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X. MANAGEMENT AND INTERNAL CONTROLS <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 />Controls and managerial emphasis deemed most important that shall be employed where practical <br />are: <br />A. Control of collusion. <br />B. Separation of duties. <br />C. Separation of transaction authority from accounting and record keeping. <br />D. Custodian safekeeping receipts records management. <br />E. Avoidance of physical delivery securities. <br />F. Clear delegation of authority. <br />G. Documentation on investment bidding events. <br />H. Written confirmation of telephone transactions. <br />I. Reconcilement and comparisons of security receipts with the investment subsidiary records. <br />J. Compliance with investment policies. <br />K. Accurate and timely reports. <br />L. Validation of investment maturity decisions with supporting cash flow data. <br />M. Adequate training and development of Investment Officers. <br />N. Verification of all interest income and security purchase as sell computations. <br />O. Review of financial condition of all brokers, dealers and depository institutions. <br />P. Staying informed about market conditions, changes, and trends that require adjustments in <br />investment strategies. <br />COMPLIANCE AUDIT The City of La Porte shall perform, in conjunction with its annual <br />financial audit, a compliance audit of management controls on investments and adherence to the <br />entity's established investment policies. The audit shall include a formal review of the quarterly <br />investment reports by an independent auditor and the results reported to the governing body by <br />the independent auditor. Also, the governing body shall review its investment policy and <br />investment strategy not less than annually and adopt a written instrument by rule, order, <br />ordinance, or resolution stating that it has reviewed the investment policy and strategy, and <br />recorded any changes made to them. <br />12 <br />