Treasury and Investment Management

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

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.

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

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.

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.

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.

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

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

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.

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

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

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

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.

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.

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.

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.

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

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

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.

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

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.

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.

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

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

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