A comprehensive checklist for auditing treasury management and liquidity risk practices in financial institutions, covering aspects such as cash flow management, funding strategies, liquidity stress testing, and regulatory compliance to ensure effective liquidity risk control and treasury operations.
Treasury Management and Liquidity Risk Audit Checklist
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About This Checklist
Effective treasury management and liquidity risk control are critical for the financial stability and operational efficiency of financial institutions. This Treasury Management and Liquidity Risk Audit Checklist is an essential tool for evaluating and enhancing an institution's ability to manage its cash flows, funding sources, and liquidity risks. By meticulously examining cash management practices, funding strategies, liquidity stress testing, and regulatory compliance, this checklist helps identify potential vulnerabilities, optimize treasury operations, and ensure robust liquidity risk management. Regular implementation of this checklist not only safeguards against liquidity crises but also contributes to improved financial performance and regulatory adherence in an ever-changing economic environment.
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Specify the cash flow projection method used.
Enter the number of months for the forecasting horizon.
Select the accuracy rating.
Indicate whether regulatory changes are considered.
Select the diversity level.
Enter the average cost of funds percentage.
Provide the frequency of strategy reviews.
Indicate if the funding strategy aligns with the business strategy.
Select compliance status.
Provide the name of the compliance officer.
Enter the date of the last compliance audit.
Enter the total number of compliance violations.
FAQs
These audits should be conducted at least annually, with more frequent reviews recommended during periods of market volatility or significant changes in the institution's funding structure.
Key areas include cash flow forecasting, funding source diversification, liquidity buffer adequacy, intraday liquidity management, stress testing methodologies, contingency funding plans, and compliance with regulatory liquidity ratios.
These audits are typically conducted by internal audit teams, treasury specialists, risk management professionals, or external auditors with expertise in treasury operations and liquidity risk management.
The checklist includes items that assess the comprehensiveness of stress scenarios, the quality of data inputs, the appropriateness of assumptions, and the integration of stress test results into liquidity risk management strategies.
Yes, the checklist can be customized to address specific treasury management and liquidity risk requirements of various financial institutions, such as commercial banks, investment banks, or credit unions, while maintaining core audit elements.
Benefits of Treasury Management and Liquidity Risk Audit Checklist
Ensures compliance with liquidity risk management regulations and internal policies
Identifies weaknesses in cash flow forecasting and management processes
Enhances funding diversity and stability of liquidity sources
Improves effectiveness of liquidity stress testing and contingency planning
Strengthens overall treasury operations and financial risk management