Part 10.
TEXAS WATER DEVELOPMENT BOARD
Chapter 365.
INVESTMENT RULES
The Texas Water Development Board (the board) adopts amendments to
31 TAC §§365.2, 365.8, 365.13, 365.18 and repeal of Subchapter C, §365.21
and new §365.21 under Subchapter B, concerning Investment Rules without
changes to the proposed text as published in the December 3, 2004, issue of
the
Texas Register
(29 TexReg 11306) and will
not be republished.
The amendments to these sections are adopted to clarify board investment
procedures and conform board rules with the Public Funds Investment Act, Government
Code, Chapter 2256.
The board renames the Subchapter B heading from "Selection of Authorized
Dealers" to "Investment Procedures," deletes the title of "Subchapter C,"
and moves new §365.21 under the renamed Subchapter B. These amendments
more accurately group related provisions of the rules under one title and
under a common, applicable, heading.
The amendment to §365.2(7) is adopted concerning the definition of
the term "Internal Auditor." The board adopts to change the definition from
the "Director of Internal Audit" to "internal audit staff." This will allow
another member of the internal audit staff to conduct reviews of the investment
functions as set forth in various sections of the rules and reflects the addition
of staff to the internal audit area.
The amendment to §365.8 is adopted to require the internal audit staff
to report to the Audit Committee rather than the Finance Committee when presenting
results of the biennial review of investment controls conducted pursuant to §365.18
of the rules. This reflects the board's previous designation of duties of
the Audit and Finance Committees.
The board amends §363.13(b)(3) to reduce the stated final maturity
date of collateralized mortgage obligations in which the board may invest
to not more than seven years. This change will harmonize currently inconsistent
references to the maximum maturities in which the board may invest. While §363.13(b)(3)
currently prohibits investments with final maturities of greater than ten
years (consistent with Government Code §2256.009), §363.17 provides
the board's actual policy of allowing investments of reserve funds of up to
seven years only, with the consent of the board. The change will make clear
that the maximum investment is seven years.
The board amends §365.18, Internal Control, to clarify that the internal
auditor's biennial review of the board's investment policies and investment
functions is more accurately a review of the "agency's management controls
on investments and adherence to the agency's established investment policies,"
as required by Public Funds Investment Act (Government Code §2256.005).
This section is also adopted to reflect the mandatory requirement in the Public
Funds Investment Act (Government Code §2256.005) to send the results
of the auditor's biennial review to the state auditor.
The board adopts the repeal of Subchapter C, §365.21 and adopts a
new §365.21 under Subchapter B incorporating existing language of Subchapter
C, §365.21. A new sentence will be added to new §365.21, that reads:
"The quarterly reports shall be formally reviewed at least annually by the
internal auditor and the result of the review shall be reported to the board."
This annual review is required by the Public Funds Investment Act (Government
Code §2256.023) and the new §365.21 reflects this requirement.
There were no comments received on the proposed amendments, repeal and
new section.
Subchapter A. GENERAL PROVISIONS
31 TAC §365.2, §365.8
The amendments are adopted under the authority of the Texas
Water Code §6.101, which provide the Texas Water Development Board with
the authority to adopt rules necessary to carry out the powers and duties
in the Texas Water Code and other laws of the State, and the Texas Government
Code, Chapter 2256, which requires each State agency to adopt rules regarding
the investment of its funds.
There are no statutory provisions affected by the adopted amendments.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on January 19, 2005.
TRD-200500257
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: February 8, 2005
Proposal publication date: December 3, 2004
For further information, please call: (512) 475-2052
Subchapter B. INVESTMENT PROCEDURES