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[Sections 2257.049 to 2257.060 reserved for expansion] <br /> <br />SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES <br /> <br />2257.061 Audits and Examinations <br />As a part of an audit or regulatory examination of a public entity's depository or custodian, the <br />auditor or examiner shall: <br /> (1) examine and verify the pledged investment securities and records maintained under <br /> Section 2257.025 or 2257.046; and <br /> (2) report any significant or material noncompliance with this chapter to the comptroller. <br /> <br />2257.062 Penalties <br /> (a) The comp~oller may revoke a depository's designation as a state depository for one yem' <br /> if, after notice and a hearing, the comptroller makes a written finding that the depository, <br /> while acting as either a depository or a custodian: <br /> (1) did not maintain reasonable compliance with this chapter; and <br /> (2) failed to remedy a violation of this chapter within a reasonable time after <br /> receiving written notice of the violation. <br /> (b) The comptroller may permanently revoke a depository's designation as a state depository <br /> if the comptroller makes a written finding that the depository: <br /> (1) has not maintained reasonable compliance with this chapter; and <br /> (2) has acted in bad faith by not remedying a violations of this chapter. <br /> <br />2257.063 Mitigating Circumstances <br /> (a) The comptroller shall consider the total circumstances relating to the performance of <br /> a depository or custodian, when the comptroller makes a finding required by Section <br /> 2257.062; including the extent to which the noncompliance is minor, isolated, temporary or <br /> nonrecurrent. <br /> (b) The comptroller may not find that a depository or custodian did not maintain reasonable <br /> compliance with this chapter if the noncompliance results from the public entity's failure to <br /> comply with Section 2257.026. <br /> (c) This section does not relieve a depository or custodian of the obligation to secure a <br /> deposit of public funds with eligible security in the amount and manner required by this <br /> chapter within a reasonable time after the public entity deposits the deposit of public funds <br /> with the depository. <br /> <br />2257.064 Reinstatement <br />The comptroller may reinstate a depository's designation as a state depository if: <br /> (1) the comptroller deten,nines that the depository has remedied all violations of this <br /> chapter; and <br /> (2) the depository assures the comptroller to the comptroller's satisfaction that the <br /> depository will maintain reasonable compliance with this chapter. <br /> <br />City of San Marcos Investment Policy Page 38 <br /> <br /> <br />