Corporate Treasury Review Audit Work Program

Table of Contents
CORPORATE TREASURY REVIEW AUDIT WORK PROGRAM: SAMPLE 1.........................................................3

CORPORATE TREASURY REVIEW AUDIT WORK PROGRAM: SAMPLE 2.........................................................8
CORPORATE TREASURY REVIEW AUDIT WORK
PROGRAM: SAMPLE 1
PROJECT TEAM (LIST MEMBERS)
Project Phase Date Comments
Planning
Fieldwork
Report Issuance
Time Objectives Comments Initial
Assess and evaluate the adequacy of the overall financial control

environment.
Assess and evaluate the adequacy of significant financial and

accounting controls.
Processes and functions in the scope of this review include:

• Cash management
• Investments
• Foreign exchange exposure management
Time Audit Step Results Index
Perform the following work.
Obtain and review the corporate treasury policies and procedures

related to cash management, investing and foreign exchange
exposure management.
Interview key cash management, investments and foreign

exchange hedging personnel (including corporate treasurer).
Interview selected accounting personnel.
Observe key process performances.
Perform detailed testing of outgoing wire transfers.
Review reconciliations of selected cash and investment accounts.
Analyze investment portfolio statements.
2 Source: www.knowledgeleader.com
Review various internal and external management reports.
Analyze foreign exchange contract gains and losses.
Review accounting procedures for foreign exchange transactions.
Evaluate the overall internal control environment.
Perform follow-up reviews of action items from prior treasury

audits.
Provide management with best practices for selected treasury

operations.
Cash Management and Investing
Identify cash position and related cash activity.
Utilize lockboxes.
Surplus cash treatment.
Use independent investment managers, if any.
Reconcile monthly statements from investment managers.
Ensure independent investment managers’ compliance with

company internal investment policies.
Evaluate investment managers’ performance against benchmarks.
Prepare accounting entries and segregation of duties.
Reconcile bank statements.
Determine subsidiaries’ responsibility regarding corporate policies

and procedures.
Determine subsidiaries’ reporting of cash activity to the corporate

treasury department.
Determine subsidiaries’ responsibility for bank account

confirmation and reconciliation.
Wire Transfers
Determine any predefined wire instructions and authorization

procedures for changes.
Identify procedures for recurring wires, if any.
Identify any differences between wire authorization policies and

check authorization policies.
Perform treatment and review processes for high-dollar wire

transfers.
Communicate the individuals authorized to issue wire transfer

instructions to banks.
Authorize processes for bank wires initiated via telephone.
Account for wire transfers specifically regarding segregation of

duties.
Ensure compliance by domestic and international subsidiaries for

wire transfer policies.
Utilize third-party wire transfer procedures.
Foreign Exchange Exposure Management
Ensure that written policies and procedures are sufficient to

control and monitor the current level of foreign exchange activity.
Identify any specific limits to derivative transactions activity about

meeting predefined objectives, such as to offset certain defined
foreign currency exposures. Is speculation allowed?
Consider policies that address who is authorized to approve

hedging strategies and transactions.
Utilize policies and procedures regarding authorization of specific

counterparties to conduct foreign exchange business.
Authorize specific employees to execute foreign exchange

transactions and communicate that authorization to counterparty
banks.
Account for foreign exchange contracts and related segregation of

duties.
Perform approval processes for amounts to be hedged.
Track foreign exchange exposure.
Report foreign exchange activities by management.
Utilize third-party wire transfer procedures.


Utilize policies addressing who is authorized to approve hedging

strategies and transactions.


transactions and communication that authorization to counterparty
banks.

duties.
Understand third-party wire transfer procedures.


