HomeMy WebLinkAboutTreasury Policies & ProceduresCITY OF PALM DESERT
TREASURY
POLICIES AND PROCEDURES
Citv Council
Richard S . Kelly
Jean M. Benson
James C. Ferguson
Cindy Finerty
Robert A. Spiegel
Mayor
Mayor Pro Tempore
Council Member
Council Member
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 Paim 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 ("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
Subject Section
TREASURY POLICY 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
Treasury Policies and Procedures
Revision No. 3
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
y 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"), the Palm Desert Redevelopment Agency
Board ("Redevelopment Agency Board of Directors"), and the Palm Desert
Housing Authority Commission ("Housing Authority Commission"), the Palm
Desert Financing Authority Commission ("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 followed; 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.
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1.0 Policy Drafting Requests
Revision No. 3
Adopted:
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
shall 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.
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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. City 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 shall 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. Publication. 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.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 3
SUBJECT: "INTERNAL CONTROLS"
POLICY
Revision No. 3
Adopted:
The purpose of this document is to outline the policy on internal controls.
It is the policy of the:
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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:
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1.1 Approving the purchase and sale of securities.
Revision No. 3
Adopted:
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 broker dealers securities brokers
shall not 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.
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3.0 Custody Controls
Revision No. 3
Adopted:
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.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 4
SUBJECT: "TRADING"
POLICY
Revision No. 3
Adopted:
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.
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1.2 The Deputy City Treasurer.
Revision No. 3
Adopted:
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 five three factors while developing the City's trading
strategies:
3.1 The Daily Csrh Sheet that provides^ah balcn .
3.2 The "Statement of Investment Policy" that identifies approved
transactions, instruments, issuers, maturity limits, and
concentration limits.
3.3 The Fivo Year Cash Expenditure Forecast.
3.4 The present City portfolio structure.
3.5 The interest rate outlook.
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Revision No. 3
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 control structure for trading shall 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.
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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 four 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
input entry into the SymPro investment portfolio 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.
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6.0 Trade and Settlement Dates
"Trade date" is the date of trade execution.
Revision No. 3
Adopted:
"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 loss, 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.
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PROCEDURE
Revision No. 3
Adopted:
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 Collusion. 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 offering is competitive or non-
competitive, the Deputy City Treasurer shall not disclose to any
eligible broker: (1) the identity of other eligible brokers or brokerage
firms that are involved in the offering; or (2) 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. Details 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. If a broker fails to disclose a commission, then that
broker shall be automatically disqualified from the offering.
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Revision No. 3
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 Offers. 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 f submiooiaR 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(s). 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.
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9. Treasury Accounting. 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 TEAM Ba!anec Report 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 Bert. 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 only).
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
only)
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. Monthly Reconciliation. The Accounting Technician shall reconcile
monthly bank, custodial, and trustee statements with cash -based
SymPro investment portfolio reports, at month -end.
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POLICY NO.: 5
SUBJECT: "COMPETITIVE OFFERINGS"
POLICY
Revision No. 3
Adopted:
The purpose of this document is to outline the policy and procedure on
competitive offerings.
It is the policy of the:
b V \' V
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 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:
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No. 5: "Competitive Offerings"
Revision No. 3
Adopted:
2.1 Reasonably Competitive 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 (2) 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
other 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.
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Revision No. 3
Adopted:
2.7 Certification of Third-Partv 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. In order to comply with this
requirement, all providers shall be required to execute a
certification that the fee is a qualified administrative cost. If 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 Offering. 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 the 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.
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Revision No. 3
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. Com 3etitive 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 trwestmefft
Manager 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.
4 of 6
Palm Desert Treasury Policies and Procedures
No. 5: "Competitive Offerings"
Revision No. 3
Adopted:
4. Evaluation of Offers. The Deputy City Treasurer shall review all offers and
shall recommend the most favorable ones, based strictly upon the lowest
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. Acceptance of Offers. After receiving the City Treasurer's approval, the
Deputy City Treasurer shall immediately notify the successful offeror(s), 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 withinono hour of cubmicoian
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. Remaining 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 offer 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
No. 5: "Competitive Offerings"
Revision No. 3
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.
