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San Leandro Investment Policy Statement Page 7 of 12 Internal Control and Review The Finance Director will establish an annual review process to be conducted by an independent external auditor. The review will provide internal control by assuring compliance with established City policies and procedures. Performance Standards The portfolio will be structured to obtain a rate of return that reflects the prevailing and historical level of interest rates and the City's expected cash flow needs. The City employs a passive investment strategy that focuses on safety and liquidity. Given this strategy, the bases used by the Finance Director for benchmark purposes will be the yield on the following safe and liquid investment vehicles: • The State of California Local Agency Investment Fund (LATE) • The two-year U.S. Treasury Bill • The five-year U.S. Treasury Note Reporting This policy will be reviewed annually with the City Council to ensure compliance with the objectives of safety, liquidity and yield and adherence with applicable laws. The City Council Finance Committee will review and approve all changes to this policy statement prior to submittal to the full City Council for approval. California Government Code Section 53646 requires the Finance Director to submit a quarterly report on the status of the City's investment portfolio to the City Manager and the City Council within 30 days after the end of the calendar quarter. The report will provide detailed information regarding the type of investments, the amount invested with various institutions, purchase and maturity dates, and interest yield on all investments. The report shall state if the City's investments are in compliance with this policy and if the City will be able to meet its cash obligations during the next six-month period. The Finance Director, on occasion, will submit monthly reports on the portfolio's status to the City Manager and City Council that are consistent with the requirements of the State Code.