Obtain and review policies addressing who is authorized to

approve hedging strategies and transactions.
Obtain and review policies and procedures regarding authorization

of specific counterparties to conduct foreign exchange business.

banks.

duties.
Obtain and review policies addressing who is authorized to

approve hedging strategies and transactions.


banks.

duties.
CORPORATE TREASURY REVIEW AUDIT WORK
PROGRAM: SAMPLE 2
PROJECT TEAM MEMBERS
Project Timing Date Comments
Planning
Fieldwork
Report Issuance (Local)
Report Issuance (Worldwide)
Time Project Work Step Initial Index
Planning
Conduct project planning, scope setting and auditee requests/coordination.
Coordinate meetings with key process personnel.
Obtain data for testing (see test descriptions in each section).
Fieldwork
Obtain and review the policies and procedures for the corporate treasury
department. Ensure policies and procedures are approved by the board and are
current.
Wire Transfers
Understand the wire transfer process for both the parent company and the
subsidiaries.
For companies that use an online wire transfer system, review the following and
determine reasonableness.
• User access rights (e.g., who has access to create a wire, create a wire
template, approve a wire, and release a wire)
• Password protection controls (e.g., frequency of required password

changes, etc.)
• System dollar limits (e.g., dollar limits per transaction, dollar limits per user,
dollar limits per day)
• Authorization dollar limits and approval levels (e.g., CFO > $xxx Controller >
$xxx [estimates only – do not use as best practice])
For companies that have a manual wire transfer system (that phone in wires to
the bank), review all applicable items above in addition to the following.
Determine reasonableness.
• Understand the telephone wire transfer process.
• Ensure that the bank has a list of approved wire transfer processors (call the
bank to confirm).
• Ensure that all telephone wire transfer security systems (e.g., safe wire
[looks like a calculator that you put against the phone]) are safeguarded.
Ensure that dual authorization controls are established and used (e.g., non-
recurring wires).
Ensure adequate segregation of duties (e.g., the same person who creates a
wire should not have the ability to approve it without a second-party approval).
Select several outgoing wire transfers from a recent bank statement. Test each
wire for the proper approval, supporting documentation, business purpose and
policy compliance.
Understand the reconciliation process. Ensure that wires are properly

accounted for.
Analyze gathered data.
Conduct other meetings/interviews/discussions.
Cash Management
Understand the daily/monthly cash management process for both the parent
company and the subsidiaries.
Observe the morning cash management process.
• Ensure that subsidiaries transfer funds to the parent company (zero balance
accounts (ZBA) are preferred).
• Determine the method for cash forecasting. Ensure that all disbursements,
subsidiary funds and maturing investments are accounted for.
• Understand the overnight, short-term and long-term investment strategies.
• Ensure that excess cash is invested.
• Ensure that closing cash balances are swept into an overnight money
market account.
Review daily bank statements (usually pulled in the morning from an online
inquiry) and document the following:
• Closing ledger balance
• Closing available
Graph both calculations and evaluate performance.
Ensure that investment decisions are based on closing available and not
closing ledger balances.
Ensure that cash management worksheets are documented and filed with other
transaction documents (e.g., wires, investments, etc.).
Identify foreign currency accounts. Determine risk exposure based on the size
of account and materiality.
Ensure that foreign currency accounts are properly hedged.
Understand the reconciliation process. Ensure that daily cash transactions are
properly accounted for.
Investments
Understand the investment process. Understand the key players in the

decision-making and processing processes.
Obtain and review a detailed list of investments.
Obtain and review external money manager investment listings and/or monthly
statements.
Determine who holds the investments (usually a custodial bank). Confirm

possession of investments.
Ensure adequate segregation of duties (e.g., the same person who approves
the investment should not invest without a second-party approval).
Select a sample of investments from the company investment list. Review each
investment for policy compliance (grade, duration, percentage of the total
portfolio, etc.), proper approval and reasonableness. Tie to the GL, money
manager statements and investment confirmations (preferably fax confirms).
If applicable, select a sample of investments from the money manager's

monthly statement and review each investment for policy compliance (grade,
duration, percentage of the total portfolio, etc.), proper approval and
reasonableness. Tie to the company investments list (usually in Excel), the GL
and confirmations (preferably fax confirms).
Review the investment reconciliation process.
Ensure that investments are properly recorded and accounted for (external
auditors should audit the investments and ensure they are marked to market).
Obtain and review monthly/quarterly management reports. Determine if monthly