6 of 6
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 6
SUBJECT: "CUSTODY AND SAFEKEEPING"
POLICY
Revision No. 4
Adopted:
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
No. 6: "Custody and Safekeeping"
Revision No. 4
Adopted:
The City shall subsequently execute separate custody 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 Duty. 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
Palm Desert Treasury Policies and Procedures
No. 6: "Custody and Safekeeping"
Revision No. 4
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.
4.0 Credit -Risk
na;:hip of the securities is thus -safeguarded -by -limiting
their-negotiabiIity-:
68 requires th&t all nv-estmonta, c
pools -and mutual funds, be classified int„ „n„ „f three categories „f
efedit rick, an at. The
1.1 "Category 1". This ap pTi'es to investtTTmentsthat are. (1 ) insQfee'd
' ent in the City's
system where the broker ir. separate from the custodian, and-t ►e
' ok in the City's
,Ta-m
n e Theme transactions havo the /owcst r/eirree of credit risk•
,
these arc r+referred y the City,
71.2 "Category ". This appIi„ is that are
Hugh a financial inctitutien's trading -department -and
e trustdepartment of the same
financial inctitutian, and the investments are recorded on the
•'c name. These transactions
hate a hiirher degree of credit ris/i
11.3 "Category-3-'4—This applies to uninsured -investments that are:
gh a financicl it stitutien's trading -department
Epartrncnt of the same
financial institt ' cial inetitution's
trust department and h
3 of 7
Palm Desert Treasury Policies and Procedures
No. 6: "Custody and Safekeeping"
4.0 Risk
Revision No. 4
Adopted:
dapartm ;
same broker; or (1) not r stituti3n'a sf
on the broker's books in the-City's name. These transactions
have the ighes-t decvree of oreriit rin/c
All of the securities that the City owns shall 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 Investments 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
No. 6: "Custody and Safekeeping"
Revision No. 4
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 or investment advisor shall 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.
5 of 7
Palm Desert Treasury Policies and Procedures
No. 6: "Custody and Safekeeping"
10.0 Segregation of Broker and Custodial Functions
Revision No. 4
Adopted:
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 Toss 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 Toss.
PROCEDURE
1. Receipt -Versus -Payment ("RVP"). The following steps shall be taken when
the City buys 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.
6 of 7
Palm Desert Treasury Policies and Procedures
No. 6: "Custody and Safekeeping"
Revision No. 4
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 simultaneously 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.
7 of 7
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 7
SUBJECT: "DISMISSAL OF BROKERS"
POLICY
Revision No. 3
Adopted:
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 if it fails to
E business with the City or if it fails to execute
Seetififf33 trarsaeti3rrs in an am -eatable munnaF 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. An excessive A number of trade fails (a failure to
deliver securities on time).
1.2 Trade Errors. An-e-xcassive A number of trade errors due to
sloppiness, incompetence, inefficiency, or a failure to follow
directions.
1.3 Account Officer Turnover. An 3xoee A number of account
officer changes.
1 of 3
Palm Desert Treasury Policies and Procedures
No. 7: "Dismissal of Brokers"
Revision No. 3
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 litigation).
1.5 Inflated Pricing. An excessive A number of offers that are
substantially above market prices.
1.6 Adverse Change. An adverse change in the broker's financial
condition.
1.7 Failure to Comply. A repeated 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 Inappropriate Investments. An inability to offer
appropriate investments to the City.
1.11 Failure to Participate. A repeated failure to participate in
competitive offerings.
1.12 Failure-to-Submit-Doc-urnents. ^ fail re to submit required
for annual regualifioatien. Unethical Behavior. A
failure to conduct business with the City or, in general, in an
honest, transparent, and ethical manner.
1.13 Collusion on Pricing. Collusion on pricing with other brokers
during competitive offerings.
1.14 Tardiness. A failure to submit offerings on time, in terms of
meeting a deadline.
1.15 Yield Burning. The inflation of bond prices in order to lower
yields ("yield burning").
