T + 3" (trading day + three business days). 6,5 "Delayed (beyond T + 3) "T + 3" is used primarily for corporate securities (commercial paper and medium-term notes) since they are electronically transferred through the DTC. United States Treasury and Government Agency securities are electronically transferred through the Federal Reserve Communications System ("Fedwire"). Corporate securities are electronically transferred through the Depository Trust Company System ("DTC"). 7.0 Trading Losses It is the policy of the City to avoid realizing trading losses on securities transactions. Should it become necessary to realize a trading Ioss, then the City Treasurer must specifically approve the loss, in writing, prior to trade execution. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. 5of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: PROCEDURE 1 . Solicitation of Offers. The procedure for competitive and non- competitive offerings shall be the same. The Deputy City Treasurer shall send a solicitation that includes a preformatted Offering Sheet, to the City's eligible brokers in advance of the trade date. The brokers shall use this Offering Sheet to submit their bids to the Deputy City Treasurer by a certain time on the trade date. a. Avoidance of Col/usion. In a competitive offering, the brokers shall also complete and return to the Deputy City Treasurer a certification that collusion has not occurred, in order for the broker to be eligible to bid. Regardless of whether the offe�ing is competitrve or non- competitive, the Deputy City Treasurer shall not disc%se to any eligible broker: ()) the identity of other eligible brokers or brokerage firms that are involved in the offering; or (21 any of the other offers. The Deputy City Treasurer shall address all solicitations to a single individual at a brokerage firm; not to all of the brokers involved in the offering. 2. Verification of Available Cash. In the case of securities purchases, the Deputy City Treasurer shall ensure that sufficient public monies are in the City`s bank account to pay for the securities. If there will be a significant time lag between trade and settlement dates, then the Deputy City Treasurer shall ensure that the public monies which are intended for payment, are invested in the highest-yielding instrument that is authorized under Treasury Policy No. 2, "Statement of Investment Policy". 3. Submission of Offers. After the Deputy City Treasurer has received the brokers's Offering Sheets on the trade date, the Deputy City Treasurer shall compare them, based on price, yield-to-maturity, lot size, and portfolio objectives. If information on an Offering Sheet is unclear, then the Deputy City Treasurer shall contact the submitting broker, and request clarification. a. Detai/s of Offer. All offer prices should be in decimals in order to facilitate comparison. In the case of a competitive offering, the broker's commission for each security offering must disclosed on the Offering Sheet, in dollars, in order to assure compliance with IRS guidelines on yield-burning. lf a broker fails to disc%se a commission, then that broker shall be automatically disqualified from the offering. 6of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: 4. Review of Offers. The Deputy City Treasurer shall review the offers, and shall evaluate their reasonableness against the market prices that Bloomberg Services reports. The Deputy City Treasurer shall then show all of the offers to the City Treasurer, and shall recommend the best ones for acceptance. The City Treasurer shall review and approve the offers that are in the best interests of the City. 5. Acceptance of Offe_rs. After the City Treasurer has approved the offer(s!, the Deputy City Treasurer shall promptly contact the successful broker(s) by telephone to reconfirm the trade terms, in case market prices have significantly increased since the time of the initial offer. In order to minimize such risk, the Deputy City Treasurer should strive to accept all offers as quickly as possible. 6. Renegotiation of Offers. If market prices have significantly increased between the time of initial offer and trade execution, then the Deputy City Treasurer shall attempt to renegotiate a compromise price with the affected broker. If a compromise cannot be agreed upon, then the Deputy City Treasurer, in the case of a competitive offering, must reject the offer, and accept the next lowest cost offer from another broker. In the case of a non-competitive offering, the Deputy City Treasurer may either (a) reject the offer, and accept the next lowest offer from another broker (even if this means denying the first broker any business); or (b) accept the higher price. 7. Completion of Trade. The successful broker(s) shall forward each Bloomberg Trade Ticket to the Deputy City Treasurer in order to verify the security transaction(sl. The Deputy City Treasurer shall compare the terms on each Trade Ticket with those on the corresponding Offering Sheet in order to ensure uniformity. If there is a discrepancy, then the Deputy City Treasurer shall resolve the difference with the affected broker. Once all differences have been resolved, the Deputy City Treasurer shall present the Bloomberg Trade Ticket(s) to the City Treasurer for an approval signature. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. 8. Custodial Interface. The Deputy City Treasurer shall then fax to the City's custodian or trustee, a signed Bloomberg Trade Ticket with delivery instructions for each security purchased. The Deputy City Treasurer shall telephone the City trustee or custodian to confirm receipt of these documents, as well as payment terms. 7 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 4: "Trading" Adopted: 9. Treasury Accountin . The Deputy City Treasurer shall then create a new investment file in SymPro, and shall enter the data from the Trade Sheet. On the next business day after settlement, the Deputy City Treasurer shall print the on-line bank report that shows the cash being wired out for settlement. The Deputy City Treasurer shall give the Senior Financial Analyst: (a► a printout of the SymPro file on the new security; and (b) a copy of the related bank report �aJa�►se-�ePe�. The Senior Financial Analyst shall enter this data into the City accounting system. 10. Retention of Trade Documents. The Deputy City Treasurer shall retain and file the following trade documents: a. Solicitation (competitive offering on/y). b. All Offering Sheets (competitive offering only). c. Certificate of Absence of Collusion (competitive offering only). d. Certificate of Third-Party Administrative Costs (competitive offering onlyJ. e. Certificate of Competitive Offering (competitive offering only). f. Most efficient portfolio of SLGSs (competitive offering only). g. Broker Trade Confirmation. h. Bloomberg Trade Ticket. i. Bloomberg Security Description. All trade documents that are connected with to a competitive offering, shall be retained for at least three years after the last outstanding bond is redeemed, pursuant to Internal Revenue Service regulations. 11 . Monthl�Reconciliation. The Accounting Technician shall reconcile monthly bank, custodial, and trustee statements with cash-based SymPro investment portfolio reports, at month-end. 8 of 8 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 5 SUBJECT: "COMPETITIVE OFFERINGS" POLICY The purpose of this document is to outline the policy and procedure on competitive offerings, It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the y City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that the gross proceeds of tax- exempt bonds shall be invested in fixed-income securities which are obtained through competitive offerings. Such an approach is needed in order to ensure that the City buys securities that are priced at market, thereby avoiding any appearance of "yield burning". 1 .0 Yield Burning Yield burning occurs when the price of securities that are purchased for yield-restricted defeasance escrows is artificially inflated in order to lower the investment yield below the bond yield, thereby avoiding impermissible arbitrage. If this happens, then the Internal Revenue Service ("IRS") may: (1 ) compel the municipal issuer to reimburse the United States Treasury for excessive underwriter profits; or (2) eliminate the municipal issuer's tax exemption for the defeasance bonds. 2.0 Safe Harbor Under current IRS regulations, municipal issuers are guaranteed a "safe harbor" from allegations of yield burning if certain requirements are met. The IRS will assume that the purchase price of securities for yield- restricted defeasance escrows approximates their fair market value on the purchase date if: 1 of 6 Palm Dese�t Treasury Policies and Procedures Revision No. 3 No. 5: "Competitive Offerings" Adopted: 2.1 Reasonably ComQetitive Providers. The municipal issuer solicits, in good faith and in writing, offers from at least three reasonably competitive providers" that have no material financial interest in the bond issuance, and receives at least one offer from such a provider. IRS regulations define a reasonably competitive provider as a provider that has an established industry reputation as a competitive provider of the type of investment that is being purchased. 2.2 No Material Finance Interest. Bond underwriters, financial advisors, and their related providers are excluded from the competitive offering since they are deemed to have a material financial interest in the bond issuance. 2.3 Certification of Absence of Collusion. Each provider that submits an offer includes an executed certification stating that by submitting the offer, the provider is representing that: (1 ) it did not consult with any other providers about their offer; and S21 the offer is not being submitted solely as a courtesy to the issuer or to any third party in order to satisfy the IRS requirement of at least one offer from a reasonably competitive provider. 2.4 Commercially Reasonable Terms. The terms of the competitive offering solicitation are "commercially reasonable". A term should be included in the competitive offering for a legitimate business purpose, other than to lower the yield or increase the cost of the offer. 2.5 No Last Look. No provider is permitted to review other offers before making an offer, in order to ensure that all providers have an equal opportunity to bid. 2.6 Comparison to SLGSs. If the investment is a guaranteed investment contract, then the municipal issuer must accept the offer with the highest yield (excluding broker's fees). For all othe� investments, the issuer must accept the lowest cost offer (including broker's fees). The lowest cost offer should not exceed the cost of the most efficient portfolio of State and Local Government Series ("SLGS") securities with the same maturity that are available on the day that the offers are submitted: provided, however, that such SLGSs are available for purchase on that day. 2of6 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 5: "Competitive Offerings" Adopted: 2.7 Certification of Third-Party Administrative Costs. The fee that a municipal issuer pays to a provider (broker) is a qualified administrative cost only if the fee is comparable to one that would be charged for a reasonably comparable investment that is acquired with money other than tax-exempt bond proceeds, and the fee is reasonable. A broker`s fee will meet the reasonableness and comparability tests if it does not exceed the lesser of $10,000 or 0.1 percent of the initial principal amount of investments that are purchased for the defeasible escrow. ln order to comply with this requirement, all providers shall be required to execute a certification that the fee is a qualified administrative cost. lf they fail to provide this information, then they shall be automatically disqualified from the competitive offering. 