Treasury and Investment Management

Investing Policy and Governance Best Practices

• Best Practices

  Invest­ment Policy

  GFOA rec­om­mends that all gov­ern­ments estab­lish and have its gov­ern­ing board adopt an invest­ment policy.

• Best Practices

  Invest­ment Pro­gram for Pub­lic Funds

• Best Practices

  Diver­si­fy­ing the Invest­ment Portfolio

  GFOA rec­om­mends that state and local gov­ern­ments prop­er­ly man­age the risk in their port­fo­lios to achieve their invest­ment objec­tives and com­ply with their invest­ment constraints.

• Best Practices

  Col­lat­er­al­iz­ing Pub­lic Deposits

  GFOA rec­om­mends the use of a writ­ten agree­ment with pledg­ing require­ments as pro­tec­tion for state or local gov­ern­men­t’s deposits. 

• Best Practices

  Gov­ern­ment Rela­tion­ships with Secu­ri­ties Dealers

  Gov­ern­ment investors should fol­low GFOA rec­om­men­da­tions per­tain­ing to select­ing secu­ri­ties deal­ers for their approved ven­dor list, man­ag­ing the rela­tion­ships with the broker/​dealers, and con­duct­ing invest­ment trans­ac­tions with them. 

• Best Practices

  Invest­ment and Man­age­ment of Bond Proceeds

  GFOA rec­om­mends that gov­ern­ments have an Invest­ment Pol­i­cy which takes into con­sid­er­a­tion all inher­ent risks, and which also includes spe­cif­ic poli­cies for the invest­ment of bond pro­ceeds to ensure that legal and reg­u­la­to­ry require­ments are met, fair mar­ket val­ue bids are received, and issuer objec­tives for var­i­ous uses of pro­ceeds are attained. This best prac­tice is focused on the invest­ment of bond pro­ceeds. For best prac­tices regard­ing a com­pre­hen­sive Invest­ment Pol­i­cy see the ref­er­ence list of GFOA best prac­tices below.

Measuring Investment Performance Best Practices

• Best Practices

  Mark-to-Mar­ket Report­ing for Pub­lic Invest­ment Portfolios

  GFOA rec­om­mends that state and local gov­ern­ment offi­cials respon­si­ble for invest­ment port­fo­lio report­ing deter­mine the mar­ket val­ue of all secu­ri­ties in the port­fo­lio on at least a quar­ter­ly basis. These val­ues should be obtained from a rep­utable and inde­pen­dent source and dis­closed to the gov­ern­ing body or oth­er over­sight body at least quar­ter­ly in a writ­ten report.

• Best Practices

  Mon­i­tor­ing the Val­ue of Secu­ri­ties in Repur­chase Agreements

• Best Practices

  Man­ag­ing Mar­ket Risk in Invest­ment Portfolios

  Gov­ern­ment investors should fol­low GFOA rec­om­men­da­tions with respect to man­ag­ing mar­ket risk. 

• Best Practices

  Using Bench­marks to Assess Port­fo­lio Risk and Return

Investment Services Best Practices

• Best Practices

  Selec­tion and Review of Invest­ment Advisors

• Best Practices

  Using Safe­keep­ing and Third-Par­ty Cus­to­di­an Services

Types of Investments

• Best Practices

  Local Gov­ern­ment Invest­ment Pools

• Best Practices

  Estab­lish­ing a Pol­i­cy for Repur­chase Agreements

Advisories

• Advisories

  Ensur­ing the Safe­ty of Reverse Repur­chase Agreements

• Advisories

  Using Com­mer­cial Paper in Invest­ment Portfolios

• Advisories

  Use of Deriv­a­tives and Struc­tured Invest­ments by State and Local Gov­ern­ments for Non-Pen­sion Fund Invest­ment Portfolios

• Advisories

  Secu­ri­ties Lend­ing Pro­grams for Non-Pen­sion Fund Portfolios

• Best Practices

  Receiv­ables and Han­dling Receipts in the Trea­sury Office

  The GFOA rec­om­mends that gov­ern­ments should have writ­ten poli­cies and pro­ce­dures for invoic­ing and col­lec­tion of revenues.

• Best Practices

  Pay­ments Made by Governments

  The GFOA rec­om­mends that gov­ern­ments have poli­cies and pro­ce­dures and inter­nal con­trols in place for each pay­ment method and use elec­tron­ic means to make pay­ments as often as possible.

• Best Practices

  Using Cash Fore­casts for Trea­sury and Oper­a­tions Liquidity

  GFOA rec­om­mends that gov­ern­ments per­form ongo­ing cash fore­cast­ing to ensure that they have suf­fi­cient cash liq­uid­i­ty to meet dis­burse­ment require­ments and lim­it idle cash.

