106-Investment Policy.pdf
CITY OF CUPERTINO
Independent Accountant’s Report on
Applying Agreed-Upon Procedures
on the City of Cupertino’s Investment Policy
As of March 31, 2010
City Council
Finance Director of the City of Cupertino
Cupertino, California
Independent Accountant’s Report on
Applying Agreed-Upon Procedures
on the City of Cupertino’s Investment Policy
We have performed the procedures enumerated below, which were agreed to by the management of the
City of Cupertino (the City), solely to assist the specified parties with respect to the compliance with the
City’s Investment Policy for the 9-month period ended March 31, 2010. The City’s management is
responsible for the City’s compliance with those requirements. This agreed-upon procedures engagement
was conducted in accordance with attestation standards established by the American Institute of Certified
Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties
specified in the report. Consequently, we make no representation regarding the sufficiency of the
procedures described below, either for the purpose for which this report has been requested or for any
other purpose.
The procedures performed and our findings are summarized as follows:
1.We obtained the City Council-approved Investment Policy dated December 16, 2008. We
compared the investments authorized by the Investment Policy with the investments listed in the
March 2010 Treasurer’s Investment Report to determine whether all investment types are allowed
by the City’s Investment Policy.
Finding:No exceptions were noted as a result of applying our procedures.
2.We compared the City’s Investment Policy with California Government Code Section 53601 to
determine the investments authorized by the City’s Investment Policy complied with the
provisions of the California Government Code Section 53601.
Finding: No exceptions were noted as a result of applying our procedures.
3.We compared the March 31, 2010 Treasurer’s Investment Report with California Government
Code Section 53646 to determine whether the March 2010 Treasurer’s Investment Report
complied with provisions of the California Government Code Section 53646.
Finding: Pursuant to California Government Code Section 53646 paragraph (b)(1), the
Investment Report should identify the source used to derive fair value of the City’s investments.
The City utilizes the fair value provided by Wells Fargo Bank Institutional Trust Services using
valuations from Interactive Data Pricing and Reference Data, Inc., but did not identify the source
on the Investment Report. Beginning with the June 2010 Investment Report, the City has
included the source of fair value determination in the report.
4.We verified that investment performance statistics and activity reports are generated on a regular
basis for presentation to the oversight (audit) committee, City Manager, and City Council, as
required by the City’s Investment Policy.
Finding: No exceptions were noted as a result of applying our procedures.
5.We inquired and documented our understanding of the City’s wire transfer procedures to ensure
compliance with the City’s Investment Policy, which requires all wire transfers initiated by
Treasury Section personnel to be reconfirmed by the appropriate financial institution to City non-
Treasury Section personnel.
Finding: No exceptions were noted as a result of applying our procedures.
6.We selected five investments sold/matured during the 9-month period ended March 31, 2010
from the City’s investment files and performed the following:
A.Agreed the sold/matured investment description to the corresponding Treasurer’s
Investment Report for the month in which the investments were sold/matured.
B.Agreed the amount, terms and interest rate to the Treasurer’s Investment Report.
Finding: No exceptions were noted as a result of applying our procedures.
7.We selected five investments purchased during the 9-month period ended March 31, 2010 from
the City’s investment files and performed the following:
A.Agreed the purchased investment description to the corresponding Treasurer’s
Investment Report for the month in which the investments were purchased.
B.Agreed the amount, terms and interest rate to the Treasurer’s Investment Report.
C.Verified that the investment type is authorized by the City’s Investment Policy.
Finding: No exceptions were noted as a result of applying our procedures.
8.We obtained the Treasurer’s custodian statement as of March 31, 2010 from Wells Fargo Bank,
the City’s third-party investment safekeeping custodian, and agreed the following information of
each investment listed in the March 31, 2010 custodian statement to the Treasurer’s Investment
Report as of March 31, 2010:
A.Investment description
B.Market value
C.Purchase date
D.Maturity date
E.Coupon rate
Finding: No exceptions were noted as a result of applying our procedures.
9.We selected 3 investments (excluding Treasury Securities, State of California Local Agency
Investment Fund, Non-negotiable Certificates of Deposit, Money Market Funds) from the
March 31, 2010 Wells Fargo Bank custodian statement and agreed the reported ratings to
Moody’s Investors Service rating information.
Finding: No exceptions were noted as a result of applying our procedures.
We were not engaged to, and did not, conduct an examination, the objective of which would be the
expression of an opinion on compliance with the City’s investment policy. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
This report is intended solely for the information and use of the City Council and City management and is
not intended to be and should not be used by anyone other than those specified parties.
Certified Public Accountants
Walnut Creek, California
November 17, 2010