2.8 Retention of Records. The municipal issuer retains, until three years after the last outstanding bond is redeemed: (1 ) all bond documents; (2} purchase confirmations; (3) records of the amount actually paid by the issuer; (4) date- and time-stamped offers that were received; (5) competitive offering documents; and (6) working papers on the cost of the most efficient portfolio of SLGSs (if a guaranteed investment contract is not involved). 2.9 Certification of Competitive Offerinq. The municipal issuer certifies that: (1 ) offers were solicited from at least three uninterested, reasonably competitive providers; (2) all offerors had an equal opportunity to bid; (3) an offer was received from at least one reasonably competitive provider; and (4) if an agent conducted the offering, then that agent did not offer to provide the investments. 3.0 Exceptions There is a major exception to restricted yields in defeasible escrows. A municipal issuer is permitted a three-year temporary period during which it may invest bond proceeds at a yield higher than the bond yield: provided, however, that on fhe issue date, the issuer had a reasonable expectation that 85 percent of the bond's "net sale proceeds" would be spent within three years. Bond proceeds that are deposited into a special escrow fund could be so invested. 3of6 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 5: "Competitive Offerings" Adopted: There are numerous other exceptions that are set forth in the Internal Revenue Code arbitrage regulations that are not discussed in this policy. PROCEDURE 1 . Competitive Offering. The Deputy City Treasurer shall solicit competitive offerings from at least three of the City's authorized brokers, in advance of the trade date. This solicitation shall consist of the following: a. A cover memorandum individually addressed to each broker, explaining the details of the offering, and the delivery instructions. b. A Broker Registration Form. c. A Certificate of the Absence of Collusion. d. A Certificate of Third-Party Administrative Costs. e. A preformatted Offering Sheet with which each broker can prepare and submit an offer. Under no circumstances shall the cover memorandum include the names of the other brokers or brokerage firms that will be involved in the competitive offering. Likewise, under no circumstances shall the Deputy City Treasurer disclose to a broker the details of offers that the City has received from other competing brokers. 2. Calculation of Lowest Cost Portfolio. On the trade date, the N�a�age� Deputy City Treasurer shall determine the lowest cost of the most efficient portfolio of SLGSs with the same maturity, if such securities are available. The cost of the winning offers should not exceed the cost of this portfolio. 3. Deadline for Offers. Each broker shall submit an offer by a specified time on the trade date. In order to qualify for consideration, the offer must consist of: a. A completed Broker Registration Form. b. An executed Certificate of the Absence of Collusion. c. An executed Certificate of Third-Party Administrative Costs. d. A completed Offering Sheet. Any broker that fails to include these three documents in an offer shall be automatically disqualified from the competitive offering. 4of6 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 5: "Competitive Offerings" Adopted: 4. Evaluation of Offers. The Deputy City Treasurer shall review all offers and shall recommend the most favorable ones, based strict/y upon the /owest cost, to the City Treasurer for review and approval. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. 5. Ac_c,eptance of Offers. After receiving the City Treasurer's approval, the Deputy City Treasurer shall immediately notify the successful offeror(s1, by telephone, that the City has accepted its offer. At that time, trade terms should be reconfirmed, in the event that market prices have increased since the time of the initial offer. In order to manage such risk, the Deputy City Treasurer should strive to accept all offers as quickly as possible. 6. Renegotiation of Offers. If there has been a significant increase in market prices during the interim, then the Deputy City Treasurer shall renegotiate with the successful offeror for the lowest possible cost for the City. If, however, the cost of the investment has risen above other offers, then the Deputy City Treasurer shall accept the next lowest offer from another offeror instead. 7. Remaininq Closing Procedures. The Deputy City Treasurer shall follow the remaining procedural closing steps (e.g., faxing a signed Bloomberg Ticket to the City's custodian or trustee) that are detailed in Treasury Policy No. 4, "Trading". 8. Retention of Records. The Deputy City Treasurer shall retain and file, together with all of the bond documents: a. A copy of the guaranteed investment contract (if applicable). b. The purchase confirmations (e.g., Bloomberg Trade Ticket, broker trade confirmation). c. A record of the amount actually paid by the City, including a record of any administrative costs paid by the City, and the certification of the provider as to administrative costs. d. Each offe'r that is submitted, in terms of the name of the submitting broker; the time and date of the bid; and the bid results. e. The competitive offering solicitation. f. The cost of the most efficient portfolio of SLGSs, if used to benchmark competitive offers. 5 of 6 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 5: "Competitive Offerings" Adopted: 9. Certificate _of Competitive Offering. The City Treasurer shall certify, in writing, on the City's behalf, that: a. Offers were solicited from at least three uninterested, reasonably competitive providers. b. All offerors had an equal opportunity to bid. c. An offer was received from at least one reasonably competitive provider. d. If an agent conducted the offering, then that agent did not make an offer to provide the investments. The Deputy City Treasurer shall file this certification with the other bond documents. 6of6 City of Palm Desert Revision No. 4 Treasury Poficies and Procedures Adopted: POLICY NO.: 6 SUBJECT: "CUSTODY AND SAFEKEEPING" POLICY The purpose of this document is to outline the policy and procedure on the custody and safekeeping of securities. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the ➢ City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that the City shall retain third- party bank trust companies as clearinghouses for the payment, delivery, receipt, and safekeeping of securities that the City buys or sells. 1 .0 Selection of Custodian and of Trustee A third-party bank trust company shall serve as the City's custodian ("Custodian") for the purpose of settling all of the City's securities transactions that do not involve the investment of the gross proceeds of tax-exempt bonds. A third-party bank trust company shall serve as the City's trustee ("Trustee") for the purpose of settling all of the City`s securities transactions that involve the investment of the gross proceeds of tax- exempt bonds. The City shall select both the Custodian and the Trustee through a Request for Proposals ("RFP") process. The City may initiate an RFP process every five years, unless there is an immediate need to fill a vacancy or to replace a trust company. 1 of 7 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: The City shall subsequently execute separate custady agreements with the selected Custodian and the selected Trustee in order to confirm all legal rights and obligations. The City shall only use safekeeping or custodial agents that are located within the State of California. 2.0 Qualifications of Custodian and of Trustee The Custodian and the Trustee shall, at a minimum, possess the following qualifications: 2.1 Safekeeping. The ability to clear and safekeep all securities that are authorized by California Government Code Section 53601 . 2.2 Fiduciary Du�. The ability to hold all of the City's investments on a fiduciary basis and to segregate them from the trust company's other assets. 2.3 Bank Charter. Membership in the Federal Reserve System and status as a State of California- or federally-chartered commercial bank, with its accounts insured by the Federal Deposit Insurance Corporation. 3.0 Methods of Delivering Securities All of the City's securities transactions shall be done either on a receipt- versus-payment ("DVP") basis. Both the Custodian and the Trustee shall disburse City monies or deliver City-owned securities to an approved broker only after that broker has delivered to the Custodian or to the Trustee either the securities to be sold or the money to purchase the securities. Both the Custodian and the Trustee shall only process a security transaction after they have received a Bloomberg Trade Ticket from the City which either the City Treasurer or the Assistant Finance Director has signed. The only exceptions to RVP or DVP shall be the purchase or sale of securities that are connected with: (1 ) local government investment pools; (2) money market mutual funds; or (3) Federal Reserve Banks ("Treasury Direct Program"), since those securities are not deliverable. 2 of 7 Patm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: When the City enters into a new custodial relationship, then the securities that the City already owns shall be delivered into safekeeping on a free-delivery basis. The countersignature of either the City Treasurer or the Assistant Finance Director shall be required for the free delivery of securities. Separate custodial accounts shall be maintained for the City of Palm Desert and for the Palm Desert Redevelopment Authority. 4�----Cr�dtt-R+s1E , , , " . 4:�—"Gatege�y--1". T�i-s a��Ee�-�e-+r+v-es#��s-�h�a-* ��: �' � �nca�a „ „ , , , ; c�v +em �nihoro t{�o hr�Lor ic. c�or�.�roto fr�m tho r.��c�+�r�i�r� �r�� tF+o i i i r�/� o T{ie�nn +r'r�n�r.fi��n h��i� �I{�� /�ui�nf �A/YCaA �� i.r�i-/it rioL• 1 TCTf� • / f h a\�CtC.T7 C'fy"�Cr{�f A_,�,�/'t 1/ _ _'_� ' 4.T- .�sR.t�ry 7�� Thic� or�nlioc� 4� ��r�ir�c��rei-1 ir»iec�tmor�+e> th�t �ro i i t �e�r»r � ^ �'.TITTLtiI.`V'Tl�.�'�'Q�I�i"+.'�Yf�'�Tr'�CiT/V�T„TJ {�.�.ta � {�iir�+�+r i-/�+i+raa �f i.rar/if ric�L 4•�—'�GAtego%y�-3': . , , 3of7 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: ; . . . . , ; s��ek.�er's-�e�Fs �^-�,�;�'+�y'-��a�e��,�^�� h��i� *L�o L�irrhec�� i-/��ren �f nrc�i-/i} rin/i 4.0 Risk Al/of the secuiities that the City owns sha/l be registered in the City's name. This safeguards the ownership of the securities by limiting their negotiability. Governmental Accounting Standards Board Statement No. 31 , "Accounting and Financial Reporting for Certain lnvestments and for External Investment Pools", requires that certain investments be classified according to four measures of risk, and disclosed on a governmental entity's balance sheet. The four measures of risk are: 4.1 Credit Risk. 4.2 Custodial Credit Risk. 4.3 Concentration of Credit Risk. 4.4 Interest-Rate Risk. 5.0 Authorized Access The following City employees shall be authorized to interface with both the Custodian and the Trustee: 5.1 The City Treasurer. 5.2 The Deputy City Treasurer. 