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<br />- <br /> <br />e <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 <br />the procedural steps for gaining access to the collateral should the City of La Porte determine that <br />the City's funds are in jeopardy. The safekeeping institution, or Trustee, shall be the Federal <br />Reserve Bank or an institution not affiliated with the firm pledging the collateral. The <br />safekeeping agreement shall include the signatures of the City of La Porte, the firm pledging the <br />collateral, 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 />DELNERY VERSUS PAYMENT TFeasary Bills, Nates &. BaRes eRe Ga'leflHReRt f...geRsies' <br />see1:ll'ities All investment transactions, with the exception of local government investment pools <br />and mutual fund transactions, shall be purchased using the delivery versus payment method. That <br />is, funds shall not be wired or paid until verification has been made that the collateral was <br />received by the Trustee. The collateral shall be held in the name of the City or held on behalf of <br />the City. The Trustee's records shall assure the notation of the City's ownership of or explicit <br />claim on the securities. The original copy of all safekeeping receipts shall be delivered to the <br />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 />Controls and managerial emphasis deemed most important that shall be employed where practical <br />are: <br /> <br />A. Control of collusion. <br /> <br />B. Separation of duties. <br /> <br />C. Separation of transaction authority from accounting and record keeping. <br /> <br />D. Custodian safekeeping receipts records management. <br /> <br />12 <br />