http://tacua.org/docs/PFIA_Compliance_Checklist.pdf
Public Funds Investment Act Compliance Checklist
[Section 2256.005(a)(b)] – Policy items
Does your entity have a written investment policy approved by your governing body?
Present Not Present
Does your policy list the authorized investments for the investment of the entity’s funds?
Present Not Present
Does your policy state the maximum stated maturity of any individual investment and, for
pooled fund groups, the maximum dollar-weighted average maturity?
Present Not Present
Does your policy include methods to monitor the market price of investments and the
requirement that all transactions, excluding investment pools and mutual funds, be settled on
a delivery versus payment basis?
Present
Not Present
[Section 2256.005(d)] – Strategy Items
Has your entity adopted a written investment strategy for each fund or group of funds under
its control?
Present Not Present
Does the strategy describe the objectives for the fund using the priorities of suitability,
preservation and safety of principal, liquidity, marketability, diversification, and yield in that
order?
Present
Not Present
[Section 2256.005(e)] – Policy & Strategy Review
Does your governing body review the investment policy and investment strategy at least
annually?
Present Not Present
Does the governing body adopt a written instrument stating that it has reviewed the policy
and strategy?
Present Not Present
[Section 2256.005(f-i)] – Investment Officers
Has your entity designated one or more officers or employees as Investment Officers?
Present Not Present
Does your entity require its Investment Officer to disclose a personal business relationship
with a business organization offering to sell investments to the organization?
Present Not Present
Does your entity require its Investment Officer to disclose whether he/she is related within
the second degree by affinity or consanguinity to an individual seeking to sell an investment
to the entity?
Present
Not Present
[Section 2256.005(k-l)] – External Business Policy Certification
Has a written copy of the investment policy been presented to every business organization
offering to engage in an investment transaction with the entity, including investment pools,
banks, and investment management firms?
Present
Not Present
Has a written instrument from each business organization been received acknowledging that
the investment policy has been received and reviewed and that procedures and controls
have been implemented to preclude unauthorized transactions?
Present Not Present
Has a qualified representative as defined in Section 2256.002(10) of each business
organization signed the written instrument?
Present Not Present
[Section 2256.005(m-n)] – Compliance Audit
Is a compliance audit of management controls on investments and adherence to the entity’s
established investment policies performed in conjunction with the annual financial audit?
Present Not Present
For state agencies, is a compliance audit performed at least once every two years, and are
the results reported to the state auditor not later than January 1 of each even-numbered
year?
Present
Not Present
[Section 2256.007] – Investment Officer Training
Have the applicable training requirements been met?
Present Not Present
For state agencies and institutions of higher education, has each governing board member
and investment officer attended at least one training session within six months after taking
office or assuming duties?
Present
Not Present
Has each investment officer attended a training session at least once every two years and
received training from an independent source approved by the governing body?
Present Not Present
The following questionnaire is provided as a guide to the requirements of the Public Funds Investment Act (Chapter
2256, Government Code). This checklist does not imply that an Investment Policy or Investment Program is in
compliance with the PFIA. Each entity should review its own investment program with its attorneys and auditors to
determine its compliance with the Act.
Public Funds Investment Act Compliance Checklist
Has the investment officer presented a report to the governing body on changes to the Public
Funds Investment Act within six months after the end of each regular legislative session?
Present Not Present
[Section 2256.008] – Investment Officer Training (cont.)
For local governments, have the treasurer, the chief financial officer, and the investment
officer attended at least one training session containing at least 10 hours of instruction within
12 months after taking office or assuming duties?
Present
Not Present
Has each official attended a training session at least once every two years and received at
least 10 hours of instruction from an independent source approved by the governing body or
a designated investment committee?
Present
Not Present
Has an independent source of investment training been approved by the governing body or a
designated investment committee?
Present Not Present
This section does not apply to a district governed by Chapter 36 or 49 of the Water Code.
Present Not Present
1.
Investment officers of such districts should review the appropriate section of the Water
Code for applicable investment training requirements.
[Subchapter E, Chapter 36 and 49 of
the Water Code, as amended by HB 675, approved by the 77
th
Regular Session of the
Texas Legislature]
Investment Type Restrictions/Qualifications
Obligations Issued, Guaranteed, or Insured by the U.S. or its Agencies and Instrumentalities,
including letters of credit
[Section 2256.009(a)(1)(4)]
None
Obligations Issued, Guaranteed, or Insured by the State of Texas or its Agencies and
Instrumentalities
[Section 2256.009(a)(2)(4)]
None
Collateralized Mortgage Obligations
[Section 2256.009(a)(3) and (b)(1-4)]*
10 yr. or less stated final maturity date
Cannot be either an Interest-Only or Principal-Only CMO
Cannot be an inverse floater
Obligations of States (other than Texas), Agencies, Counties, Cities and Other Political
Subdivisions
[Section 2256.009(a)(5)]
Rated not less than A or its equivalent by at least one
nationally recognized investment rating firm
State of Israel Bonds
[Section 2256.009(a)(6)]
None
Certificates of Deposit
(Section 2256.010)
Issued by a depository institution that has its main office or
a branch office in Texas. Must be guaranteed or insured by
FDIC or National Credit Union Share Insurance Fund and
secured as described in the PFIA or other applicable law.
Issued by one or more federally insured depository
institutions, wherever located, provided that the funds are
invested through a depository institution that has its main
office or branch office in Texas and that the full amount of
the principal and accrued interest of each certificate of
deposit is insured by the U.S. or an instrumentality of the
U.S. The depository institution through which the entity’s
funds are invested shall receive an amount of deposits from
customers of other federally insured depository institutions
that is equal to or greater than the amount of funds
invested.