2 of 3
Palm Desert Treasury Policies and Procedures
No. 7: "Dismissal of Brokers"
PROCEDURE
Revision No. 3
Adopted:
1. Disciplinary Documentation. The Deputy City Treasurer shall be
responsible for maintaining written documentation on an approved broker's
failure to perform at an acceptable level in an acceptable manner or to
comply with City policy; -of maintain its qualifioations.
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
Investment Audit, Investment, 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
Treasury Policies and Procedures
POLICY NO.: 8
SUBJECT: "REQUESTS FOR PROPOSALS"
POLICY
Revision No. 4
Adopted:
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
City of Palm Desert Recreational Facilities Corporation
(hereafter 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. The
gin in January, 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. In e.nua;y of every 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
No. 8: "Requests for Proposals"
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
Revision No. 4
Adopted:
2. Technical Evaluation. The Deputy City Treasurer shall be responsible for
doing a comparative technical evaluation of all RFPs that the City receives.
3. Investment -and Finance Committee Review. The Deputy City Treasurer
shall present the results of the technical evaluation, along with
recommendations, to the estment-and Finance 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. Updating 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.
2 of 2
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 9
SUBJECT: "BANK ACCOUNTS"
POLICY
Revision No. 4
Adopted:
The purpose of this document is to outline the policy and procedure on bank
accounts.
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 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 shall 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.
Certain 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
No. 9: "Bank Accounts"
Revision No. 4
Adopted:
1.1 City Council
1.1.1 The Mayor.
1.1.2 . Any other City Council Member.
1.2 City 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 Sports Management, Inc. (Desert Willow Golf Resort)
1.3.1 g. The General Manager.
1.3.2 Brian -Miller. The Director of Food and
Beverage
1.3.3 Miohaol 9-sgeed. 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 Robert Pfeil. 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
No. 9: "Bank Accounts"
PROCEDURE
Revision No. 4
Adopted:
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.
3 of 4
Palm Desert Treasury Policies and Procedures
No. 9: "Bank Accounts"
Revision No. 4
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. Closing 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 Treasurer 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 shall 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.
4 of 4
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 10
SUBJECT: "SECURITY AGREEMENTS"
POLICY
Revision No. 2
Adopted:
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
• 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 Credit -Risk
6-7-requir-es that
dit risk, ands 4osed in c governmental
I ategories are as fellows•
entity'sina�aia� ctste�e+�t�
1.1 "Category-V. Depesits that are-(-1) incured by the Federal
Deposit Ir c ran ; ) oo ateraIized with „rities
' ent, in the City's name.
Th a tr nsa nn h e the / errr a of nr /i• they e
rrrESc-crm-rocrE�9r,�-rr3-b��crrc-r9i4� c�rcc-vr-zre�l�-rfjs�n�rrcy-or'c
1.2 "Category 2". >=:ritiac held
en'c trust ,
in the City's-Ram. The a tr nsa tior.n hye hiivher degree of
r. re'/c-.-
1 of 3
Palm Desert Treasury Policies and Procedures
No. 10: "Security Agreements"
Revision No. 2
Adopted:
1.3 "Category-3". Deposits that are not incur.
These t✓an actions have the highest degree of credit r'c L
7.
1.0 Risk
Governmental Accounting Standards Board Statement No. 31,
"Accounting and Financial Reporting for Certain Investments 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:
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 ar-e 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, ar-e shall be authorized to act
as an agent of depository. Collateral may al -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 har, shall have an
undivided security interest in the pooled securities
cl smsu e# reflecting its
deposits as a percentage of the total deposits that are secured by the
pooled securities.
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Palm Desert Treasury Policies and Procedures
No. 10: "Security Agreements"
3.0 Perfecting a Security Interest
Revision No. 2
Adopted:
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 Interest
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 Insurance 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.
3 of 3
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 11
SUBJECT: "CHECKS"
POLICY
Revision No. 3
Adopted:
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
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.
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Palm Desert Treasury Policies and Procedures
No. 11: "Checks"
Revision No. 3
Adopted:
2.3 Embezzlement 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 preparation). Individuals, independent of one other, shall
therefore discharge the following duties:
3.1 Check Stock Custody. 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 Preparation. 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 Tempafe , if the
Mayor is not available, another City Council 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.
