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Treasury Operations and Liquidity Management Audit Checklist

A comprehensive checklist for auditing treasury operations and liquidity management practices within financial institutions, focusing on cash management, funding strategies, and liquidity risk mitigation.

Treasury Operations and Liquidity Management Audit Checklist

by: audit-now
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About This Checklist

In the complex world of financial services, effective treasury operations and liquidity management are critical for maintaining institutional stability and regulatory compliance. This Treasury Operations and Liquidity Management Audit Checklist is designed to help financial institutions evaluate and enhance their cash management, funding strategies, and liquidity risk mitigation practices. By systematically assessing key areas of treasury operations, organizations can identify potential vulnerabilities, ensure adherence to regulatory requirements, and implement best practices in liquidity management. This comprehensive checklist serves as a vital tool for optimizing cash flow, improving funding efficiency, and safeguarding against liquidity risks in a volatile financial landscape.

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Industry

Financial Services

Standard

Basel III Liquidity Standards

Workspaces

Trading floors

Occupations

Treasury Manager
Liquidity Risk Officer
Financial Controller
Compliance Officer
Internal Auditor
1
Is the organization compliant with the Liquidity Coverage Ratio requirements?
2
What is the percentage accuracy of cash flow forecasts for the last quarter?
Min: 0
Target: 95
Max: 100
3
Provide a summary of the last review of the contingency funding plan.
4
How often are liquidity stress tests conducted?
5
Are regular checks for regulatory compliance conducted?
6
What types of liquidity risk mitigation strategies are currently in place?
7
What is the average number of times the daily cash position is monitored?
Min: 1
Target: 3
Max: 10
8
Summarize the findings from the most recent liquidity risk assessment.
9
How often is liquidity-related regulatory reporting performed?
10
Is there regular training provided on liquidity risk management for staff?
11
How diverse are the funding sources utilized by the organization?
12
What is the current average cost of funds as a percentage?
Min: 0
Target: 2.5
Max: 10
13
Provide a summary of the last funding strategy review.
14
Are repurchase agreements a significant part of the funding strategy?
15
Is the funding strategy subjected to regular stress testing?
16
How frequently is the liquidity risk assessment conducted?
17
What is the average daily liquidity surplus in monetary terms?
Min: 0
Target: 500000
Max: 10000000
18
Summarize the findings from the last review of the liquidity management policy.
19
What is the current status of the organization’s liquid assets?
20
Is the organization in compliance with Basel III liquidity standards?
21
What practices are in place for monitoring cash flow?
22
What is the current number of days cash on hand?
Min: 0
Target: 30
Max: 365
23
Provide details on any recent updates to the cash management policy.
24
What tools are utilized for cash flow forecasting?
25
Is there a regular reconciliation process for cash accounts?

FAQs

Treasury operations and liquidity management audits should be conducted at least quarterly. However, more frequent reviews may be necessary during periods of market volatility or in response to significant changes in the institution's funding structure.

Key areas typically include cash flow forecasting, liquidity stress testing, funding diversification, intraday liquidity management, collateral management, compliance with liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements, and contingency funding plans.

The audit should involve treasury managers, liquidity risk officers, financial controllers, compliance officers, internal auditors, and potentially external consultants specializing in treasury management.

Institutions should develop a detailed action plan for each identified issue, assigning responsibilities and deadlines for remediation. This may include refining cash flow models, enhancing liquidity monitoring systems, or revising funding strategies. Regular progress reviews should be conducted to ensure timely implementation of improvements.

Technology plays a crucial role in modern treasury audits, including advanced analytics for cash flow forecasting, real-time liquidity monitoring systems, automated stress testing tools, and integrated platforms for regulatory reporting and compliance management.

Benefits of Treasury Operations and Liquidity Management Audit Checklist

Ensures compliance with liquidity management regulations and standards

Identifies potential weaknesses in cash flow forecasting and management

Optimizes funding strategies and reduces liquidity risk

Enhances overall treasury operations efficiency

Provides a structured approach to continuous improvement of liquidity management practices