Chapter 17 - Treasury Policies and Procedures

Treasury Policies

A list of key __ __ include: 1. Bank account and financial services authority 2. Payments 3. Collection and Concentration 4. Investment Valuation and Impairment 5. Payment Card (rec/pay) 6. Outsourcing 7. Financial Risk Management 8. Regulatory Compliance 9. Runding/Financing 10. Treasury Systems

Roles and Responsibilities

A primary reason for a treasury policy that provides a clear definition of the roles and responsibilities within the treasury function. When problems occur, documented policies and procedures can provide some degree of protection for staff that are following the approved procedures.

Organizational Needs

A primary reason for a treasury policy that provides a documented guide to best practices to ensure fundamental operational processes are performed in a consistent manner than meets the __ __.

Compliance

A primary reason for a treasury policy that provides an effective internal audit and control tool that helps keep a company in compliance with regulatory and legal requirements, through well-defined and documented processes and guidelines.

Risk Management

A primary reason for a treasury policy that that provides a control process to mitigate identified risks in the operation

Standard Operating Procedure

A specified series of actions or operations that should be executed in a consistent manner to achieve desired results identified in the policy. In other words, the procedures must follow the guidelines of the policy.

Reapproved

All policies should be reviewed, update, and __ on a specified periodic basis, driven by the size and type of the organization. A best practice is to include a revision-tracking section as part of the document which should list all changes and updates in order to provide historical context and document any necessary regulatory compliance.

Policy

Approval of the __: 1. Treasury Department Review 2. Review by Other Functional Area 3. Review by Internal Audit and/or Compliance Group 4. Final Approval

Policies and Procedures

Four primary reasons why treasury __ __ __ are necessary: 1. Organizational Needs 2. Risk Management 3. Roles and Responsibilities 4. Compliance

Policies and Procedures

Guidelines for creating __ __ __: 1. Determine the primary objective relating to each treasury function 2. Communicate the objectives for each treasury area throughout the organization 3. Provide guidelines to ensure that the practices employed will support those objectives consistently 4. Understand that the processes in each area are generally influenced by factors outside that area

Treasury Systems

In addition to end-user computing requirements, companies may want a specific policy regarding any TMSs they have installed. Include: -Access to TMS -Password requirements -Segregation of duties -Reconcilement with accounting and other books -Backup and recovery -Off-preise access and use -Reporting requirements

Controls

Key __ Considerations: 1. Structure of __ 2. Delegation of Authority and Governance 3. Segregation of Duties 4. Roles and Responsibilities 5. Records Retention Policies 6. Moving from __ to Policies and Procedures

Policies

Organizations use __ to identify and describe their risks, and the establish the limits, guidelines, accountabilities, and risk management practices that the organization deems essential. A __ is intended to serve as a statement to guide activities in a particular area or function of an organization and to establish performance evaluation guidelines and process measurements

Policy

Stages of Writing a __: 1. Predevelopment Stage 2. Identifying Issues and Conducting Analysis 3. Drafting the Policy 4. Basic Elements of a Policy

Segregation of Duties

The concept of having more than one individual involved in a process to complete a task, which significantly reduces the risks of fraud and human error.

Structure of Controls

There is no standard structure for a company to follow in determining the levels of control that should be in place, but there are certain best-practice standards that should be followed -- especially from an audit perspective. Items to consider are: -Internal and external controls -Reporting and audit trails -Controls on third-party service providers -Compliance with regulatory requirements

Financial Risk Management

These policies apply to any financial instruments but are especially necessary if any financial derivatives or hedging activities occur, as policies may be a requirement for proper accounting and tax purposes. -Scope of permitted hedging and derivative activities -Delegation of authority -Segregation of duties -Authorized derivatives -Performance measurement and evaluation -Management reporting -Accounting and disclosure -Trade/deal limits and monitoring -Exception management -Approved counterparts and related limits

Bank Account and Financial Services

These policies are essential for providing the appropriate delegation of authority regarding opening, closing, and managing accounts. -Delegation of authority o mange financial service provider -Delegation of authority to open and close accounts -Oversight and governance of banking relationships -Duties and tasks involved in managing relationships -Qualifying types of financial institutions -Signing authority and reporting requirements -Financial institution evaluation and reporting -Documentations requirements -Records retention requirements

Payments

These policies are important in order to provide consistent management of payments and payments risk across all payment processes. Separate electronic funds transfer policies and or an international payments policy due to the increased potential risks. -Delegation of authority -Permitted payment methods -Payment and approval limits -Joint approval requirements -Payment authorization requirements -Payment Risk management -Required documentation

Payment Card

These policies can cover both corporate cards issued and receipt of card payments from customers. -Types of cards issued/accepts -Eligibility of approved users -Definition of responsibilities -Card and transaction limits -Review and reconcilement requirements -Purchase restrictions -Prohibited uses -PCI DSS compliance requirements -Payment and fraud risk management -Any requirements regarding merchant services providers

Regulatory Compliance

These policies cover activities needed to comply with regulatory requirements that exist in the growing number of countries,s including regulations related to money laundering, trade, and corruption. -Statement of policy and required compliance -Subcontractor and vendor compliance -Compliance monitoring activities -Audit requirements -Exception management -Disciplinary processes

Collection and Concentration

These policies cover the issues involved in collecting customer payments and converting the receipts into accessible available funds. -Control objectives -Segregation of duties -Customer satisfaction -Acceptable payment types -Performance management -Reporting requirements -Exception management

Investment Valuation and Impairment

These policies deal specifically with investment valuation and impairment. -Identification of impaired investment -Mark to market requirements -Valuation of impaired securities -Reporting requirements -Exception management

Outsourcing

These policies help manage risk and maintain appropriate control as more companies __ various operating units. -Delegation of authority -Reporting requirements -Vendor and operational risk management -Information security and confidentiality requirements -Performance measurement

Funding and Financing

These policies pertain to the execution of strategies for long-term funding of the organization. -Funding objectives -Limits and targets for committed funding -Limits and targets for different sources of funding -Structural considerations of fixed- to variable rate debt -Covenants -Tax and other compliance mandates -Authorization/approval processes -Refinancing or prepayment process -Uses of derivatives -References to standard documentation

Delegation of Authority

This is accomplished by a BOD resolution outlining which responsibilities are delegated to a particular management position within the treasury operations area and identifying any designated limits such as signing limits, on that authority.

Roles and Responsibilities

This key control identifies responsibilities and authority for each position and function. Identify responsibilities of organizational positions.

Records Retention

This key control reduces the risk of severe penalties for failure to maintain proper work papers, especially those related to audit activity bankruptcies, and many government investigations. Frequently include when and how specific key records should be destroyed and requirements for the appropriate retention, safekeeping, and destruction of records where appropriate.

Predevelopment

This phase of the policy writing cycle is where authorization and support for the entire policy development process happens at the highest level possible. An individual or group is appointed to take the lead, and staff from various functional read directly affected by the policy are included.

Analysis

This phase of the policy writing cycle is where issues are identified and __ is conducted. Issues An agree-upon flowchart should be created for the proper execution of the new processes.

Elements

This phase of the policy writing cycle is where the basic __ are identified. These include: 1. Objectives 2. Scope 3. Basic Guidelines 4. Roles and Responsibilities 5. Performance Measurement and Reporting 6. Required Controls and compliance Considerations 7. Exception Management 8. Review Cycle 9. Policy Attachments

Drafting

This phase of the policy writing cycle is where the new policy is created or the old policy is modified.