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Palm Desert Treasury Policies and Procedures
No. 11: "Checks"
Revision No. 3
Adopted:
3.7 Stop Payments. The Deputy City Treasurer shall have exclusive
responsibility for placing stop payments on outstanding checks.
3.8 Check Register. 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.
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No. 11: "Checks"
Revision No. 3
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.
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Palm Desert Treasury Policies and Procedures
No. 11: "Checks"
Revision No. 3
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 Council Members shall have check -
signing authority on the City's behalf. If the Mayor is not available,
then another City Council member may sign. A dual -signature
requirement shall be in effect at all times. Blank checks are never to be
signed.
Only the Mayor and the other City Council members
shall be allowed to use facsimile signatures. All checks in excess of
$100,000, however, shall require two original signatures. All other
government officials and employees are prohibited from having check -
signing authority.
Desert Willow checks that exceed $5,000.00 shall require the
countersignature of either the City Treasurer or the Assistant Finance
Director.
9.0 Mailing
Whenever possible, checks should always 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
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Palm Desert Treasury Policies and Procedures
No. 11: "Checks"
Revision No. 3
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.
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No. 11: "Checks"
Revision No. 3
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
Obsolete check stock shall always 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 public 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.)".
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Palm Desert Treasury Policies and Procedures
No. 11: "Checks"
Revision No. 3
Adopted:
2. Petty 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 (principal 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 Iced -unit secure place.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 12
SUBJECT: "STOP PAYMENTS"
POLICY
Revision No. 3
Adopted:
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 the-lnien
Ban -lief ifcrnia TEAM 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 all 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.
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Palm Desert Treasury Policies and Procedures
No. 12: "Stop Payments"
3.0 Retention of Stop Payment Documentation
Revision No. 3
Adopted:
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
(white) 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 U-i cn Bank's the bank's
Positive Pay Program.
2. Internet Log -On. The Deputy City Treasurer shall then log -on to the Dien
Bank Team 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 of 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.
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No. 12: "Stop Payments"
c. Enter the check number.
d. Enter the check amount.
e. Select "Lost", "Stolen", "Destroyed", or "Other".
f. Select "Submit".
Revision No. 3
Adopted:
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 (accounts 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.
3 of 3
City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 13
SUBJECT: "WIRE TRANSFERS"
POLICY
Revision No. 3
Adopted:
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 $5-million $10 million on non -repetitive wires (including Desert
Willow).
1.2 $5,00
Acoei nt) unlesv the City Treasurer has given-pfi-or approval,
The only exception to the foregoing shall be the wire transfer of tax-
exempt bond proceeds; Local Government Investment Fund ("LAIF")
monies; property taxes; and tax increment revenues, upon which there
shall be no limit.
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Palm Desert Treasury Policies and Procedures
No. 13: "Bank Wires"
2.0 Wire Deadlines
In order to assure same -day processing:
Revision No. 3
Adopted:
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
a.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
terms 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.
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Palm Desert Treasury Policies and Procedures
No. 13: "Bank Wires"
Revision No. 3
Adopted:
No broker or investment advisor shall be authorized to initiate or to
verify wire transfers on behalf 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 repetitive and
non -repetitive, must be verified by telephone callbacks.
No account numbers shall be released over the telephone, other than to
initiate or verify a wire transfer.
PROCEDURE
1. Repetitive 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
Un+en Bank the bank over the telephorie 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 pion Bunk with
the bank over the internet or over the telephone. The wire verifier shall
then sign the Wire Log as such.
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No. 13: "Bank Wires"
Revision No. 3
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
Un on Bank the bank over the telephone 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
Treasury Policies and Procedures
Revision No. 3
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, Toss, 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
Information Systems.
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Palm Desert Treasury Policies and Procedures
No. 14: "Access to Treasury Systems"
Revision No. 3
Adopted:
1.2 Security. The Deputy City Treasurer shall be responsible for
maintaining PIN numbers.