reports adequately portray investment activity, duration, risk and yield.
Understand the overall hedging strategy.
Review the methodology used to identify and quantify exposures to be hedged.
Test and evaluate the process of initiating and terminating hedge contracts.
Review each contract and ensure the following:
• Policy compliance
• Proper approval
• Adequate segregation of duties
• Proper recording of purchase/maturity
Review and evaluate the process of monitoring the effectiveness of the hedging
program.

reports adequately portray foreign exposure activity, projected activity, risk and
yield.
Interest Rate Swaps
Understand the swap strategy.
Understand the approval and initiation process.
Select a sample of swaps and review for proper approval, policy compliance
and reasonableness.
Review swaps activity (procedures for verifying/accounting for periodic

settlements, monitoring of compliance, etc.).

reports adequately portray swap activity risk and yield (if applicable).
Reporting
Prepare reports on procedures, findings and recommendations.
Facilitate closing meetings, report distribution and other wrap-ups.

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Table of Contents

CORPORATE TREASURY REVIEW AUDIT WORK PROGRAM: SAMPLE 1.........................................................3

PROJECT TEAM (LIST MEMBERS)

Project Phase Date Comments

Time Objectives Comments Initial

Assess and evaluate the adequacy of the overall financial control

Assess and evaluate the adequacy of significant financial and

Processes and functions in the scope of this review include:

Time Audit Step Results Index

Perform the following work.

Obtain and review the corporate treasury policies and procedures

Interview key cash management, investments and foreign

Interview selected accounting personnel.

Observe key process performances.

Perform detailed testing of outgoing wire transfers.

Review reconciliations of selected cash and investment accounts.

Analyze investment portfolio statements.

Review various internal and external management reports.

Analyze foreign exchange contract gains and losses.

Review accounting procedures for foreign exchange transactions.

Evaluate the overall internal control environment.

Perform follow-up reviews of action items from prior treasury

Provide management with best practices for selected treasury

Cash Management and Investing

Identify cash position and related cash activity.

Surplus cash treatment.

Use independent investment managers, if any.

Reconcile monthly statements from investment managers.

Ensure independent investment managers’ compliance with

Evaluate investment managers’ performance against benchmarks.

Prepare accounting entries and segregation of duties.

Reconcile bank statements.

Determine subsidiaries’ responsibility regarding corporate policies

Determine subsidiaries’ reporting of cash activity to the corporate

Determine subsidiaries’ responsibility for bank account

Determine any predefined wire instructions and authorization

Identify procedures for recurring wires, if any.

Identify any differences between wire authorization policies and

Perform treatment and review processes for high-dollar wire

Communicate the individuals authorized to issue wire transfer

Authorize processes for bank wires initiated via telephone.

Account for wire transfers specifically regarding segregation of

Ensure compliance by domestic and international subsidiaries for

Utilize third-party wire transfer procedures.

Foreign Exchange Exposure Management

Ensure that written policies and procedures are sufficient to

Identify any specific limits to derivative transactions activity about

Consider policies that address who is authorized to approve

Utilize policies and procedures regarding authorization of specific

Authorize specific employees to execute foreign exchange

Account for foreign exchange contracts and related segregation of

Perform approval processes for amounts to be hedged.

Track foreign exchange exposure.

Report foreign exchange activities by management.

Utilize third-party wire transfer procedures.

Foreign Exchange Exposure Management

Ensure that written policies and procedures are sufficient to

Identify any specific limits to derivative transactions activity about

Utilize policies addressing who is authorized to approve hedging

Utilize policies and procedures regarding authorization of specific

Authorize specific employees to execute foreign exchange

Account for foreign exchange contracts and related segregation of

Perform approval processes for amounts to be hedged.

Track foreign exchange exposure.