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(n) Except as provided by Subsection (o), at least once every two years a state agency shall arrange for a
<br />compliance audit of management controls on investments and adherence to the agency's established investment policies.
<br />The compliance audit shall be performed by the agency's internal auditor or by a private auditor employed in the manner
<br />provided by Section 321.020. Not later than January 1 of each even-numbered year a state agency shall report the results
<br />of the most recent audit performed under this subsection to the state auditor. Subject to a risk assessment and to the
<br />legislative audit committee's approval of including a review by the state auditor in the audit plan under Section 321.013,
<br />the state auditor may review information provided under this section. If review by the state auditor is approved by the
<br />legislative audit committee, the state auditor may, based on its review, require a state agency to also report to the state
<br />auditor other information the state auditor determines necessary to assess compliance with laws and policies applicable to
<br />state agency investments. A report under this subsection shall be prepared in a manner the state auditor prescribes.
<br />(o) The audit requirements of Subsection (n) do not apply to assets of a state agency that are invested by the
<br />comptroller under Section 404.024.
<br />Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 685, Sec. 1, eff. Sept. 1,
<br />1997; Acts 1997, 75th Leg., ch. 1421, Sec. 3, eff. Sept. 1,1997; Acts 1999, 76th Leg., ch. 1454, Sec. 4, eff. Sept. 1,
<br />1999; Acts 2003, 78th Leg., ch. 785, Sec. 41, eff. Sept. 1, 2003.
<br />Sec. 2256.006. STANDARD OF CARE. (a) Investments shall be made with judgment and care, under
<br />prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the
<br />person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable
<br />income to be derived. Investment of funds shall be governed by the following investment obj ectives, in order of priority:
<br />(1) preservation and safety of principal;
<br />(2) liquidity; and
<br />(3) yield.
<br />(b) In determining whether an investment officer has exercised prudence with respect to an investment decision,
<br />the determination shall be made taking into consideration:
<br />(1) the investment of all funds, or funds under the entity's control, over which the officer had
<br />responsibility rather than a consideration as to the prudence of a single investment; and
<br />(2) whether the investment decision was consistent with the written investment policy of the entity.
<br />Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1,1995.
<br />Sec. 2256.007. INVESTMENT TRAINING; STATE AGENCY BOARD MEMBERS AND OFFICERS. (a)
<br />Each member of the governing board of a state agency and its investment officer shall attend at least one training session
<br />relating to the person's responsibilities under this chapter within six months after taking office or assuming duties.
<br />(b) The Texas Higher Education Coordinating Board shall provide the training under this section.
<br />(c) Training under this section must include education in investment controls, security risks, strategy risks,
<br />market risks, diversification of investment portfolio, and compliance with this chapter.
<br />(d) An investment officer shall attend a training session not less than once in atwo-year period and may receive
<br />training from any independent source approved by the governing body of the state agency. The investment officer shall
<br />prepare a report on this subchapter and deliver the report to the governing body of the state agency not later than the
<br />180th day after the last day of each regular session of the legislature.
<br />Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 73, Sec. 1, eff. May 9,
<br />1997; Acts 1997, 75th Leg., ch. 1421, Sec. 4, eff. Sept. 1,1997; Acts 1999, 76th Leg., ch. 1454, Sec. 5, eff. Sept. 1,
<br />1999.
<br />Sec. 2256.008. INVESTMENT TRAINING; LOCAL GOVERNMENTS. (a) Except as provided by
<br />Subsections (b) and (e), the treasurer, the chief financial officer if the treasurer is not the chief financial officer, and the
<br />investment officer of a local government shall:
<br />(1) attend at least one training session from an independent source approved by the governing body of
<br />the local government or a designated investment committee advising the investment officer as provided for in the
<br />City of San Marcos Investment Policy Page 22
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