2.0 SymP vestnent-Pr-ogr-am 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 Level One. This user is authorized to edit, add, and
delete portfolios and files, and to change passwords.
2.1.2 Level Two. This user is authorized to edit, add, and
delete files.
2.1.3 Level 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 Level One.
2.2.1.1 The City Treasurer.
2.4.1.2 The Deputy City Treasurer.
2.2.2 Level Two.
2.2.2.1 None.
2.2.3 Level Three.
2.2.3.1 None.
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Palm Desert Treasury Policies and Procedures
No. 14: "Access to Treasury Systems"
Revision No. 3
Adopted:
2.3 Security. The Deputy City Treasurer shall be responsible for
maintaining, installing, and recommending changes to the o
investment reporting software program. The Deputy City
Treasurer shall be responsible for changing the system passwords
as needed.
3.0 Bank cf New -Fork 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 Union Bank TEAM 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 Security. Each authorized employee shall be responsible for
changing the system password as needed.
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Palm Desert Treasury Policies and Procedures
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5.0 Union Bank Positive Pay System
Revision No. 3
Adopted:
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 stied -in a
in a secure place in the Deputy City Treasurer's
office. reacure•, time City Treasurer, and they As&istant
etain exclusive possession of the keys for the
Iec ked-box .
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 15
SUBJECT: "INTEREST ALLOCATION"
POLICY
Revision No. 4
Adopted:
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 ("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.
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Palm Desert Treasury Policies and Procedures
No. 15: "Interest Allocation"
PROCEDURE
Revision No. 4
Adopted:
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. Interest Allocation Workbook. Retrieve the Interest 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. Pooled Fund Portfolios. 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
PR01) > Name (e.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 year)) > Book Value> Select All > Print > OK.
e. Fiscal Year -End Close of Pooled Fund Portfolios. 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
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Palm Desert Treasury Policies and Procedures
No. 15: "Interest Allocation"
Revision No. 4
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 110 into "RDA 110 (Active)" account.
g. Data Entry of June Audited Cash Balances (15th Period). 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 110-0000-101 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.
4) The "Active RDA" cash balance in the Statement of Cash
Transactions should be entered into the RDA 110 line item in the
"Cash Adjustment Worksheet."
h. Data Entry of Other Monthly Cash Balances. 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 12th Period.
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 for each month.
2) All 110-0000-101 sub -accounts should be added together and
entered.
3) The preliminary total in the Cash Adjustment Worksheet should
reconcile to the preliminary total in the Cash Work Sheet for that
month.
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4) The "Active RDA" cash balance in the Statement of Cash
Transactions should be entered into the RDA 110 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 Interest Allocation Workbook. Backup the "Interest
Allocation Workbook" by using the following Excel commands:
c:\backup\(target fiscal year) INTEREST ALLOCATION.
j•
Data Entry into Pooled 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 Pooled 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 should be entered into the Participant Fund.
2) RDA Cash Balance. In the case of RDA 110 (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 -versa).
k. Backup of Pooled Fund Portfolios. Backup the City and the RDA Pooled
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:\(personal
directory)\SYMPRO\DATA\BACKUP).
I. Report Production. The Deputy City Treasurer should then print the
City and the RDA Pooled Funds Reports for the City Treasurer. All
reports should be produced on both a cash basis ("CP") and an accrual
basis ("AP").
1) Portfolio Summary and Portfolio Details Reports. The SymPro
commands are: Fixed Income> Report> Portfolio Management>
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Portfolio (PM). These reports should be printed, by yeaf month, for
the target fiscal year (Exhibit "B").
m. Creation 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 -Investments" reports ("AP"), by
month, for the target fiscal year (see Exhibit "C"). Place a tick mark
next to each individual security that is listed, avoiding duplication.
2) Investment Position Reports. The SymPro commands are: Fixed
Income> Report> Reference> Investment Position Report (SP). Print
the "Investment Position Reports" for all individual securities, except
for State and Local Government Series; mutual funds; and local
agency investment pools (see Exhibit "D"). 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) Delete 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
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target fiscal year; LAIF (Housing); LAIF (Bond Proceeds); City loan to
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
Details -Investments" reports, on an accrual basis ("AP"), by 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 Portfolios. Backup the City and the
RDA Non -Restricted Funds Portfolios 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 directory)\SYMPRO\DATA\BACKUP).
