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working in conjunction to defraud their employer. <br />2. Separation of transaction authority from accounting and record keeping — By <br />separating the person who authorizes or performs the transaction from the people <br />who record or otherwise account for the transaction, a separation of duties is <br />achieved. <br />3. Custodial safekeeping — All securities, with the exception of certificates of deposit, <br />shall be held with a third -party custodian; and all securities purchased by, and all <br />collateral obtained by the City should be properly designated as an asset of the <br />City. The securities must be held in an account separate and apart from the <br />assets of the financial institution. No withdrawal of such securities, in whole or in <br />part, shall be made from safekeeping except by the Finance Director as authorized <br />herein, or by their respective designee. <br />4. Certificates of Deposit issued by a local bank or savings and loan association may <br />be held in safekeeping at that institution. The institution shall issue a copy of the <br />certificate of deposit, a safekeeping receipt, or some other confirmation of the <br />purchase that is satisfactory to the Finance Director. This will be kept on file in the <br />Finance Department and will indicate the amount, interest rate, issue date and <br />maturity date of the certificate of deposit. <br />5. Avoidance of physical delivery securities — Book entry securities are much easier <br />to transfer and account for since actual delivery is never taken. Physical delivery <br />securities must be properly safeguarded against loss or destruction. The potential <br />for fraud and loss increases with physically delivered securities. <br />6. Clear delegation of authority to subordinate staff members — Subordinate staff <br />members must have a clear understanding of their authority and responsibilities to <br />avoid improper actions. <br />7. Written confirmation of telephone transactions for investments and wire <br />transactions — Due to the potential for error and improprieties arising from <br />telephone transactions, all telephone transactions should be supported by written <br />communications and approved by appropriate personnel. <br />VIII. CONTINUING EDUCATION <br />The Finance Director shall annually complete eight (8) hours of continuing education in <br />subjects or courses of study related to investment practices and products. <br />IX. REPORTING <br />The Finance Director shall provide a quarterly investment report to the City Manager. The <br />report shall list investments by fund and type and include the book value, income earned <br />and market value as of the report date. <br />8 67 <br />