Dear Fellow CMTA Members:
For nearly 60 years, the California Municipal Treasurers Association has advanced the mission to lead and promote the fiduciary responsibility and integrity of individuals responsible for public funds.
We do this by offering conferences, educational workshops, online training and certificate programs.
In light of recent news, we believe it is useful to remind you to review your internal control procedures and ensure proper segregation of duties. In addition, your agency should evaluate who has security access to the banking and financial systems. We also encourage you to take some time to review best practices for cash and investment activities:
- Employ third-party custodians to hold securities, not broker-dealers with whom the agency effects purchases and sales.
- Utilize a dual approval system (requiring two approvers) for all account openings.
- Establish multiple levels of authorization for wires and dual signers for wire transfers, including separation between wire transfer personnel and approvers (reporting to different department heads).
- Create a separation between accountants who create monthly reports and CAFRS, and those approving/providing oversight (and multiple approvers), as well as those who are effecting securities purchases and sales.
- Employ external and internal audit team/s separate from any personnel performing tasks 2-4.
- Separating the asset custody from the reporting since this is a primary responsibility for an elected treasurer (and state treasurer).
We recognize that many of you are working with a small staff and limited resources, so it may not be possible to implement all of these safeguards above to the best extent. We encourage your agency to utilize as many as you can to strengthen your agency’s internal controls and guard against the possibility of future fraud and criminal activity. In addition, you already have a great resource in many of your business relationships like your auditors or banking professional that we anticipate would be available to identify appropriate safeguards and processes.
Individuals responsible for public funds have diverse and challenging roles and we know the vast majority of us truly want to do a good job for the entities we serve. As events like this unfold, we cannot help but think about the importance of our mission.
We ask you to join us to embrace a culture where the proper education and continual training of public stewards is a priority. The few thousand dollars a year it may cost to train elected officials, finance, accounting and treasury staff is the most crucial investment any public agency can make.
We stand by as a resource to help anyone interested in implementing a suitable training program for your agency.
Margaret Moggia, CPA
2016 CMTA President