5.3 The Assistant Finance Director. When an authorized employee is no longer employed by the City, then the City shall immediately notify both the Custodian and the Trustee, by telephone, of the expected date and time of the separation, and of the subsequent revocation of the employee's authority to interface with both the Custodian and the Trustee on the City's behalf. The City shall also confirm this, in writing, with both the Custodian and the Trustee 4 of 7 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: within two business days. The written confirmation should be sent to both the Custodian and the Trustee by return receipt, certified mail. No broker oi investment advisor sha//have access to City monies, accounts, or investments. Any transfer of monies to or through an outside broker must have the City Treasurer's prior written approval. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. 6.0 Liability of City Treasurer The City Treasurer shall not be liable for securities that are delivered to and received by the Custodian and/or the Trustee, until the City Treasurer has withdrawn them from the Custodian and/or the Trustee pursuant to California Government Code Section 53608. 7.0 Monthly Audit The City Treasurer shall receive monthly account statements from both the Custodian and the Trustee that list all of the securities that the Custodian and the Trustee are safekeeping for the City. An Accounting Technician shall complete, prior to each month-end, an audit of the prior month's inventory to ensure that both the Custodian and the Trustee can properly account for all of the City's securities that they should be holding. The Accounting Technician shall retain the monthly account statements in her files. 8.0 Annual Confirmation of Instructions The City Treasurer shall send to both the Custodian and the Trustee annually, by 1 January, the following documents: (1 ► the current City "Statement of Investment Policy"; (2) delivery instructions for security purchases; and (3) a list of public employees who are authorized to initiate investment transactions. The cover letter shall specify that only the City Treasurer shall be authorized to modify the delivery instructions, in writing. 9.0 Annual Review The City Treasurer shall review all custodial and electronic funds transfer agreements, as needed, in order to ensure that all controls, security provisions, and the responsibilities are being properly followed, and are in compliance with current law. 5of7 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: 10.0 Segregation of Broker and Custodial Functions The City shall seek to segregate the provision of brokerage services from the provision of custodial services. If the City, however, uses the same bank or brokerage firm to provide both brokerage and custodial services, then that bank or brokerage firm shall be required to carry liability insurance with the City named as a loss payee, up to the dollar amount of the securities that are held in safekeeping plus an allowance for legal costs in the event of a loss. PROCEDURE 1 . Receipt-Versus-Payment ("RVP"►. The following steps shall be taken when the City buvs a security: a. The broker shall have a current set of delivery instructions for the City on file, in advance. b. After closing the trade, the Deputy City Treasurer shall fax a copy of the associated Bloomberg Trade Ticket that has been signed by either the City Treasurer or the Assistant Finance Director, to the Custodian or the Trustee, with City delivery instructions affixed to the Ticket. c. The Deputy City Treasurer shall then telephone the Custodian or the Trustee to confirm receipt of the facsimile transmission and settlement terms. d. The Custodian or the Trustee shall then debit the City's cash account in order to deliver cash to the broker in exchange for the underlying security that the broker simultaneously delivered by electronic funds transfer, to the Custodian or the Trustee. e. An Accounting Technician shall then review the next monthly account statement that the City receives from the Custodian or the Trustee for confirmation of the transaction, and shall retain and file that statement. 2. Delivery-Versus-Payment ("DVP�. The following steps shall be taken when the City sells a security: a. The broker shall have a current set of delivery instructions for the City on file, in advance. 6of7 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 6: "Custody and Safekeeping" Adopted: b. After closing a trade, the Deputy City Treasurer shall fax a copy of the associated Bloomberg Trade Ticket that has been signed by either the City Treasurer or the Assistant Finance Director, to the Custodian or the Trustee, with City payment instructions affixed to the Ticket. c. The Deputy City Treasurer shall then telephone the Custodian or the Trustee to confirm receipt of the facsimile transmission and payment terms. d. The Custodian or the Trustee shall then debit the City's securities account in order to deliver the underlying security to the broker in exchange for cash that the broker simultaneous{y delivers by electronic funds transfer, to the Custodian or to the Trustee. e. An Accounting Technician shall then review the next monthly account statement that the City receives from the Custodian or the Trustee for confirmation of the transaction, and shall retain and file that statement. 7of7 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 7 SUBJECT: "DISMISSAL OF BROKERS" POLICY The purpose of this document is to outline the policy and procedure on the dismissal of approved brokers. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the � City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that approved brokers are expected to maintain a certain level of financial stability, industry knowledge, and professionalism in their dealings with the City. The City may ' dismiss a broker +#=i�a�'� e��,,+o �� ^��+��c *•�^c�^*�^^c �^ �^ �^^�^*�"'� ^� ^^�• if it fails to conduct business in an acceptable manner. 1 .0 Reasons for Dismissal The City Treasurer may dismiss a broker for any one of a variety of reasons including, but not limited to, the following: 1 .1 Trade Fails. �-e�c�es�ive A number of trade fails (a failure to deliver securities on time). 1 .2 Trade Errors. �xsIIc�� A number of trade errors due to sloppiness, incompetence, inefficiency, or a failure to follow directions. 1 .3 Account Officer Turnover. ^^ ��^��c�� A number of account --_.-----_ —----- -------- officer changes. 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 7: "Dismissal of Brokers" Adopted: 1 .4 Failure to Notify. A failure to notify the City Treasurer's Office in a timely manner of significant events that affect the broker-client relationship (e.g., adverse change in financial condition, change of account officers, regulatory infractions, relevant litigationl. 1 .5 Inflated Pricin�. ^^ ^�^�cc�.,� A number of offers that are substantially above market prices. 1 .6 Adverse ChanAe. An adverse change in the broker's financial condition. 1 .7 Failure to Comply. A �epea�ed failure to comply with solicitation instructions. 1.8 Legal Action. Pending legal action by the City against the broker. 1 .9 Gift Ban Violation. A violation of the gift ban in the City's "Statement of Investment Policy". 1 .10 Ina�propriate Investments. An inability to offer appropriate investments to the City. 1.11 Failure to Participate. A r�pea�e� failure to participate in competitive offerings. 1 .12 Failu�e-�o-S�+�-Boc�meFl� . . Unethical Behavior. A failure to conduct business with the City or, in general, in an honest, transparent, and ethical manner. 1 .13 Collusion on Pricinq. Collusion on pricing with other brokers during competitive offerings. 1.14 Tardiness. A failure to s�+bmit offerings on time, in terms of meeting a deadline. 1 .15 Yield Burnin�. The inflation of bond prices in order to lower yields ("yield burning"). 2of3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 7: "Dismissal of Brokers" Adopted: PROCEDURE 1 . Discielinary Documentation. The Deputy City Treasure� shall be responsible for maintaining written documentation on an appraved broker's failure to perform in an acceptable manner or to compfy with City policy;-af . 2. Letter of Dismissal. If there are sufficient grounds to dismiss the broker, then the Deputy City Treasurer shall recommend such action to the City Treasurer. If the City Treasurer concurs, then the Deputy City Treasurer shall prepare a letter for the City Treasurer's signature that notifies the broker of the dismissal, and of the reason(s) for the dismissal. This letter shall be promptly sent to the broker. 3. Finance Committee Notification. The City Treasurer shall then notify the Audit, Investment, and Finance Committee, at its next regularly scheduled meeting, of the dismissal, and provide a copy of the dismissal letter to each committee member. 4. Request for Information. If the City Treasurer deems it necessary to fill a broker vacancy, then the City Treasurer may send a Request for Information ("RFI") to each broker that would like to replace the dismissed broker and provide financial services to the City. The ' Audit, lnvestment, and Finance Committee and the City Council shall review the completed RFIs and select a replacement broker. 5. Updating City Approved List. The Eligible List that is attached to the City "Statement of Investment Policy" shall be amended annually, if needed, in order to update the broker list. 3 of 3 City of Palm Desert Revision No. 4 Treasury Policies and Procedures Adopted: POLICY NO.: 8 SUBJECT: "REQUESTS FOR PROPOSALS" POLICY The purpose of this document is to outline the policy and procedure on Requests for Proposals ("RFP"). It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the r City of Palm Desert Recreational Facilities Corporation 4hereafter referred to collectively as the "City"► that the City Treasurer may periodically issue RFPs for banking, custodial, and trustee services to any firms that wish to provide financial services to the City. The City may issue such RFPs every five years unless there is an immediate need to fill a vacancy or to replace an existing financial services provider. �e . The Deputy City Treasurer shall be responsible for the development of these RFPs. Firms that wish to bid for the City's banking, custodial, and trustee business, may bid for that business in its entirety, or as separate product lines. PROCEDURE 1 . Proposal Process. The Deputy City Treasurer shall maintain an active file on all prospects that wish to bid for the City`s banking, trustee, and/or custodial service contracts. Every fifth year, the Deputy City Treasurer may begin the RFP process. It should consist of the following steps: 1 of 2 Palm Desert�Treasury Policies and Procedures Revision No. 4 No. 8: "Requests for Proposals" Adopted: a. Distribution of RFP b. Pre-Proposal Conference c. Proposal Submission d. Proposal Review e. Interview with Top Bidders f. Proposals Accepted by City Council g. Notification to Bidders h. Implementation 2. Technical Evaluation. The Deputy City Treasurer shall be responsible for doing a comparative technical evaluation of all RFPs that the City receives. 3. �r�ves�e�-a�d Finance Committee Review. The Deputy City Treasurer shall present the results of the technical evaluation, along with recommendations, to the Audit, Investment, and Finance Committee for review and approval. 4. City Council Review. The City Treasurer shall present the ' Audit, Investment, and 'Finance Committee's recommendations to the City Council for review and approval. 5. U�dating City Approved List. If the City Council approves the retention of a new banker, custodian, or trustee, then the Eligible List in the City's "Statement of Investment Policy" shall be amended annually in order to reflect any such changes. 