1) Accrued Interest Report. Print the "Accrued Interest (Al) Report" for
the City and RDA Non -Restricted Funds Portfolios by using the
following SymPro commands: Fixed Income> Report> Interest>
Accrued Interest (Al). The reporting period should be from
7/01 /(target fiscal year) 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 Portfolio Details Reports. The SymPro
commands are: Fixed Income> Report> Portfolio Management>
Portfolio (PM). Print these reports, by month, for the target fiscal
year (see Exhibit "E").
2) Interest Earnings Reports. 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„) .
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Palm Desert Treasury Policies and Procedures
No. 15: "Interest Allocation"
Revision No. 4
Adopted:
3) Allocation Account Activity Reports. The SymPro commands are:
Earnings Allocation > Report > Allocation Account Activity (LP). Print
the Allocation Accounts Activity 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. Preparatory Work Prior to Interest Allocation. Prior to allocating interest
earnings, either the City Treasurer or the Assistant Finance Director
should take the following steps:
1) Accrual 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) Calculation of Accrued Interest Earnings. Review the "Interest
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 Pooled Fund Portfolios.
3) Calculation of Total Interest 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 all 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 Pooled Fund Portfo/ios. The time period would be from
7/1 /(target fiscal year) thorough 7/2/(subsequent fiscal year)).
q. Allocation of Total Interest Earnings. The Deputy City Treasurer should
then allocate total interest earnings to the accounting funds in the
edited Pooled Fund Portfolios. All reports should be on a cash basis
("CP"). The SymPro commands are:
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No. 15: "Interest Allocation"
Revision No. 4
Adopted:
1) Select the Earnings Allocation> Utility> Select Investment Types For
Allocation Pool 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 Allocate. Enter the beginning and ending dates for
each month of the target fiscal year for the appropriate edited
Pooled 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.
b) June Total Earnings. Total earnings for the month of June for
both the City and the RDA may be calculated as follows:
(1) Adjusted Annual Total Earnings. 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 Total Earnings. Add or subtract the difference
from the total earnings figure that SymPro has calculated for
the month of June.
(3) Amount to Allocate. Enter the adjusted total earnings figure
into "Amount to Allocation" for the month of June.
c) Imputed Interest Rate. SymPro will impute an interest rate for
each month of the target fiscal year, based upon the total
earnings that have been entered.
r. Report Production. 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) Allocation Account Activity Report. The SymPro commands are:
Earnings Allocation > Report> Allocation Account Activity. Print the
Allocation Account Activity Reports for a 12-month period, from the
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Palm Desert Treasury Policies and Procedures
No. 15: "Interest Allocation"
Revision No. 4
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. Allocation 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 Pooled Fund Portfolios. 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 allocating the management fee should
be the dollar amount of each accounting fund as a percentage of the
dollar amount of all accounting funds within the Pooled Fund Portfolios.
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 Interest Allocation. The City Treasurer or the Assistant
Finance Director shall then post the interest earned to all accounting
funds in the City and the RDA Pooled 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 Interest 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 FYEC)>Path (C:\SYMPRO\DATA\FYEC). This will archive
the City and the RDA portfolios for the target fiscal year.
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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:\(personal directory)\SYMPRO\BACKUP). This will
create an archive copy of the City and the RDA portfolios for the target
fiscal year.
e. Reindex Portfolio Files. The SymPro commands are: Fixed Income>
Utility> Reindex Files. Reindex to remove any deleted records before
proceeding with the close.
f. The Close. The SymPro commands are: Fixed Income> Utility>
Setup> Fiscal Year End Close. Non -amortizing discount instruments
should not be converted to amortizing 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.
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City of Palm Desert
Treasury Policies and Procedures
Revision No. 4
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;
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
personnel. 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 all information and
documents requested, as well as responding honestly to all inquiries.
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Palm Desert Treasury Policies and Procedures
No. 16: "Cash and investments Audit`
Revision No. 4
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.
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