The treasury department oversees the cash management, wire transfers, investments and foreign exchange hedging processes. This audit report focuses on opportunities for improvement through interviews and process observations with treasury personnel and limited transaction testing. Objectives include assessing/evaluating adequacy of the overall financial control environment and significant financial and accounting controls.
The following primary opportunities for improvement been identified and documented in this report:
- Treasury department policies and procedures are outdated in all areas (cash management, wire transfers, foreign exchange, treasury accounting, subsidiary procedure-related policies). Formal, written cash management or treasury accounting policies do not exist.
- Cash management operations at the subsidiary corporation could be combined with Company ABC corporate treasury.
- Foreign exchange exposure hedges are not formally approved. Policy requires written documentation from the chief financial officer (CFO) of all hedge contracts.
- Confirmations sent by counterparties are received directly by those persons who execute foreign exchange hedging transactions.
- Management reporting in all areas could be improved (specifically, investments and foreign exchange hedging). Treasury currently submits single-page documents to executive management with little detail of key treasury measures (e.g., yield, portfolio composition, foreign exchange exposures, etc.).
- Reconciliations of the AA bank account should be reviewed by the treasury manager to ensure they have been properly prepared. This review should be documented.