2of2 City of Palm Desert Revision No. 4 Treasury Policies and Procedures Adopted: POLICY NO.: 9 SUBJECT: "BANK ACCOUNTS" POLICY The purpose of this document is to outline the policy and procedure on bank accounts. lt is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the r City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") to establish bank accounts for the deposit and disbursement of public monies, and to maintain a complete set of bank contracts, including signature cards, for purposes of control, accountability, limitation, and authorization. The City shall establish as few bank accounts as possible in order to minimize banking costs. All monthly bank statements shall be mailed directly to and processed by the City accounting function. Two signatures sha//be required for each bank account. 1 .0 Authorized Signers Only the City Treasurer or, if the City Treasurer is not available, the Assistant Finance Director shall be authorized to sign as the "Signer of Contract" on bank documents. Ge�a-i�► City Council members, public employees, and employees of private management companies that contract with the City shall be authorized as signers on various City bank accounts. The current account signers are as follows: 1 of 4 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 9: "Bank Accounts" Adopted: 1 .1 City_Council 1 .1 .1 The Mayor. 1.1 .2 . Any other City Council Member. 1 .2 Cit�EmploYees 1.2.1 The City Treasurer. 1 .2.2 The Assistant Finance Director. 1 .2.3 The Director of Information Systems. 1 .3 Kemper Seorts Management, Inc. lDesert Willow Golf Resort) 1.3.1 . g. The General Manager. 1 .3.2 ��a�-P�+I�ef. The Director of Food and Beverage 1 .3.3 . The Director of Sales 1 .4 RPM Company 1 .4.1 . The President/CEO 1 .4.2 . . The Secretary/Treasurer 1 .4.3 . . The Director/CFO 1 .4.4 . Staff 2.0 Annual Review The City Treasurer shall review all bank contracts and signature cards, as needed. 2 of 4 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 9: "Bank Accounts" Adopted: PROCEDURE 1. Opening A Bank Account. The City Treasurer or, if the City Treasurer is not available, the Assistant Finance Director shall determine whether or not a new City bank account is required, and who shall be authorized as an account signer. If a new City account is to be opened, then: a. The Deputy City Treasurer shall request signature cards from the bank; prepare them; and send them to the authorized signers for completion. b. After the authorized signers have completed the signature cards, they shall return them to the City Treasurer for the "Signer of Contract" authorization. c. The Deputy City Treasurer shall then return the original signature cards to the bank, along with the account contract�s). d. The Deputy City Treasurer shall retain and file a photocopy of each account contract and each signature card. 2. Adding Or Deleting A Signer. When an authorized signer is hired, terminated, or transferred, then the Deputy City Treasurer or, if the Deputy City Treasurer is not available, the City Treasurer shall immediately review all bank signature cards, account contracts, and Funds Transfer Agreements to determine if they require modification. If a modification is necessary, then the Deputy City Treasurer or, if the Deputy City Treasurer is not available, the City Treasurer shall do the following: a. Prepare a letter instructing the bank to add or delete a signer. This letter shall be signed by the City Treasurer and countersigned by the affected signer, whenever possible. (1) In the case of a terminating employee, the letter shall be sent to the bank by facsimile machine on the same date that notice is received of the employee's forthcoming termination. The original letter shall also be sent to the bank in the mail. 3of4 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 9: "Bank Accounts" Adopted: (2) In the case of a new employee, the Deputy City Treasurer shall request a new bank signature card or an addendum card from the bank; obtain the necessary signatures; and return the card to the bank. b. In all cases, the Deputy City Treasurer shall retain and file a photocopy of the bank documentation. 3. Closin�A Bank Account. Only the City Treasurer or, if the City Treasurer is not available, the Assistant Finance Director shall be authorized to close a City bank account. a. The Deputy City Treasurer shall draft a letter to the bank for signature by the City Treasurer or, if the City T�easurer is not available, by the Assistant Finance Director approving the account closure on an effective date. b. The Deputy City Treasurer shall send the original, signed letter to the bank, and retain and file a photocopy of the letter. c. The City accounting function shall confirm the closing of the bank account, and the termination of all related services, upon receipt of the next monthly bank statement. d. The City accounting function shalt then notify the City Treasurer that the bank account has been closed; remove the bank account from the general ledger; and retain a file on the closed bank account for the annual financial audit. 4of4 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: POLICY NO.: 10 SUBJECT: "SECURITY AGREEMENTS" POLICY The purpose of this document is to outline the policy on security agreements. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the Y Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City"� that the City Treasurer shall enter into a security agreement with a financial institution whenever the City maintains deposits in that institution which exceed $100,000. The City Treasurer may waive collateralization for amounts under that limit. 1 .0 C�edit Risk ' . . '' .�-T--"Ca�egory--�":—��es+��--t#�+ ,r�. �, � ;r�,..o�_�Te�er�; ; , , , • �#e�e-�a�s�e-t�et�s-�a-e�e-��e-reiti�e�d��-o-r-��r,��T� arrnrl {��i f{�e �i{�i �"C781Q 0 �". . . . . . 9 �Y- , , i�r��an, 7"{+�+nn fr�r�n�nfiifi+n {��ie � /�iivF��r r/e�r�� f � .+ ��.....� ,...,,a��-.- 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 10: "Security Agreements" Adopted: „ „ . a#e9`9 -. . Than� }✓�r�c+�nti�r�n {i��i� fha {�ir{i�nt i-/orrr�� f i.rer/it r'c�L .... ..........„......., ,,,,.., ...., ,..y,,.,.,. .,.,y...,. .,, .,,..�„� ,�.....- 1.0 Risk Governmental Accounting Standards Board Statement No. 31 , "Accounting and Financial Reporting for Certain Investments and for External Investment Poo{s", requires that certain investments be classified according to four measures of risk, and disclosed on a govemmental entity's balance sheet. The four measures of risk are: 1.1 Credit Risk. 1 .2 Custodial Credit Risk. 1 .3 Concentration of Credit Risk. 1 .4 Interest-Rate Risk. 2.0 Agents of Depository Collateral for City deposits in federal- and state-chartered banks and savings and loan associations afe shall be held in safekeeping by an authorized "agent of depository" that is recognized by the State of California Department of Banking. Only trust companies and trust departments of commercial banks that are located in California, and the Federal Home Loan Bank in San Francisco, afe shall be authorized to act as an agent of depository. Collateral may a�se be held in safekeeping with a Federal Reserve Bank, however, if this is authorized in the contract between the City Treasurer and the depository, An agent of depository may hold and pool securities to secure deposits for one or more depositories, but must maintain a separate pool for each depository. Each local governmental agency #as shall have an undivided security interest in the pooled securities ' reflecting its deposits as a percentage of the total deposits that are secured by the pooled securities. 2 of 3 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 10: "Security Agreements" Adopted: 3.0 Perfecting a Security Interest The placement of collateral by a commercial bank or by a savings and loan association with an agent of depository has the effect of perfecting the security interest in the name of the City. Accordingly, all collateral held by California agents of depository shall be considered to be held for, and in the name of, the City. 4.0 Protecting a Perfected Security fnterest The City Treasurer shall take all possible action to comply with federal requirements ' so that the City's security interests in collateral pledged to secure deposits, are enforceable against the receiver of a failed financial institution. Under certain circumstances, the Federal Deposit fnsurance Corporation ("FDIC") may be able to void a perfected security interest, and leave the City with only the right to share with other creditors in the pro rata distribution of the assets of a failed institution. Federal law provides that a depositor's security agreement, which tends to diminish or defeat the interest of the FDIC in an asset acquired by it as receiver of an insured depository, shall not be valid against the FDIC unless the agreement: 4.1 Is in writing; 4.2 Was executed by the depository institution and any person claiming an adverse interest, contemporaneously with the acquisition of the asset by the depository institution; 4.3 Was approved by the depository's board of directors or loan committee; and 4.4 Has been continuously from the time of its execution, an official record of the depository institution. 3of3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 11 SUBJECT: "CHECKS" POLICY The purpose of this document is to outline the policy and procedure on checks. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; � Palm Desert Financing Authority; and the Y City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") to use checks as its principal means of disbursement. Checks minimize the amount of cash on hand; require expenditure preauthorization and justification; and are easier to record than credit transactions. Weak or nonexistent internal controls, however, could result in check fraud losses for the City since the Uniform Commercial Code has shifted a greater proportion of such losses to the check issuer. 1 .0 Scope The provisions of this policy shall apply to all checks that the City originates or receives. 2.0 Objectives The City's objectives shall be to minimize the risk of: 2.1 Theft by third parties after checks have been ordered or mailed in payment of bills. 2.2 Forgery of check signatures by public officials or employees, or by third parties who have intercepted checks in the mail. 1 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: 2.3 Embezz/ement by public officials or employees through the improper use of checks. 2.4 Fraud by public officials or employees through the misrepresentation or omission of a material fact concerning checks. 3.0 Segregation of Duties The duties of public officials and employees with respect to check custody, preparation, and execution shall be segregated so that embezzlement will not be facilitated by a concentration of responsibilities in one person (e.g., cash handling and financial statement preparationl. Individuals, independent of one other, shall therefore discharge the following duties: 3.1 Check Stock Custodv. The City Treasurer shall have exclusive custody of the key to the locked unit in which the check stock is kept. Only the Accounting Technician (accounts payable) and the Accounting Technician (payroll) shall be allowed to use the key. 3.2 Check Pre�aration. The Accounting Technician (accounts payable) and the Accounting Technician (payroll) shall have exclusive responsibility for preparing all checks. 