CITY OF ALAMEDA
INDEPENDENT ACCOUNTANT’S REPORT ON
APPLYING AGREED UPON PROCEDURES FOR
TESTING THE CITY’S COMPLIANCE WITH
CERTAIN PROVISIONS OF THE CITY’S
2023 INVESTMENT POLICY
FOR THE YEAR ENDED JUNE 30, 2023
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INDEPENDENT ACCOUNTANT’S REPORT ON
APPLYING AGREED UPON PROCEDURES FOR
TESTING THE CITY’S COMPLIANCE WITH
CERTAIN PROVISIONS OF THE CITY’S
2023 INVESTMENT POLICY
FOR THE YEAR ENDED JUNE 30, 2023
Honorable Mayor and Members
of the City Council
City of Alameda, California
We have performed the procedures enumerated below on testing the City of Alameda’s compliance with certain provisions of the City’s 2023 Investment Policy as of June 30, 2023. The City’s management is responsible for the City’s compliance with the City’s 2023 Investment Policy.
The City of Alameda has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of testing the City’s comp liance with certain provisions of the City’s 2023 Investment Policy. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for de termining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained and read the City’s 2022 Investment Policy adopted on June 21, 2022.
2. Section V. Internal Controls of the Investment Policy and Section VI. Investment Procedures and Delegation of Authority require the City to have a written “system of internal controls” related to the investment function. We obtained the written procedures for fiscal year 2023, but we understand they were not written until October 2022. However, we did note that the prior written procedures were dated November 30, 2021.
3. We tested the City’s compliance with the following provisions of the Investment Policy:
VI. Investment Procedures and Delegation of Authority
We tested whether the City’s investment managers are registered under the Investment Advisers Act of 1940 on May 2, 2022 and February 16, 2024 and noted the following:
• Chandler Asset Management (CRD # 107287 /SEC#:801-44378) is registered as an investment advisor with a regist ration status of “Approved” per https://adviserinfo.sec.gov/firm/summary/107287
• PFM Fund Distributors, Inc. (dba PFM Asset Management) (CRD#: 114474/SEC#: 8- 53496) is registered as a brokerage firm, wi th a registration status of “Approved” per https://brokercheck.finra.org/firm/summary/114474
VII. Safekeeping and Custody
We obtained the June 30, 2023 US Bank third pa rty custodian statement and reconciled it to the June 2023 Quarterly Investment Report to determ ine that all securities included in the Quarterly Investment Report were held by the City’s thir d-party custodian without exception. We noted that the only investments in the Quarterly Inve stment Report that were not included in the custodian statement were the Local Agency In vestment Fund (LAIF) account, Bank of Marin Certificate of Deposit account, and Beacon Business Bank Certificate of Deposit Account.
IX. Authorized Investments, Maximum Maturities and Investment Accounts
We tested the composition of the City’s June 2023 Monthly Investment Report for compliance with the types of securities held and the ma ximum holdings, maximum per issuer and maximum maturity limitations without exception.
We selected 12 investment purchase transactions from July 1, 2022 to June 30, 2023 out of 106 total purchases for fiscal year 2023 and tested for the following without exception:
• Authorization
• Compliance with bid requirements, as applicable
• Investment rating at time of purchase to Moody’s or S&P and for compliance with Investment Policy minimum ratin g requirement, as applicable • Addition to the safekeeping statement in the month purchased • Addition to the Quarterly Investment Report in the quarter purchased
X. Due Diligence: Adding Investment Po ols/ Mutual Funds/ Money Market Funds
The City did not add any of the account types li sted during the year ended June 30, 2023. The City had two existing accounts at June 30, 2023 , therefore, we selected one account (Local Agency Investment Fund (LAIF)) for testing of th e last time the City obtained the information from the pool. The Investment Po licy requires that 12 points of information be obtained “on a regular basis”. City staff did obtain the informat ion from the LAIF pool on October 2, 2023 as the LAIF Info Digest is issued on 9/30/2023. The information was previously obtained in December 2022.
XII. Collateralization
The City did not have any time deposits in savi ngs and loans at June 30 , 2023 and did not have non-negotiable certificates of deposit in exces s of $250,000 outstanding at June 30, 2023, therefore we did not select 10% of such invest ments to trace to collateralization documentation and test whether in compliance with the coll ateralization requirements of the California Government Code and the Investment Policy.
4. We did not test for compliance with the following provisions of the Investment Policy:
I. Statement of Purpose and Adoption of Policy
II. Scope
III. Objectives and Performance Standards
IV. Prudence and Risk Tolerance
VIII. Authorized Banks and Financial Securities Dealers and Institutions (the City contracts with an outside investment manager) XI. Diversification
XIII. Ethics and Conflicts of Interest
XIV. Investment Advisory Committee / Reporting Requirements Attachment A. Glossary
We were engaged by the City to perform this ag reed-upon procedures enga gement and conducted our engagement in accordance with atte station standards established by th e American Institute of Certified Public Accountants. We were not engaged to and di d not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the City’s compliance with certain provisions of the City’s 2023 Investment Policy for the year ended June 30, 2023.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City of Alameda and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
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This report is intended solely for the information a nd use of management and th e City Council and is not intended to be and should not be used by anyone other than those specified parties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record.
Pleasant Hill, California
March 16, 2024
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