Chapter 3.04
FISCAL PROVISIONS GENERALLY
Sections:
3.04.010 Finance director named fiscal agent for city.
3.04.030 Bond required of city employees handling city funds.
3.04.050 City funds, investment, collateralization and treasury management.
3.04.051 Governance of the Valdez permanent fund assets.
3.04.060 Set-offs prior to disbursements.
3.04.070 Interest on city accounts receivable.
3.04.010 Finance director named fiscal agent for city.
Pursuant to Section 5.6 of the Valdez City Charter, the fiscal agent for the city shall be designated as the finance director. The city manager may appoint an employee to serve as finance director and may require that before assuming office the finance director furnish bond in such sum and with such sureties as the manager shall require, conditioned on the faithful performance of the employee’s duties as finance director. (Amended during 12-08 supplement; prior code § 2-2.1)
3.04.020 Fiscal year.
The fiscal year of the city shall be the calendar year. (Prior code § 9-1)
3.04.030 Bond required of city employees handling city funds.
Before entering upon the duties of office, the finance director, and all other employees charged with accountability of city funds and resources, shall be bonded by individual or group bonds, for the faithful performance of their duties, and for proper application and payment of all money or property coming into their hands by virtue of their office, payable to the city in an amount of no less than fifty thousand dollars, with good and sufficient surety company bond, duly approved by the city attorney. (Amended during 12-08 supplement; Ord. 93-04 § 2: prior code § 9-3)
3.04.040 Independent audit.
The council shall provide for an independent annual audit of all city accounts, and may provide for such other audits as it deems necessary. Such audits shall be made by a certified public accountant, or firm staffed by such accountants, who have no personal interest, direct or indirect in the fiscal affairs of the city government or of any of its officers. The council may, without requiring competitive bidding, designate such accountant or firm for a period not to exceed two years. The designation of such auditor shall be made no later than thirty days before the beginning of the first fiscal year of the contract period. During the course of the audit, the auditor is employed by and directly responsible to the council, but may also correspond with and contact the mayor and members of the city administration. The mayor shall sign the contract with the designated auditors on behalf of the council. Such contract shall contain the following provisions as a minimum:
AGREEMENT
THIS AGREEMENT, entered into this ____ day of ________, 20__, by and between the City of Valdez, a municipal corporation organized and existing under the laws of the State of Alaska, hereinafter sometimes called the “City,” and _______ hereinafter called the “Auditor,”
WITNESSETH:
Whereas, the City requires a complete financial report on the total functions and activities of the municipality not later than three months after the close of the fiscal year; and
Whereas, it is desirable that only one financial report covering the same fiscal period be prepared; and
Whereas, it is desirable to standardize the reporting form so as to contain financial statements in accordance with generally accepted guidelines for municipal accounting; and
Whereas, it is desirable to standardize the statistical tables supporting financial statements accordingly; and
Whereas, the City Council of the City of Valdez has designated the firm of __________ as auditors for the period of ___ years commencing _______; now therefore
In consideration of the mutual promises and covenants herein set forth for the Examination of Financial Affairs of the City, the parties agree as follows:
I Auditor’s Responsibilities
The Auditor agrees to perform the various professional services required for the Audit Examination as follows:
1. Scope of Services
The Auditor shall complete an audit in accordance with the generally accepted auditing standards prescribed by the American Institute of Certified Public Accountants recognizing the recommendations of the National Committee on Governmental Accounting.
2. Definition of Audit Examination
The examination shall be made in accordance with generally accepted governmental auditing procedures as prescribed in the AICPA Industry Audit Guide—Audits of State and Local Governmental Units and as prescribed in the Government Finance Officers Association’s GAAFR.
3. Time for Completion of Audit
The audit report shall be transmitted to the City Council within one hundred eighty days following the close of the fiscal year under examination.
4. Extent of the Examination
The examination and report shall cover all functions, activities, funds, agencies, operations and accounts of the City.
5. Form of Report
The report shall be in the form outlined in Part Three, Section III, The Auditing Report, “Municipal Accounting and Auditing,” containing a letter of transmittal, a financial section, and a statistical section.