3.3 Check Signing. The Mayor or , if the Mayar is not available, another City Councif Member; and the City Treasurer or the Assistant Finance Director shall have exclusive responsibility for signing all checks. 3.4 Batches Reviewed and Posted. Either the City Treasurer or the Assistant Finance Director shall review and post all accounting batches. 3.5 Bank Statement Reconciliation. The Accounting Technician (purchasing and bank reconciliation) shall have exclusive responsibility for reconciling the City's bank statements to its general ledger on a monthly basis. 3.6 Mail. The Finance Department Administrative Secretary shall have exclusive responsibility for receiving, opening, and reviewing all incoming mail; and for preparing all outgoing mail. 2of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: 3.7 Stop Payments. The Deputy City Treasurer shall have exclusive responsibility for placing stop payments on outstanding checks. 3.8 Check Re ister. The City Treasurer, the City Manager, or the Executive Director of the Palm Desert Redevelopment Agency; and the Mayor or , if the Mayor is not available, another City Council Member shall have exclusive responsibility for approving all check registers. 3.9 Facsimile Signature Stamps. The City Clerk or the Deputy City Clerk shall have exclusive custody of the City's facsimile signature stamps. If any of the above-referenced Finance Department employees are not available, then Finance Department management may assign those responsibilities to other Finance Department employees. 4.0 Control Reports A criminal typically attempts to conceal embezzlement by increasing or decreasing reported monthly expenditures, or by doing both. The City shall address this risk by requiring that the City Treasurer or the Assistant Finance Director prepare and review the City's monthly statements of financial position; statements of revenues and expenditures; check registers; and bank reconciliations. The City Council shall receive a copy of each check register and each statement of revenues and expenditures, on a monthly basis. 5.0 Procurement The City's check stock shall be pre-numbered, and shall have the following security features: 5.1 Artificial watermarks on both sides of the check that cannot be scanned or photocopied. 5.2 The word "VOID" will appear on the check if it is scanned or photocopied. 5.3 Chemical-reactive paper that voids the check if an ink eradicator is applied. 3of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: 5.4 Microprinting that prevents details from being matched if the check is scanned or photocopied. 5.5 Warning banners that advise tellers to inspect a check before accepting it, and that may deter criminal experimenting. The City Treasurer or the Assistant Finance Director shall be responsible, upon receipt of new check stock, for its immediate review in order to verify consecutive check numbering, and the accuracy of account information. If either individual is not available, then the Finance Department Administrative Secretary shall perform these duties. 6.0 Custody The City Treasurer shall designate a locked unit for the storage of all check stock. The City Treasurer shall have exclusive custody of the key to that unit, and shall release it only to authorized Accounting Technicians, or to their authorized replacements. The Accounting Technician (accounts payable) and the Accounting Technician (payroll) who prepare the checks shall maintain a log that lists the checks that have been issued. Another Accounting Technician (purchasing and bank reconciliation) shall review the log on a quarterly basis in order to verify that all checks have been properly accounted for. 7.0 Request for Payment The Accounting Technician (accounts payable) shall prepare and submit to the City Treasurer or to the Assistant Finance Director a transaction report that lists all check payees, prior to requesting the key to the locked unit in which the check stock is kept. The transaction report shall also itemize, describe, and justify all proposed expenditures by check. All check payments shall be supported by purchase orders; sales receipts; time cards; personal action forms; and any other necessary supporting documentation. Only original invoices (no photocopies unless unable to receive original) totaling the amount of the disbursement shall be attached to the request for payment prior to execution. 4 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: All requests for payment, and all attached invoices shall be stamped "PAID" in order to avoid duplicate payments. 8.0 Signature Authority Only the City Treasurer; the Assistant Finance Director; the Mayor; and the other City Counci/Membe�s sha//have check- signing authority on the City's behalf. /f the Mayor is not available, then another City Counci/member mey sign. A dua/-signature requirement sha//be in effect at a// times. B/ank checks are never to be si ned. On/y the Mayor and the other City Counci/members sha//be a//owed to use facsimi/e signatures. A/!checks in excess of �100,000, however, sha/l�equire two origina/signatures. Al/othe� government officials and employees are prohibited from havinq check- signing authoiity. Desert Willow checks that exceed �5,000.00 shall require the countersiqnatu�e of either the City Treasuier or the Assistant Finance Directo�. 9.0 Mailing Whenever possible, checks should a�a�s be mailed directly to the vendor or payee. They shall not be returned to the requesting department, division, or individual, in order to minimize the likelihood that such checks will be altered, and negotiated by someone other than the intended payee. 10.0 Manually-Issued Checks The City periodically must issue manual checks that are subsequently entered into the City's computerized accounting system. In order to minimize the potential for forgery, all manual checks shall prepared on a typewriter with a single-strike cloth ribbon. The dollar amount of the check shall be imprinted with an embossing machine. 11 .0 Positive Pay The City shall use "Positive Pay", or an equivalent program, in order to minimize check losses due to fraud or forgery. Under Positive Pay, the 5of8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: City provides its commercial bank with a daily list of the payees, numbers, dates, and dollar amounts of any checks that the City has issued. The bank responds by providing the City with a daily list of any checks that do not correspond with the City's previously submitted information. The City must then confirm that such checks are eligible for payment before the bank will process them. 12.0 Cancelled Checks The City shall request that its commercial bank return all of the City's cancelled checks, or a disk with a copy of each check on both sides, on a monthly basis, by mail, so that the City will possess the requisite financial records for its annual financial audit. 13.0 Reconciled Bank Accounts The Accounting Technician (purchasing and bank reconciliation) shall promptly reconcile all bank statements within 30 days of statement mailing. That technician shall immediately report any discrepancy to the City Treasurer or to the Assistant Finance Director, and shall provide both with a supporting reconciliation report. The Assistant Finance Director shall perform a final review of the bank reconciliation, and shall approve the bank reconciliation by initialing it. 14.0 Stale Checks Financial institutions classify checks that are presented for payment as "stale" if they are dated 12 or more months earlier. Even so, the banks cannot guarantee that such checks will not clear. The City accounting staff shall place stop payments on any checks that are over 18 months old, and shall void them in the City's financial records. 15.0 Voided Checks All checks that are spoiled or mutilated or that have been defectively prepared, shall be voided by: 15.1 Stamping or by writing, in ink, the word "VOID" in the check amount field, and in the vendor name/address field; and 15.2 Excising the signature blocks from the check. 6 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: The check shall also be voided on the City's computerized accounting system. 16.0 Stop Payments When one of the City's checks is lost in the mail or otherwise cannot be accounted for, then the City shall immediately contact the bank upon which the check is drawn, and place a stop payment on the check for at least one year. The check shall also be voided on the City's computerized accounting system. In order to place a stop payment on a check for one year, the City must renew the stop payment every six months. Even this does not guarantee that that bank will not clear the check, however. The only sure way to stop a check is to close the bank account upon which the check is drawn. 17.0 Destruction of Obsolete Check Stock Obso%te check stock shall a/ways be destroyed, never discarded intact. Check stock shall be deemed to be obsolete when an address change occurs or a bank account is closed. The City Treasurer or the Assistant Finance Director shall, in the presence of another pubfic employee, either burn or shred all obsolete check stock. Alternatively, in the case of used check stock, the City Treasurer may retain a commercial shred company with bonded employees for that purpose. 18.0 Disciplinary Action Public employees who violate the provisions of this policy shall be subject to disciplinary action, up to and including termination of employment. PROCEDURE 1 . Cashier's Checks. Checks that are exchanged for cashier's checks shall be made payable to the City's bank with a notation under the name stating, "Cashier Check: (name of recipient/escrow number etc.)". 7 of 8 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 11: "Checks" Adopted: 2. Pett�Cash_Checks. Checks that are used to refund petty cash shall be made payable to "(name of petty cash handler/employee►/Petty Cash". It shall be noted on the check stub that the purpose of the transaction will be to "Refund Petty Cash". 3. Inter-Account Transfer. Checks that are used to transfer money between the City's bank accounts shall be made payable to the title and to the account number to which they are being deposited. The inter-account transfer shall be noted on the check stub description. 4. Bank Checks. Checks that are used to pay obligations Iprincipal and interest payments) that are owed to the City's bank, shall be made payable to that bank. The obligation to be met shall be noted on the check stub. 5. Signature_Cards. Either the City Treasurer or the Deputy City Treasurer shall be responsible for periodically reviewing the City`s bank signature cards; fund transfer agreements; and bank access codes in order to ensure that they are still in force. The Deputy City Treasurer shall keep copies of these documents in a ��ed-�+� secure place. 8 of 8 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 12 SUBJECT: "STOP PAYMENTS" POLICY The purpose of this document is to outline the policy and procedure on stop payments. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the :- City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that stop payments should be placed upon lost or stolen checks as quickly as possible in order to avoid financial losses. The City accounting function shall be responsible for initiating all stop payment requests. 1 .0 Authorization to Place Stop Payments The following three City employees shall be authorized to use �#e-�►+e� a bank stop payment service ("SPS") to place stop payments: 1 .1 The City Treasurer. 1 .2 The Deputy City Treasurer. 