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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?

Select the status of compliance.

To assess adherence to the Basel III Liquidity Standards.
2
What is the percentage accuracy of cash flow forecasts for the last quarter?

Enter the percentage of forecast accuracy.

To evaluate the effectiveness of cash flow forecasting processes.
Min: 0
Target: 95
Max: 100
3
Provide a summary of the last review of the contingency funding plan.

Include key findings and recommendations.

To ensure the contingency funding plan is regularly reviewed and updated.
4
How often are liquidity stress tests conducted?

Select the frequency of stress testing.

To assess the robustness of liquidity risk management practices.
5
Are regular checks for regulatory compliance conducted?

Indicate if checks are conducted.

To ensure ongoing compliance with relevant regulations.
6
What types of liquidity risk mitigation strategies are currently in place?

Select all applicable strategies.

To evaluate the effectiveness of implemented strategies for managing liquidity risk.
7
What is the average number of times the daily cash position is monitored?

Enter the number of monitoring instances per day.

To assess the frequency of cash position reviews.
Min: 1
Target: 3
Max: 10
8
Summarize the findings from the most recent liquidity risk assessment.

Include any identified risks and proposed actions.

To ensure that all findings are documented and actionable.
9
How often is liquidity-related regulatory reporting performed?

Select the reporting frequency.

To confirm compliance with reporting requirements.
10
Is there regular training provided on liquidity risk management for staff?

Indicate if training is conducted.

To ensure that staff are well-informed and equipped to manage liquidity risks.
11
How diverse are the funding sources utilized by the organization?

Select the level of diversity in funding sources.

To assess the resilience of funding strategies against liquidity shocks.
12
What is the current average cost of funds as a percentage?

Enter the average cost of funds percentage.

To evaluate the efficiency of the funding strategy.
Min: 0
Target: 2.5
Max: 10
13
Provide a summary of the last funding strategy review.

Include key points and recommendations from the review.

To ensure that funding strategies are regularly evaluated and updated.
14
Are repurchase agreements a significant part of the funding strategy?

Select if repurchase agreements are utilized.

To assess reliance on short-term funding mechanisms.
15
Is the funding strategy subjected to regular stress testing?

Indicate if stress testing is performed.

To ensure that the funding strategy can withstand adverse conditions.
16
How frequently is the liquidity risk assessment conducted?

Select the frequency of liquidity risk assessments.

To ensure that liquidity risks are monitored regularly.
17
What is the average daily liquidity surplus in monetary terms?

Enter the average daily liquidity surplus amount.

To evaluate the organization’s liquidity position.
Min: 0
Target: 500000
Max: 10000000
18
Summarize the findings from the last review of the liquidity management policy.

Include any updates or changes made to the policy.

To ensure that the policy remains effective and relevant.
19
What is the current status of the organization’s liquid assets?

Select the status of liquid assets.

To assess the availability of liquid assets for meeting obligations.
20
Is the organization in compliance with Basel III liquidity standards?

Indicate if compliance is maintained.

To ensure adherence to regulatory requirements.
21
What practices are in place for monitoring cash flow?

Select all applicable monitoring practices.

To evaluate the effectiveness of cash flow monitoring processes.
22
What is the current number of days cash on hand?

Enter the number of days cash on hand.

To assess the liquidity position in terms of available cash.
Min: 0
Target: 30
Max: 365
23
Provide details on any recent updates to the cash management policy.

Include any changes or enhancements made.

To ensure the policy reflects current practices and regulatory requirements.
24
What tools are utilized for cash flow forecasting?

Select all relevant forecasting tools.

To evaluate the tools available for accurate cash flow forecasting.
25
Is there a regular reconciliation process for cash accounts?

Indicate if reconciliations are performed regularly.

To ensure accuracy and integrity of cash records.

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