II City’s Responsibilities
It is mutually agreed between the parties that the Auditor is not responsible for the following:
1. Books of Account
The records and books of account forming the basis of the examination and report shall be maintained currently by the City.
2. Reconciliation of Balances
Records of bank accounts, accounts receivable, and similar such records shall be currently reconciled.
3. Confirmation of Balances
Requests for confirmation shall be prepared as required by the Auditor under his direction.
III Compensation
The fee is based on the amount of time required to perform the audit. However, the Auditor, after being notified of his selection, has surveyed the fiscal records and identified the principal problems, estimated the cost of the services to be not more than $ ____ unless unforeseen problems are encountered. Payment is to be due upon receipt of the reports and an invoice for said services.
(Ord. 07-09 § 1: Prop. 2, 10-2-01; Ord. 93-04 § 21; prior code § 9-35)
3.04.050 City funds, investment, collateralization and treasury management.
A. The city shall provide for maximum security and interest revenue possible, consistent with safety, for the investment of public funds.
B. The city manager and city treasurer shall be responsible for treasury management, including investment and reinvestment of all revenues of the city. All city funds shall be deposited in such financial institutions as the city manager or city treasurer have established as city depositories, and either shall have the authority to establish new accounts for checking, trust account or investment purposes in the name of the city. A report of all city monies and investments shall be submitted at least monthly to the city council.
C. All funds of the city, with the exception of the city permanent funds, may be invested in any of the following:
1. Obligations of, or obligations insured or guaranteed by, the United States or agencies or instrumentalities of the United States;
2. Obligations secured by reserves paid in by the United States or agencies or instrumentalities of the United States or obligations of corporations in which the United States is a shareholder or member;
3. Certificates of deposit issued by United States domestic banks which are members of the Federal Deposit Insurance Corporation for which a generally recognized secondary market exists or which are secured fully at all times as to the payment of principal and interest as set forth in subsection E of this section;
4. Corporate debt securities with a minimum rating of “AAA” or the equivalent by a nationally recognized rating organization;
5. Commercial paper bearing the highest rating of a nationally recognized rating organization;
6. Bankers acceptances drawn on and accepted by banks with a combined capital and surplus aggregating at least two hundred million dollars;
7. Shares of federally chartered savings and loan associations in Alaska which are fully secured at all times as to the payment of principal and interest as set forth in subsection E of this section;
8. Savings certificates issued by state-chartered savings and loan associations in Alaska which are fully secured at all times as to the payment of principal and interest as set forth in subsection E of this section;
9. Deposits with mutual savings banks in Alaska which are fully secured at all times as to the payment of principal and interest as set forth in subsection E of this section;
10. Fixed-term certificates of indebtedness of federally insured credit union in Alaska which are fully secured at all times as to the payment of principal and interest as set forth in subsection E of this section;
11. Repurchase agreements, the securities underlying the agreements being any of the items in subdivisions 1 through 6 of this subsection.
D. The city permanent fund shall be invested only in those investments authorized by Section 6.7(c) of the City Charter.
E. For those investments requiring collateralization pursuant to subsection C above, the investments shall be collateralized one hundred percent by any of the following:
1. Obligations of the United States or instrumentalities of the United States;
2. Corporate debt securities with a minimum rating of “AAA”, or the equivalent, by a nationally recognized rating organization;
3. Municipal or state debt securities with a minimum rating of “AA”, or the equivalent, by a nationally recognized rating organization;
4. Debt securities of the state;
5. Debt securities of the municipality of Anchorage, Fairbanks, or Valdez.
Alternatively, the investments may be collateralized by current mortgage loans in the state in the amount of two hundred percent. (Ord. 93-04 § 22; prior code § 9-37)
3.04.051 Governance of the Valdez permanent fund assets.
A. The city, the city council, the administration, the investment managers and the bank custodians shall exercise the judgment and care under the circumstances then prevailing which an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of large investments entrusted to it, not in regard to speculation, but in regard to the long term investment of funds considering the probable safety of capital as well as probable income.