1 .3 The Assistant Finance Director, 2.0 Placement of Stop Payments The Deputy City Treasurer shall have the primary responsibility for placing alf stop payments. If the Deputy City Treasurer is not available, then the (1 ) Assistant Finance Director or (2) the City Treasurer, in that order, shall be responsible for placing the stop payment. 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 12: "Stop Payments" Adopted: 3.0 Retention of Stop Payment Documentation The Deputy City Treasurer shall retain a copy of all stop payment . documentation. PROCEDURE 1 . Request Origination. The City accounting function shall request that the Deputy City Treasurer place a stop payment on a check. The City employee making the request must complete the Stop Payment Form (�rvhite) and obtain the necessary pre-approval, in writing. A copy of the following documents must be attached to the Stop Payment Form in order for it to be processed: a. The check. b. The original invoice. Alternatively, the Deputy City Treasurer may initiate a stop payment request if a fraudulent check is detected through �1-�+era--�aa�l�s the bank's Positive Pay Program. 2. Internet Log-On. The Deputy City Treasurer shall then log-on to the l�a�ie� �afllE-�ea� bank website. 3. Check Status. In order to verify that the check has not cleared, the Deputy City Treasurer shall: a. Select "Stops" ("Check Inquiry" will be the automatic default). b. Select the bank account number. c. Enter the check number. d. Select "Submit". The status of the check will be shown as af the end of business of the prior day. 4. Stop Payment. If the check has not cleared, then the Deputy City Treasurer shall: a. Select "Place Stop". b. Select the appropriate bank account. 2of3 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 12: "Stop Payments" Adopted: c. Enter the check number. d. Enter the check amount. e. Select "Lost", "Stolen", "Destroyed", or "Other". f. Select "Submit". 5. Stop Payment Report. After placing the stop payment, the Deputy City Treasurer shall then produce a Stop Payment Report. a. Select "Stops History". b. Select Print. 6. Report Distribution. The Deputy City Treasurer shall then return the original paperwork to the Accounting Technician laccounts payable), with a copy of the Stop History Report attached. The Deputy City Treasurer shall retain a copy of that paperwork 7. Stop Payment Order Confirmation. When the Deputy City Treasurer receives this confirmation from the bank, the Deputy City Treasurer shall retain the original and provide the Accounting Technician (accounts payable) with a copy. 3of3 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 13 SUBJECT: "WIRE TRANSFERS" POLICY The purpose of this document is to outline the policy and procedure on wire transfers. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the :- City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") to receive and disburse investment monies electronically through bank wire systems. A "wire transfer" is a form of electronic fund transfer that is commonly used for securities transactions. Once money is transferred by wire, the underlying investment transaction is final and irrevocable. A wire transfer may be initiated either through the Internet or by telephone. 1 .0 Wire Limits Wire transfers may not be initiated on behalf of the City for more than: 1 .1 S6-millic�r� 510 million on non-repetitive wires (including Desert Willow). ��-S E;00 . . . . . The only exception to the foregoing shall be the wire transfer of tax- exempt bond proceeds; Loca/ Government lnvestment Fund ("LA/F"1 monies; property taxes; and tax increment revenues, upon which there shall be no limit. 1 of 4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 13: "Bank Wires" Adopted: 2.0 Wire Deadlines In order to assure same-day processing: 2.1 Union Bank of California. All wires with Union Bank of California ("UBOC") must be initiated and verified by 1:00 p.m. (telephone); by 3:00 p.m. {internet "Fed"); or by 4:00 p.m. (internet "Book") Pacific Daylight Time. 2.2 LAIF. All wires with LAIF must be initiated by 10:00 a.m. Pacific Daylight Time. 2.3 CAMP. All wire notifications for CAMP must be sent by 11:00 e.m. Pacific Daylight Time. Accompanying bank wires must be sent by 1:00 p.m. Pacific Daylight Time on the same day. 3.0 Funds Transfer Agreements The City Treasurer shall execute a Funds Transfer Agreement with each approved financial institution, prior to conducting any wire transfers with that institution,. The Deputy City Treasurer shall retain and file a photocopy of each Funds Transfer Agreement. The City Treasurer shall designate three City employees in each Funds Transfer Agreement who shall serve as "Authorized Representatives", in rterms of initiating or verifying wire transfers. Each Authorized Representative shall receive a separate personal identification number ("PIN") that shall be kept confidential. 4.0 Authorized Representatives The following City employees shall be designated as Authorized Representatives: 4.1 The City Treasurer. 4.2 The Deputy City Treasurer. 4.3 The Assistant Finance Director. 4.4 The Director of Information Systems. 2 of 4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 13: "Bank Wires" Adopted: No broke� or investment advisor sha//be authorized to initiate or to verify wi�e transfers on beha/f of the City. 5.0 Wire Verification An Authorized Representative cannot initiate and verify the same wire transfer; another Authorized Representative must perform one of these tasks. Internet-initiated wires, both repetitive and non-repetitive, must be verified by a second-level approval on-line, in order to release the payment instructions. Telephone-initiated wires� both re�etitive and non-repetitive, must be verified bv teleqhone callbacks. No account numbers shall be released over the telephone, other than to initiate or verify a wire transfer. PROCEDURE 1 . Re�etitive Wire Transfers. These are wires that are sent on a recurring basis, in which the destination and beneficiary information remain the same, but the transfer amount and the release date vary. The process is as follows: a. The City employee who is requesting the wire transfer shall prepare a Wire Transfer Form (red) and obtain the necessary pre-approval, in writing. b. The Deputy City Treasurer shall then review the paperwork and enter the necessary particulars into the Wire Log. c. The Deputy City Treasurer shall then initiate the wire transfer with the bank over the �+�le�e�e internet or over the telephone. If the Deputy City Treasurer is not available, then another Authorized Representative shall do so. d. An Authorized Representative other than the one who initiated the wire shall verify the wire with the bank over the internet or over the telephone. The wire verifier shall then sign the Wire Log as such. 3of4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 13: "Bank Wires" Adopted: e. The Deputy City Treasurer shall then confirm the wire on a next-day basis by printing a daily statement Report. The Deputy City Treasurer shall then enter the wire transaction number into the Wire Log. f. The Deputy City Treasurer shall then distribute the Wire Transfer Form with a confirming daily statement page to the appropriate City accounting personnel for general ledger entry. 2. Non-Repetitive_Wire Transfers. These are domestic transfers that allow the wire desk to enter the transfer amount, release date, destination, and beneficiary information. The process is as follows: a. The City employee who is requesting the wire transfer shall prepare a Wire Transfer Form (red) and obtain the necessary pre-approval, in writing. b. The Deputy City Treasurer shall then review the paperwork and enter the necessary particulars into the Wire Log. c. The Deputy City Treasurer shall then initiate the wire transfer with the bank over the ��le�#ene internet or over the telephone. If the Deputy City Treasurer is not available, then another Authorized Representative shall do so. d. An Authorized Representative other than the one who initiated the wire shall verify the wire with the bank over the internet or over the telephone. The wire verifier shall then sign the Wire Log as such. e. The Deputy City Treasurer shall then confirm the wire on a next-day basis by printing a daily statement report. The Deputy City Treasurer shall then enter the wire transaction number into the Wire Log. f. The Deputy City Treasurer shall then distribute the Wire Transfer Form with a confirming daily statement page to the appropriate City accounting personnel for general ledger entry. 4 of 4 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: POLICY NO.: 14 SUBJECT: "ACCESS TO TREASURY SYSTEMS" POLICY The purpose of this document is to outline the policy on treasury systems access. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; ➢ Palm Desert Financing Authority; and the � City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") to ensure that treasury systems for banking and investments are secure, in order to protect against the theft, loss, or misuse of public monies. 1.0 Local Agency Investment Fund ("LAIF"► The City invests public monies in LAIF, based upon its liquidity and relatively high yield. Any transactions that are undertaken on behalf of the City must be initiated using a Personal Identification Number ("PIN") for each LAIF account. 1 .1 Authorization. The following City employees shall be authorized to initiate transactions on the City's behalf with LAIF: 1.1 .1 The City Treasurer. 1 .1 .2 The Deputy City Treasurer. 1 .1 .3 The Assistant Finance Director. 1 .1 .4 The . Director of Infarmation Systems. 1 of 4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 14: "Access to Treasury Systems" Adopted: 1.2 SecuritY. The Deputy City Treasurer shall be responsible for maintaining PIN numbers. 2.0 &y�R��+est�aer�-Rregr-a� Investment Reporting Program This software program is used to record, calculate, and report the City's investments. 2.1 Password Levels. In order to ensure that there exists an appropriate separation of duties , there are three separate sets of functional capability, based upon password security level: 2.1 .1 Leve/ One. This user is authorized to edit, add, and delete portfolios and files, and to change passwords. 2.1.2 Leve/ Two. This user is authorized to edit, add, and delete files. 2.1 .3 Leve/ Three. This user is authorized to view only portfolios and files (there are no editing capabilities►. 2.2 Authorization. The following City employees shall be authorized to operate at various security levels: 2.2.1 Leve/ One. 2.2.1 .1 The City Treasurer. 2.4.1.2 The Deputy City Treasurer. 2.2.2 Leve1 Two. 2.2.2.1 None. 2.2.3 Leve! Three. 2.2.3.1 None. 2of4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 14: "Access to Treasury Systems" Adopted: 2.3 Security. The Deputy City Treasurer shall be responsible for maintaining, installing, and recommending changes to the �e investment reporting software program. The Deputy City Treasurer shall be responsible for changing the system passwords as needed. 3.0 Trustee Information Network This software program is used to download data from the City's trustee, , on the investment of tax-exempt bond proceeds. 3.1 Authorization. The following City employees shall be authorized to access this program: 3.1.1 The City Treasurer. 3.1.2 The Deputy City Treasurer. 3.1 .3 The Assistant Finance Director. 3.2 SecuritY. The Assistant Finance Director shall be responsible for changing the system passwords as needed. 