Repurchase Agreements
(Section 2256.011)
Must be fully collateralized as described in the PFIA
Must have a defined termination date
Securities purchased must be pledged to the entity, held in
the entity’s name, and deposited with the entity or with a
third party selected and approved by the entity
Placed through a primary dealer or a financial institution
doing business in Texas
Reverse agreements must not exceed 90 days; securities
held as collateral must not mature later than the
agreement’s expiration date
Securities Lending Program (Section 2256.0115) Must be collateralized at not less than 100%, including
accrued income
Public Funds Investment Act Compliance Checklist
Loans may be terminated at any time
Loans must be secured as described in the PFIA
Securities held as collateral must be pledged to the entity,
held in the entity’s name and deposited with the entity or
with a third party selected and approved by the entity
Placed through a primary dealer or a financial institution
doing business in Texas
Securities lending agreement may not have a term greater
than one year
Bankers’ Acceptances
(Section 2256.012)
270 day or less stated maturity from date of issuance
Accepted by a bank rated not less than A-1 or P-1 or an
equivalent rating by at least one nationally recognized rating
agency
Commercial Paper
(Section 2256.013)
270 day or less stated maturity from date of issuance
Rated not less than A-1 or P-1 or an equivalent by at least
two nationally recognized rating agencies,
or
;
Rated not less than A-1 or P-1 or an equivalent by one
nationally recognized rating agency plus fully secured by an
irrevocable letter of credit issued by a domestic bank
No-Load Money Market Mutual Fund
[Section 2256.014 (a) and (c)]
Registered with and regulated by the Securities and
Exchange Commission
Provide a prospectus and other information required by the
Securities Exchange Act of 1934 or the Investment
Company Act of 1940
Must have a dollar-weighted average stated maturity of 90
days or less
Must include in its objectives maintenance of a stable net
asset value of $1 per share
Investing entity may not own more than 10% of the fund’s
total assets
Mutual Fund
[Section2256.014 (b) and (c)]
Registered with the Securities and Exchange Commission
Must have an average weighted maturity of less than two
years
Can only invest in obligations approved by the Act
Rated not less than AAA or its equivalent by at least one
nationally recognized investment rating firm
Comply with information and reporting requirements for
investment pools as described in the Act
Amount limited to 15% of investing entity’s monthly average
fund balance, excluding bond proceeds, reserves, and debt
service funds.
Ineligible for investment of bond proceeds, reserves, and
debt service funds
Investing entity may not own more than 10% of the fund’s
total assets
Guaranteed Investment Contracts
(Section 2256.015)
Authorized for bond proceeds investment only
Must have a defined termination date
Must be secured by U.S. Government direct or agency
obligations approved by the Act in an amount equal to the
bond proceeds
Security must be pledged to the entity and deposited with
the entity or a third party
Term must be limited to five years from the date of bond
issuance, excluding reserves and debt service funds
Must comply with terms and conditions concerning eligibility
as an authorized investment as specified in Section
2256.015(c) of the Act
Investment Pools
[Section 2256.016]
Governing body must authorize investment in pool
Public Funds Investment Act Compliance Checklist
Can only invest in obligations approved by the Act
Provide an offering circular containing information required
by the Act
Provide investment transaction confirmations
Provide a monthly report containing information required by
the Act
Pool created to function as a money market mutual fund
must mark its portfolio to market daily and stabilize at a $1
net asset value.
Must have an advisory board as specified by the Act
Rated not less than AAA or an equivalent rating by at least
one nationally recognized rating service.
[Section 2256.020] – Higher Education
For institutions of higher education, if your investment policy has been amended to include
the additional investments permitted by the Act, do these investments meet the rating
requirements specified by the Act?
Present
Not Present
[Section 2256.0201] – Municipal Electric Utility – Hedging
For a municipality that owns a municipal electric utility, if your investment policy has been
amended to include hedging contracts as permitted by the Act, does the hedging transaction
comply with the regulations of the Commodity Futures Trading Commission and the
Securities and Exchange Commission?
Present
Not Present
[Section 2256.0205] – Decommissioning Trust
If funds are held in a decommissioning trust as defined in the Act, has your investment
policy been amended to authorize investment of the trust as permitted by Subtitle B, Title 9,
of the Property Code?
Present
Not Present
[Section 2256.023] – Investment Reports
Are investment reports submitted to the governing body at least quarterly?
Present Not Present
Do the reports contain the information required by the Act?
Present Not Present
Do all investment officers sign the reports?
Present Not Present
Do the reports include a statement of compliance of the investment portfolio with the Act and
the investment strategy?
Present Not Present
Does an independent auditor review the reports at least annually if your investments include
obligations other than money market mutual funds, investment pools, or depository bank
investment accounts?
Present
Not Present
[Section 2256.003(b)] – Investment Management Firm
If the entity has contracted with an investment management firm to provide for the
investment and management of its public funds or other funds under its control, is the
investment management firm registered either under the Investment Advisers Act of 1940 or
with the State Securities Board?
Present
Not Present
Is the contract with the investment management firm limited to a maximum term of two years
with renewal or extension subject to approval of the governing body by order, ordinance, or
resolution?
Present
Not Present
[Section 2256.025] – Qualified Brokers List
Has the governing body or designated investment committee adopted a list of qualified
brokers?
Present Not Present
Does the governing body or designated investment committee review, revise, and approve
the list at least annually?
Present Not Present
