Page 63 - City of Bedford FY20 Approved Budget

dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net
capital rule). All investment providers, financial institutions and broker/dealers who desire to
become qualified for investment transactions must supply the following as appropriate:

a. Audited financial statements
b. Proof of Financial Industry Regulatory Authority (FINRA) certification
c. Proof of state registration
d. Completed broker/dealer questionnaire

The Investment Committee shall review, revise, and adopt a list of authorized broker/dealers at
least annually.

2. Internal Controls. The Director of Finance is responsible for establishing and maintaining
an internal control structure designed to ensure that the assets of BEDFORD are protected from
loss, theft or misuse. The internal control structure shall be designed to provide reasonable
assurance that these objectives are met. The concept of reasonable assurance recognizes that (1)
the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of
costs and benefits require estimates and judgments by management.

Accordingly, within the scope of the annual audit, the Director of Finance shall establish a
process for an independent review by an external auditor to assure compliance with policies and
procedures. The results of this compliance audit must be reported annually to the City Council.
The internal controls shall address the following points:

a. Control of collusion
b. Separation of transaction authority from accounting and record keeping
c. Custodial safekeeping
d. Avoidance of physical delivery securities
e. Clear delegation of authority to subordinate staff members
f. Written confirmation of transactions for investments and wire transfers

3. Delivery Versus Payment. All trades, where applicable, will be executed by delivery versus
payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to
the release of funds. Securities will be held by a third-party safekeeping agent as evidenced by
safekeeping receipts.

V. Suitable and Authorized Investments

1. Investment Types. The following investments will be permitted by this Policy as defined by
state and local law where applicable. BEDFORD is not required to liquidate investments that
were authorized at the time of purchase.

a. U.S. government obligations, U.S. government agency obligations, and U.S.
government instrumentality obligations (including obligations of the FDIC and the
Federal Home Loan Banks), which have a liquid market with a readily determinable
market value, and exclude those prohibited by the PFIA.

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