4.0 �nie� Bank �€AM Information Reporting, Stop Payment & Money Transfer Services These software modules are used to download the City's bank account and cash management information; to place stop payments; and to transfer public monies electronically. 4.1 Authorization. The following City employees shall be authorized to access this program: 4.1 .1 The City Treasurer. 4.1 .2 The Deputy City Treasurer. 4.1 .3 The Assistant Finance Director. 4.2 Securit�. Each authorized employee shall be responsible for changing the system password as needed. 3 of 4 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 14: "Access to Treasury Systems" Adopted: 5.0 1�nien Bank Positive Pay System This software program is used to download images of "exception" checks that the City of Palm Desert has purportedly issued, and that have been presented to its bank for payment. The purpose of the program is to detect fraudulent checks. 5.1 Authorization. The following City employees shall be authorized to access this program: 5.1 .1 The City Treasurer. 5.1.2 The Deputy City Treasurer. 5.1 .3 The Assistant Finance Director. 6.0 Storage of Passwords The Deputy City Treasurer shall document the quarterly Treasury systems passwords, and shall keep this documentation ��e�a ' in a secure place in the Deputy City Treasurer's office. , , IeE I�ec�-be�:- 4 of 4 City of Palm Desert Revision No. 4 Treasury Policies and Procedures Adopted: POLICY NO.: 15 SUBJECT: "INTEREST ALLOCATION" POLICY The purpose of this document is to outline the policy and procedure on interest allocation. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; � Palm Desert Financing Authority; and the � City of Palm Desert Recreational Facilities Corporation that all interest income which the aforementioned entities have accrued and received within a fiscal year should be allocated to individual accounting funds in the City of Palm Desert l"City") and the Palm Desert Redevelopment Agency ("RDA") investment portfolios, so that annual audited financial statements may be prepared. 1 .0 Deduction of Management Fee The Deputy City Treasurer's salary and fringe benefits shall be deducted from each accounting fund in order to reflect the cost of investment portfolio management. If any portion of the Deputy City Treasurer's compensation is allocated to the assessment districts as a cost, then it shall be deducted from the amount that is charged to the accounting funds. 2.0 Retention of Work Papers The Assistant Finance Director shall be responsible for retaining and filing all work papers pertaining to interest allocation so that the City's external auditor will have the requisite documentation for the City's annual financial audit. 1 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: PROCEDURE 1 . Start of Fiscal Year. At the beginning of each new fiscal year, the Deputy City Treasurer should begin the process of allocating interest income. a. /nterest A/location Workbook. Retrieve the lnterest Allocation Workbook of the prior fiscal year from the Excel>Investments> Interest Allocation subdirectory in the Deputy City Treasurer's personal network directory, and access the "Cash Adjustment Worksheet" (see Exhibit "A"). b. Cash Adjustment Worksheet. Update the "Cash Adjustment Worksheet" by changing column dates; deleting individual monthly balances; reviewing adjustment formulas; and renaming and saving the workbook for the target fiscal year. 1) For each account, take the interest rate for the prior June, and copy it as the interest rate for July 1 of the subsequent fiscal year. Otherwise, SymPro will not allow data to be entered for each month of the target fiscal year. c. P00%d Fund Portfo/ios. Retrieve the City and the RDA Pooled Fund Portfolios of the prior fiscal year, and copy and rename them for the target fiscal year. The SymPro commands would be: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., PC01 and PR011>Name le.g., 2001 CITY POOLED FUNDS and 2001 RDA POOLED FUNDS)>Path (C:\SYMPRO\DATA\POOLED). d. Prior-Year June SymPro Cash Balances. Print the June 30 SymPro cash balances for the prior fiscal year for the unedited City and RDA Pooled Fund Portfolios. The SymPro commands would be: Fixed Income> Reports>Investment Listings>Investments by Fund (FI►>Ending Date (6/30/(prior fiscal yearl)>Book Value>Select All>Print>OK. e. Fisca/ Year-End C/ose of P00%d Fund Porffo/ios. Perform a prior fiscal year-end close on the new Pooled Fund Portfolios. The SymPro commands would be: Utility>Setup>Fiscal Year End Close>(check box that data has been archived and backed up)>(enter prior fiscal year- end). This will clear all prior fiscal year transactions; create a beginning balance for the target fiscal year; and reset the portfolio for the target 2 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: fiscal year. Check "yes" when asked if the year-end of each portfolio should be processed. f. Data Entry of Prior-Year June SymPro Cash Balances. Enter the June 30 book value cash balances, as calculated in Procedure 1 .d. of this policy, by fund number, into Column C of the "Cash Adjustment Worksheet." Enter RDA Fund 1 10 into "RDA 110 (Active)" account. g. Data Entry of June Audited Cash Balances (15"' Periodl. Enter the audited cash balances, by fund number, from the June Bank Reconciliation (Period 15) of the prior fiscal year into Column D of the "Cash Adjustment Worksheet." 1) All cash that is listed, by fund number, for Activity Code Number 101-0000 under the "Active Cash Cumulative" column of each Cash Work Sheet, should be entered. 2) All 1 10-0000-101 sub-accounts should be added together and entered. 3) The preliminary total in the "Cash Adjustment Worksheet" should match the preliminary total in the Cash Work Sheet. 41 The "Active RDA" cash balance in the Statement of Cash Transactions should be entered into the RDA 1 10 line item in the "Cash Adjustment Worksheet." h. Data Entry of Other Month/y Cash Ba/ances. Enter the cash balances, by fund number, from the Cash Work Sheets for the months of the target fiscal year into the appropriate monthly columns of the "Cash Adjustment Worksheet." The ending month of June will be 12"' Period. 1} All cash that is listed, by fund number, for Activity Code Number 101-0000 under ihe "Active Cash Cumulative" column of each Cash Work Shest, should be entered for each month. 2) All 1 10-0000-101 sub-accounts should be added together and entered. 3) The preliminary total in the Cash Adjustment Wo�ksheet should reconcile to the preliminary total in the Cash Work Sheet for that month. 3 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: 4) The "Active RDA" cash balance in the Statement of Cash Tiansactions should be entered into the RDA 1 10 line item in the Cash Adjustment Worksheet. After cash balances have been entered into the "Cash Adjustment Worksheet," the "Adjustment to SymPro" column that is adjacent to each month, will automatically calculate an adjustment. i. Backup of/nte�esf A//ocation Workbook. Backup the "lnterest Allocation Workbook" by using the following Excel commands: c:\backup\ltarget fiscal year) INTEREST ALLOCATION. j. Dafa Entry info P00%d Fund Portfolios. Enter each cash adjustment, by month, from the "Cash Adjustment Worksheet", as a deposit or a withdrawal in the Transactions Field of the appropriate Participant Fund in the City and the RDA P00%d Fund Portfolios. The resulting cash balance in the Participant Fund should match the corresponding cash balance in the "Cash Adjustment Worksheet." The monthly interest rates will be calculated automatically later in the process. 1) No Cash Adjustment. If the cash adjustment is zero, then no data for that month shou,ld be entered into the Participant Fund. 2) RDA Cash Ba/ance. In the case of RDA 1 10 (Active), the opposite sign convention (e.g., a positive for a negative in the "Cash Adjustment Worksheet" should be used when entering data into the Transactions Field of the Participant Fund, and vice-versal. k. Backup of P00%d Fund Poitfolios. Backup the City and the RDA P00%d Fund Portfolios by using the following SymPro commands: Utility> Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., 01 PC and 01 PR)>Name (e.g., BACKUP-2001 CITY POOLED FUND and BACKUP-2001 RDA POOLED FUND►>Path (H:\Ipersonal directory)\SYMPRO\DATA\BACKUP). I. Report P�oduction. The Deputy City Treasurer should then print the City and the RDA P00%d Funds Reports for the City Treasurer. All reports should be produced on both a cash basis ("CP") and an accrual basis ("AP"). 1� Portfo/io Sumrr�ary and Portfolio Detai/s Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> 4 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: Portfolio (PM). These reports should be printed, � � month, for the target fiscal year (Exhibit "B"�. m. C�eation of Non-Restricted Funds Reports. The Deputy City Treasurer should then retrieve the current "CITY" and "RDA" investment portfolios, and copy and rename them for the target fiscal year. The SymPro commands are: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., NC01 and NR01)>Name (e.g., 2001 CITY NON- RESTRICTED FUNDS and 2001 RDA NON-RESTRICTED FUNDS)>Path (C:\SYMPRO\DATA\NON-RES). n. Report Production. The Deputy City Treasurer should then provide the City Treasurer with the following reports from the unedited City and RDA Non-Restricted Funds Portfolios. 1) Portfolio Reports. The SymPro commands are: Fixed Income> Report>Portfolio Management>Portfolio (PM►. Print the "Portfolio Summary" and "Portfolio Details-lnvestments" reports ("AP"), � month, for the target fiscal year (see Exhibit "C"►. Place a tick mark next to each individual security that is listed, avoiding duplication. 2) /nvestment Position Reports. The SymPro commands are: Fixed Income>Report>Reference>Investment Position Report (SP). Print the "lnvesiment Position Reports" for all individual securities, except for State and Local Government Series; mutual funds; and local agency investment pools Isee Exhibit "D"1. The purpose of this report is to identify trustee securities that should be deleted from the City and the RDA Non-Restricted Funds Portfolios. 3) De%te Trustee Records. "Forward" through the SymPro investment records (using Search>Investment Number►, and delete all records of trustee-held ("Restricted") securities, except for the following: a) City: Main Checking Account; all custodian-held securities; CAMP (City); and LAIF (City). b) RDA: All custodian-held securities; CAMP (RDA); and LAIF (RDA). Also delete "City" SymPro Nos. 18040 and 18041 (Retiree Health investments); all individual securities that have matured prior to the 5 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: target fiscal year; LAIF (Housing►; LAIF (Bond Proceeds); City loan ta RDA; and all State and Local Government Series ("SLGS"). All interest income for the deleted records should have been previously booked (as trustee transactions) by the Senior Financial Analyst. 4) Print Edited Non-Restricted Funds Portfolio Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> Portfolio (PM). Print the "Portfolio Summary" and the "Portfolio Detai/s-/nvestments" reports, on an accrual basis l"AP"), bv month, for the targeted fiscal year (see Exhibit "C"). The Deputy City Treasurer should give them to the Assistant Finance Director or the Senior Financial Analyst for review and verification. n. Backup of Non-Restricted Funds Porffo/ios. Backup the City and the RDA Non-Restricted Funds PortfoJios by using the following SymPro commands: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio�Code (e.g., 01 NC and 01 NR)>Name (e.g., BACKUP-2001 CITY NONRESTRICTED and BACKUP-2001 RDA NONRESTRICTED)> Path (H:\(personal directoryl\SYMPRO\DATAIBACKUP). 