Companies face a variety of cash and treasury risks that can significantly impact their financial stability and operational efficiency. One primary risk is liquidity risk, which arises when a company cannot meet its short-term financial obligations due to insufficient cash flow. This can be caused by unexpected expenses, delayed receivables or downturns in sales. Another critical risk is interest rate risk, which affects the cost of borrowing and the returns on investments. Fluctuations in interest rates can lead to increased costs for companies with variable-rate debt or reduced income from fixed-income investments. Additionally, foreign exchange risk presents challenges for companies engaged in international business, as currency fluctuations can affect the value of transactions and impact profitability. 

Companies should implement robust cash management strategies that include regular cash flow forecasting and monitoring to manage these risks. By predicting cash inflows and outflows, organizations can identify potential liquidity shortfalls in advance and take proactive measures to mitigate them, such as securing lines of credit or adjusting payment terms with suppliers. Employing hedging techniques can help manage interest rate and foreign exchange risks. For instance, companies can use interest rate swaps or options to lock in favorable rates, while forward contracts can protect against adverse currency movements. These financial instruments allow organizations to stabilize their cash flows and reduce uncertainty. 

1. Treasury and Cash Management Audit Work Program 

This document includes two sample treasury and cash management work programs that focus on adequacy of controls, overall efficiency and effectiveness of processes, and compliance with policies and procedures. Specific areas of review include wire transfers, investments, cash management, foreign exchange exposure, interest rate swaps and check issuance practices. Project work steps include: conduct project planning, scope setting and client requests/coordination; coordinate meetings with key process personnel; review best practices for cash management, cash flow, treasury operations and financial risk management; obtain data for testing (see test descriptions in each section); etc. 

2. Treasury and Cash Management Process Flow 

When cash flows are improperly monitored and adequate controls to prevent fraud and misstatements aren’t in place, there is a large amount of pervasive business risk. This tool includes two sample process flows that can be used as a general guide to understanding and reviewing the steps in an organization’s treasury and cash management process. This document should be used as a general guide to understand and review this business process. Organizations should customize this tool to ensure that it reflects their business operations and continuously monitor the process to ensure that the steps described are accurate. 

3. Manage Cash Flow/Treasury RCM 

A successful risk management strategy requires a strong internal control environment. The risk and control matrix (RCM) format emphasizes that strong and risk-oriented internal control environments are often optimized with automated/manual controls, depending on the situation. An RCM provides an overview of different control objectives that organizations should take into consideration and the corresponding controls to safeguard the company against risks which may arise if not checked timely. Once customized to an organization, this document can help the user in assessing each control. The control assessment can then also be summarized to develop an action plan to strengthen the internal control structure. This document outlines risks and controls common to the 5.1.4 Manage Cash Flow/Treasury process in an RCM format. 

4. Sound Corporate Finances Begins With Cash and Treasury Best Practices 

Cash management and treasury management are not precisely the same things, but they are related functions. Together, they form the foundation of sound corporate finance and are critical to any organization's financial health. This is true for businesses, nonprofit enterprises and government entities. Explore the intricate relationship between cash management and treasury management in corporate finance and dive into best practices, auditing techniques, and professional tools to enhance your organization’s financial health. 

5. Corporate Treasury Policy 

Our Corporate Treasury Policy serves as a guide for organizations aiming to enhance their treasury management practices. By providing a structured framework for managing treasury operations, this tool enables companies to effectively safeguard their financial assets while ensuring compliance with regulatory requirements. The policies and procedures detailed within this tool facilitate optimized cash flow management, risk mitigation and strategic investment decisions. With an emphasis on control, transparency and efficiency, this resource is essential for organizations seeking to fortify their financial governance and reduce exposure to risks. 

6. Hotel Financial Reporting and Treasury Review Audit Work Program 

Elevate your financial management skills with the targeted audit insights in our sample hotel financial reporting and treasury review. This tool provides a structured approach to reviewing key treasury functions within hospitality properties, promoting robust internal controls and effective risk management. It guides users through the evaluation of critical processes such as cash handling, cashier procedures, front-office operations, room inventory management, guest billing and foreign currency transactions. It emphasizes safeguarding assets, verifying compliance with company policies, and identifying opportunities to enhance both efficiency and control. 

7. Treasury Operations Scoping Memo 

The purpose of this sample memo is to outline the scope, objectives, planned work and general timing of a treasury operations audit. Sample work steps include: perform process walk-throughs of relevant treasury processes; meet with representatives from company divisions that have frequent interaction with the treasury area; conduct interviews to better understand communication, interactions and any potential issues or challenges; ensure that the company operates in compliance with treasury regulations related to cash received, claims payments and wire transfers; and review banking relationships and confirm that accounts are valid, approved and monitored. 

8. Cash Applications Observations Memo 

This sample memo presents a high-level observation of the review and testing of manual and system controls present in a company’s cash applications process. It discusses change notifications, analysis impact documentation, and actions and responses. Memo sections include background information, executive summary (including objectives and approach and key findings), and observations and recommendations (including an action plan and management response). One recommendation is to ensure that Treasury assigns each cash processor a unique logon, password and certificate and provides a link to the company’s imaging website to change the password and download the certificate. 

9. Cash and Cash Equivalents Policy 

The purpose of this policy is to establish uniform policies for cash and cash equivalents for companies that preserve principal, meet liquidity needs, and deliver a suitable return in relation to these policies and market conditions. In this sample, all sites are required to complete the bank account opening form whenever new banks or other related investment accounts are needed. This form will highlight the accounts currently open, determine why the new account(s) are needed and estimate costs when opening needed accounts. Bank accounts can only be opened by officers of the company (as authorized by the board of directors). 

10. Cash Policy 

This tool contains five sample policies that highlight standards and procedures for identifying and using cash and cash equivalents. These samples are designed to preserve principal, meet liquidity needs and deliver a suitable return related to market conditions.  

Sample procedures covered in these policies include centralizing the cash receipt function, depositing intact cash receipts to the bank daily, recording all cash receipts to the appropriate subledger and general ledger on the date of receipt, clearing unapplied cash daily, and limiting payments to checks rather than actual currency.