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VII. Diversification Limits — Chapter 281.415 (8) Florida Statutes states that the investment <br />policy shall provide for appropriate diversification of the investment portfolio. It is the <br />policy of the City to diversify its investment portfolios. Assets held in the common cash <br />fund and other investment funds shall be diversified to eliminate the risk of loss resulting <br />from overconcentration of assets in a specific maturity, a specific issuer, or a specific class <br />of securities. Diversification strategies shall be determined and revised periodically. The <br />portfolio shall be staggered in a way that avoids undue concentration of assets in the <br />specific maturity, issuer, instrument, dealer, or bank or investment sector. Maturities shall <br />be selected which provide for stability of income and reasonable liquidity. <br />For cash management funds: <br />- Liquidity shall be assured through practices that ensure that the City's next disbursement <br />date and payroll date are covered through maturing investments or marketable U.S. <br />Treasury bills. <br />Positions in securities having potential default risk (e.g., commercial paper) shall be <br />limited in size so that in the event of a default, the portfolio's annual investment <br />income will exceed a loss on a single issuer's securities. <br />- Risks of market price volatility shall be controlled through maturity diversification such <br />that aggregate price losses on instruments with maturities exceeding one year shall <br />not be greater than coupon interest and investment income received from the balance <br />of the portfolio. If market conditions persist that cause this situation to occur, the <br />manager will structure the portfolio more defensively to avoid a loss. <br />VIII.Internal Controls <br />Management responsibility for the investment program is hereby delegated to the Director <br />of Finance who shall establish a system of internal controls, consistent with this investment <br />policy, which shall be documented in writing. The controls shall be designed to prevent <br />losses of public funds arising from fraud, employee error, and misrepresentation by third <br />parties, unanticipated changes in financial markets, or imprudent actions by employees and <br />officers of the City. The internal controls structure shall be designed to provide reasonable <br />assurance that these objectives are met. The concept of reasonable assurance recognizes <br />that the cost of a control should not exceed the benefits likely to be derived and that the <br />valuation of costs and benefits requires estimates and judgment by management. <br />The internal control structure shall address the following points: <br />- Control of collusion <br />- Separation of transaction authority from accounting and recordkeeping <br />