1) Accrued/nterest Report. Print the "Accrued lnterest (Al) Report" for the City and RDA Non-Restricted Funds Portfolios by using the following SymPro commands: Fixed Income>Report>Interest> Accrued Interest (AI). The reporting period should be from 7/01/(target fiscal yearl through 6/30/(target fiscal year). o. Report Production. The Deputy City Treasurer should then provide the City Treasurer with the following reports from the edited City and RDA Non-Restricted Funds Portfolios. All reports should be on both a cash basis ("CP") and an accrual basis ("AP"}. 1) Portfolio Summary and Portfo/io Detai/s Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> Portfolio (PM). Print these reports, bv month, for the target fiscal year (see Exhibit "E"). 21 /nteiest Earnings Reporfs. The SymPro commands are: Fixed Income>Report>Interest>Interest Earnings (IE)>Issuer>Average Value/Annualized Yield. Print these reports for a 12-month period, from July 1 through June 30 of the target fiscal year (see Exhibit „F„�. 6 of 10 Palm Desert 7reasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: 3) A//ocation Account Activity Reports. The SymPro commands are: Earnings Allocation>Report>Allocation Account Activity (LP). Print the Allocation Accounts Activitv Reports for a 12-month period, from the 2nd calendar day at the beginning of the target fiscal year through the 2nd calendar day after the end of the target fiscal year, in order to exclude June interest income on the front end, and to add it on the back end (see Exhibit "G"}. p. Prepaiatory Work Prior to /nterest A//ocation. Prior to allocating interest earnings, either the City Treasurer or the Assistant Finance Director should take the following steps: 1) Accrua/ Worksheet. Prepare an Excel worksheet which calculates the amount of interest income that was earned in the prior fiscal period but received in the target fiscal period. Since debt securities with interest coupons typically pay interest every six months, interest received up to 31 December might include some accrued interest. 2) Ca/cu/ation of Accrued/nterest Earnings. Review the "lnterest Earnings Report" in order to determine what portion of interest earnings that were received in the target fiscal period should be allocated as accrued interest from the prior fiscal period. Then prepare and post all accrued interest to the general ledgers of the edited City and RDA P00%d Fund Portfolios. 3) Ca/culation of Tota//nterest Earnings. Then add this accrued interest to interest received during the target fiscal period, in order to calculate the amount of total interest earnings that will be allocated to afl accounting funds in the edited City and RDA Pooled Fund Portfolios. 4) Final Allocation Activity Report. The Deputy City Treasurer should then print "Allocation Account Activity Reports" for the edited City and RDA P00%d Fund Portfolios. The time period would be from 7/1/�target fiscal year) thorough 7/2/(subsequent fiscal year)�. q. A//ocation of Tota//nterest Earnings. The Deputy City Treasurer should then allocate total interest earnings to the accounting funds in the edited Poo/ed Fund Portfolios. All reports should be on a cash basis ("CP"}. The SymPro commands are: 7 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: 1) Select the Earnings Allocation>Utility>Select Investment Types For Allocation Paol menu options. Type "Y" in the "Include in Pool?" if "yes" is marked in the "Active Column" for "Participant Accounts," 2) Select the following Activity>Allocate Earnings menu options: a) Amount to A//ocate. Enter the beginning and ending dates for each month of the target fiscal year for the appropriate edited P00%d Fund Portfolio. Then enter total earnings for the month in "Amount To Allocate." Total earnings is taken from the intersection of the "Current Month" and "Interest Earnings" columns in the "Portfolio Summary" report for the related edited Non-Restricted Funds Portfolio for each month of the target fiscal year, except for June. bl June Tota/ Earnings. Total earnings for the month of June for both the City and the RDA may be calculated as follows: (1)Adjusted Annual Tota/Ea�nings. Reconcile the annual total earnings figure that SymPro has calculated in June with the annual total earnings figure that the Assistant Finance Director has calculated for the same time period. (2)Adjusted June Tota/Earnings. Add or subtract the difference from the total earnings figure that SymPro has calculated for the month of June. (3)Amount to A//ocate. Enter the adjusted total earnings figure into "Amount to Allocation" for the month of June. c) /mputed/nterest Rate. SymPro will impute an interest rate for each month of the target fisca! year, based upon the total earnings that have been entered. r. Report Producfion. The Deputy City Treasurer should then provide the City Treasurer with the following report from the edited City and the RDA Pooled Funds Portfolios. All reports should be on a cash basis ("CP") only. 4} A//ocation Account Activity Report. The SymPro commands are: Earnings Atlocation>Report>Allocation Account Activity. Print the Allocation Account Activitv Repoits for a 12-month period, from the 8 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: 2nd calendar day at the beginning of the target fiscal year through the 2nd calendar day after the end of the target fiscal year. Interest is posted on the first day of each subsequent month. These reports are needed in order to verify the final interest earnings allocation for each month. s. A//ocation of Management Fee. The Deputy City Treasurer's services should be charged as a monthly fee to each accounting fund in the City and RDA P00%d Fund Po�tfolios. This fee shall be defined as the Deputy City Treasurer's salary plus fringe benefits (equivalent to 29.63 percent of salary►. The basis for allocatin�the management fee should be the dollar amount of each accounting fund as a percentage of the dollar amount of all accountinq funds within the Pooled Fund Porifolios. The management fee should be allocated to: (1) assessment district trust funds; (2) RDA trust funds; (3) all other City funds; and (4) all other RDA funds. The allocation of the management fee to all RDA funds shall be done concurrently with the allocation of City staff time that has been devoted to RDA projects. t. Posting of lnteiest A/location. The City Treasurer or the Assistant Finance Director shall then post the interest earned to all accounting funds in the City and the RDA P00%d Fund Portfolios. The RDA Trust Fund shall be subdivided in order to subdivide individual pass-through accounts. 3. Fiscal Year-End Close. After monthly data has been entered for June, (the end of the target fiscal year), the Deputy City Treasurer should begin the fiscal year-end close for the "City" and the "RDA" SymPro portfolios by doing the following: a. Verify Updated/nterest Schedule. The SymPro commands are: Fixed Income>Activity>Update Interest Schedule by Due Date. Verify that all interest payments have been posted for the target fiscal year. b. Data Backup. Backup SymPro data for the City and the RDA by using the procedures listed in the yellow Monthly Investment Report - Instructions manual. This only needs to be done once. c. Archive Portfolios. The SymPro commands are: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., FC03 and FR03)>Name (e.g., 2003 CITY PORTFOLIO FYEC and 2003 RDA PORTFOLIO FYEC1>Path (C:\SYMPRO\DATA\FYEC). This will archive the City and the RDA portfolios for the target fiscal year. 9 of 10 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 15: "Interest Allocation" Adopted: d. Backup Archive Portfolios. The SymPro commands are: Utility> Portfolio Copy/Deletion>Copy(Archive) Portfolio>Code (e.g., 03FC and 03FR)>Name (e.g., BACKUP-2003 CITY FYEC and BACKUP-2003 RDA FYEC)>Path (H:1(personal directory)\SYMPRO\BACKUP). This will create an archive copy of the City and the RDA portfolios for the target fiscal year. e. Reindex Portfo/io Files. The SymPro commands are: Fixed Income> Utility>Reindex Files. Reindex to remove any deleted records before proceeding with the close. f. The C/ose. The SymPro commands are: Fixed Income>Utility> Setup>Fiscal Year End Close. Non-amortizinq discount instruments should not be converted to amortizinq ones. 1) Check box that questions whether data files have been archived and backed up. 2) Enter the last day of the target fiscal year as the "close date". 3) Hit "OK." 4) Confirm the new fiscal year-end date. The SymPro commands are: Fixed Income>Utility>Setup>Portfolio Setup/Preferences. 10 of 10 City of Palm Desert Revision No. 4 Treasury Policies and Procedures Adopted: POLICY NO.: 16 SUBJECT: "CASH AND INVESTMENTS AUDIT" POLICY The purpose of this document is to outline the policy and procedure on the audit responsibilities of the Treasury function. It is the policy of the: ➢ City of Palm Desert; ➢ Palm Desert Redevelopment Agency; ➢ Palm Desert Housing Authority; i� Palm Desert Financing Authority; and the :- City of Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as the "City") that the City shall engage an external auditor to conduct a cash and investments audit every three years, unless there have been significant prior audit findings or a change in Treasury personne{. If either of the foregoing conditions occurs, then the City Treasurer or the Audit, Investment, and Finance Committee may increase the frequency of the audits, as needed. A cash and investments audit shall include among its objectives, a review of: ➢ The effectiveness of the internal controls for the City`s investment program. � Staff compliance with treasury policies and procedures. � The description and classification of investments, by fund type, on the City's balance sheet, as well as related disclosures, including restrictions and commitments. ➢ Custody and safekeeping arrangements. The City Treasurer and the Deputy City Treasurer shall cooperate fully with the external auditor, in terms of willingly producing afl information and documents requested, as well as responding honestly to all inquiries. 1 of 2 Palm Desert Treasury Policies and Procedures Revision No. 4 No. 16: "Cash and lnvestments AudiY` Adopted: The City's annual audit includes certain audit procedures that are related to cash and investments, such as the confirmation of the year-end balances. It is the City's policy, however, to have the external auditor perform additional procedures related to cash and investments. Consequently, the Audit, Investment, and Finance Committee shall identify and communicate to the external auditor what additional testing procedures will be required. The external auditor shall submit its report on these additional procedures to the Audit, Investment, and Finance Committee by 31 December of that year. PROCEDURE 1 . Required Audit Documentation. The Deputy City Treasurer shall provide the external auditor with the following documents for the fiscal year being audited: a. "Statement of Investment Policy". b. Treasury Policies and Procedures Manual. c. Trade Book. d. Wire Log. e. All bank account signature cards. f. All monthly investment reports and schedules. g. All competitive offering documents. h. All broker qualification documents. i. All trustee, custodian, and bank administrative fee documents. j. All money market fund qualification documents. 2. Confirmation Letters. The Deputy City Treasurer shall ensure that "Confirmation of Marketable Securities Held By A Third Party" letters are prepared for the external auditor to send to the City's custodian and to the City's trustee. 2of2