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<br />e <br /> <br />e <br /> <br />IX. SAlFEKEEP][NG AN]) CUSTODY <br /> <br />INSURANCE OR COLLATERAL All bank deposits, certificates of deposit, and repurchase <br />agreements shall be secured by pledged collateral. Bank deposits and certificates of deposit shall <br />be collateralized with a market value equal to no less than 102% of the deposits plus accrued <br />interest less than an amount insured by FDIC. Repurchase agreements shall be monitored daily. <br />Evidence of the pledged collateral shall be maintained by the Director of Finance or a third party <br />financial institution. Repurchase agreements shall be documented by specific agreement noting <br />the collateral pledged in each agreement. Collateral shall be reviewed monthly to assure the <br />market value of the securities pledged equals or exceeds the related bank balances. <br /> <br />SAFEKEEPING AGREEMENT All safekeeping arrangements shall be in accordance with a <br />Safekeeping Agreement approved by the Fiscal Affairs Committee which clearly defines the <br />procedural steps for gaining access to the collateral should the City of La Porte determine that the <br />City's funds are in jeopardy. The safekeeping institution, or Trustee, shall be the Federal Reserve <br />Bank or an institution not affiliated with the firm pledging the collateral. The safekeeping <br />agreement shall include the signatures of the City of La Porte, the firm pledging the collateral, <br />and the Trustee. <br /> <br />COLLATERAL DEFINED The City of La Porte shall accept only the following securities as <br />collateral: <br /> <br />A. FDIC insurance coverage; <br /> <br />B. United States Treasuries and Agencies; <br /> <br />C. Texas State, City, County, School or Road District bonds with a remaining maturity of ten <br />(10) years or less with rating from a nationally recognized investment rating firm and having <br />received a rating of not less than A or its equivalent; <br /> <br />D. Other securities as approved by the Fiscal Affairs Committee. <br /> <br />SUBJECT TO AUDIT All collateral shall be subject to inspection and audit by the Director of <br />Finance or the City's independent auditors. <br /> <br />DELIVERY VERSUS PAYMENT All investment transactions, with the exception of local <br />government investment pools and mutual fund transactions, shall be purchased using the delivery <br />versus payment method. That is, funds shall not be wired or paid until verification has been made <br />that the collateral was received by the Trustee. The collateral shall be held in the name of the <br />City or held on behalf of the City. The Trustee's records shall assure the notation of the City's <br />ownership of or explicit claim on the securities. The original copy of all safekeeping receipts shall <br />be, delivered to the City. <br /> <br />X. MANAGEMENT AND INTERNAL CONTROLS <br /> <br />The Director of Finance shall establish a system of internal controls, which shall be reviewed by <br />an independent auditor. The controls shall be designed to prevent losses of public funds arising <br />from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial <br />markets, or imprudent actions by employees or Investment Officers of the City. <br /> <br />12 <br />