Advisories

• Advisories

  Abstain from Using and Invest­ing in Cryp­tocur­ren­cy for Gov­ern­ment Operations

  GFOA advis­es gov­ern­ments to abstain from accept­ing cryp­tocur­ren­cy for receiv­ables, using cryp­tocur­ren­cy for payables, and invest­ing in these products.

• Best Practices

  Bank Account Fraud Prevention

  GFOA rec­om­mends that gov­ern­ments con­sid­er var­i­ous steps to pro­tect them­selves against bank account fraud. 

• Best Practices

  Pay­ments Made by Governments

  The GFOA rec­om­mends that gov­ern­ments have poli­cies and pro­ce­dures and inter­nal con­trols in place for each pay­ment method and use elec­tron­ic means to make pay­ments as often as possible.

Revenue Collection Best Practices

• Best Practices

  Use of Lock­box Services

  GFOA rec­om­mends that gov­ern­ments eval­u­ate the ben­e­fits and costs of using lock­box ser­vices to deter­mine if advan­tages can be gained in the areas of accu­ra­cy, cash flow, inter­nal con­trols, and efficiency. 

• Best Practices

  Accept­ing Pay­ment Cards and Selec­tion of Pay­ment Card Ser­vice Providers

  GFOA rec­om­mends that gov­ern­ments eval­u­ate whether accept­ing pay­ment cards as a pay­ment option is rea­son­able and appro­pri­ate for the type of charges or fees being paid, and the lev­el of cus­tomer ser­vice desired.

• Best Practices

  Pay­ment Con­sol­i­da­tion Services

  GFOA rec­om­mends that gov­ern­ments con­sid­er the use of a pay­ment con­sol­i­da­tion ser­vice to improve the effi­cien­cy of their col­lec­tion process. A com­pet­i­tive process can be used to select a pay­ment con­sol­i­da­tion ser­vice provider.

• Best Practices

  Using Remote Deposit Capture

  GFOA rec­om­mends that gov­ern­ments con­sid­er remote deposit cap­ture to improve effi­cien­cy and effec­tive­ness of accounts receiv­able processing.

Procurement of Services Best Practices

• Best Practices

  Pro­cure­ment of Finan­cial Services

  GFOA rec­om­mends that gov­ern­ments review their finan­cial ser­vices con­tracts every five years and use a com­pet­i­tive process for the pro­cure­ment of finan­cial services.

• Best Practices

  Due Dili­gence on Bank and Trea­sury Man­age­ment Providers

  The Gov­ern­ment Finance Offi­cers Asso­ci­a­tion (GFOA) rec­om­mends that gov­ern­ment trea­sury prac­ti­tion­ers review the reg­u­lat­ed banks, reg­u­lat­ed and non-reg­u­lat­ed bank part­ners, and non-bank com­pa­nies that process, val­i­date, trans­fer, dis­burse and ​‘hold on deposit’ cash and near cash assets and apply pru­dent due dili­gence through­out the life of the relationship.

• Best Practices

  Using Pur­chas­ing Cards to Stream­line the Pur­chas­ing Process

  GFOA rec­om­mends that gov­ern­ments imple­ment a pur­chas­ing card pro­gram to improve the effi­cien­cy and effec­tive­ness of their pur­chas­ing processes. 

• Best Practices

  Rev­enue Con­trol Policy

  GFOA rec­om­mends gov­ern­ments estab­lish a rev­enue con­trol and man­age­ment pol­i­cy and review it on an annu­al basis. This pol­i­cy should be cus­tomized for the size and resources of the government.

• Best Practices

  Using Mutu­al Funds for Cash Man­age­ment Purposes

  The GFOA rec­om­mends that state and local gov­ern­ments restrict their use of mutu­al funds for cash man­age­ment pur­pos­es exclu­sive­ly to: (1) mon­ey mar­ket mutu­al funds that are invest­ed in Trea­sury, fed­er­al gov­ern­ment agency, or first tier cat­e­gories and pos­sess the high­est rat­ings avail­able from at least one nation­al­ly-rec­og­nized rat­ings agency and (2) short-term bond funds that receive the high­est cred­it qual­i­ty rat­ings and the low­est risk rat­ings available.

• Best Practices

  Receiv­ables and Han­dling Receipts in the Trea­sury Office

  The GFOA rec­om­mends that gov­ern­ments should have writ­ten poli­cies and pro­ce­dures for invoic­ing and col­lec­tion of revenues.

• Best Practices

  Using Cash Fore­casts for Trea­sury and Oper­a­tions Liquidity

  GFOA rec­om­mends that gov­ern­ments per­form ongo­ing cash fore­cast­ing to ensure that they have suf­fi­cient cash liq­uid­i­ty to meet dis­burse­ment require­ments and lim­it idle cash.

Advisories

• Advisories

  Elec­tron­ic Ven­dor Fraud

  GFOA rec­om­mends that gov­ern­ments put safe­guards and inter­nal con­trols in place to mit­i­gate the risk of fraud­u­lent ven­dor pay­ment activity.