B. In order to ensure sound investment strategy, the city council will take action in the following manner:
1. The city council shall establish written investment policies by formal resolution which shall be adhered to without exception;
2. The city council shall review the investment policies of the permanent fund at least once each year during the first quarter and shall, by formal resolution, re-adopt or modify said policies;
3. The city council shall establish, by formal resolution, a plan for the allocation of investment assets each year thus determining a percentage range of the amount of assets which shall be committed to various asset classes, which sets forth portfolio duration, and which establishes performance benchmarks, and which makes a statement of the percentage or amount of that year’s annual earnings that shall be retained to inflation-proof the fund principal;
4. The city council shall establish a permanent fund investment committee consisting of the city manager, three members of the city council, and up to three members of the community at large. Appointments to at-large seats shall be made by the city council each November. At-large seats will serve three-year staggered terms. The city finance director shall serve as liaison to the committee. The committee shall meet quarterly to determine general strategies and monitor results;
5. The city administration shall maintain on file the monthly reports which indicate transactions affecting the investment account, to include, at a minimum, transfers of cash into and out of the account, and interest or dividends received by the account;
6. The city administration shall order an objective performance evaluation of the investment program every year;
7. The city council shall retain one or more bank custodians to hold all investment cash and fixed income securities of the permanent fund; that the custodians shall render monthly reports to the administration regarding assets held at both book and market values, and individual transactions which have taken place; that the banks shall have adequate fidelity insurance, and that written contracts be entered into between the city and the custodian banks.
C. The city council shall retain one or more professional investment managers to design portfolios and invest funds in accordance with the written investment policies adopted by the city council. The investment managers shall be registered financial advisers with both the United States Securities and Exchange Commission and the state of Alaska, unless otherwise exempt from registration, and the investment managers shall agree to serve as a fiduciary to the city. Each investment manager shall carry professional liability insurance in an amount satisfactory to the city, and the terms of the investment relationship shall be memorialized in a written contract entered into between the city and the respective investment advisers. (Ord. 09-01 § 1: Ord. 06-04 § 1; Ord. 02-08 § 1; Ord. 01-07 § 1)
3.04.060 Set-offs prior to disbursements.
A. Disbursement of money to a person, firm or corporation will be made only after all the various receivable accounts of the general government and any municipal utility or enterprise have been reviewed for outstanding balances owed, and the disbursement will be reduced by setting off the amount of any delinquent indebtedness due the city from such person, firm or corporation. This requirement may be suspended by resolution of the Valdez city council during a declared emergency.
B. All contracts to which the city is a party which will or may involve the disbursement of city funds shall contain the following clause, or its substantial equivalent: “Disbursement of money by the City of Valdez hereunder shall be subject to set-off pursuant to the provisions of the Valdez City Code.” Such contracts include, but are not limited to, oral contracts, employment contracts, construction contracts, purchasing contracts and contracts of any municipal utility or enterprise, including customer’s deposits. Purchasing procedures generally shall be in accordance with Chapter 2.80. (Ord. 21-01 § 1; prior code § 9-38)
3.04.070 Interest on city accounts receivable.
A. With respect to any billing for accounts owed to the city for any reason, the city may designate a date beyond which the payment of the account shall be delinquent. The date of delinquency shall be stated on the billing, and the billing shall be mailed or otherwise transmitted to a party responsible for payment not less than fifteen days prior to the date of delinquency.
B. If payment of such billing is not received by the city by the close of business on the date of delinquency, then interest shall be charged at the rate of ten and one-half percent per annum from the date the amounts included in the billing originally became due until paid.
C. This section does not apply to interest on taxes and assessments, which is provided for in Chapters 3.12 through 3.32 of this code. (Prior code § 9-38.1)
3.04.080 Bond election.
Bonds which require ratification by a vote of the electorate shall be authorized by a resolution adopted by council which shall call for and set the date of election. Such resolution shall also specify the maximum principal amount of the bonds to be authorized, the purpose for which the proceeds of the bonds are to be used and the wording of the proposition to be submitted to the elector-ate. (Prior code § 9-39)