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Treasury Policy and Procedures

Treasury Policy would be considered a basic requirement for all companies as part of their risk assessment of the financial aspects of their operations.

Needless to say, all companies interested in best practice treasury management would start with a treasury policy. Whilst it used to be the domain of plcs and large private companies, we are seeing an increasing trend in treasury policy being adopted by mid-sized corporates in both the private and publicly-quoted arena.

 

Other Related Services

  • Treasury Parameters & Procedures Document
  • ISDA Documentation Review
  • Treasury Dealing Mandate Review

Case Study

The Story

Company E is a privately owned Irish company with operations in Ireland and the UK.  Treasury Solutions was retained in order to produce a Treasury Policy document supplemented by a Treasury Parameters & Procedures document in order to ensure that the company’s approach to risk management was in a structured manner.

Work Done

  • Review Statutory Accounts to get a high level view of operations and key strategic and commercial objectives
  • Confirm areas to be subject to Group Treasury Policy
  • Obtain other pertinent data from Group personnel covering items from group structure (where does Treasury sit within the organisation?) to relationship banks
  • Define and agree objectives with Group personnel
  • Draft detailed policy provisions to meet objectives and present to Group Financial Director
  • Set out in detail the company’s attitude to counterparty risk i.e. establishing the criteria for selecting Banks and Financial Institutions with whom the company will place deposits, enter into swap and foreign exchange transactions, etc.
  • Agree final wording of document and present to Board Audit Committee
  • Subsequent to board approval of the Treasury Policy, produce a detailed Parameters & Procedures document dealing with matters such as dealing limits, approved derivative instruments and also dealing with treasury reporting to the Board and the Group Financial Director in detail.

Project Output

The final output was a policy document that was presented and approved by a sub-committee of the main Board to whom authority for risk management had been delegated. This sub-committee included some non-executive Directors who would be well known in Irish financial circles.  Subsequently, the Treasury Policy was reviewed at least annually by the Audit Committee.  It also represented tangible evidence for both internal and external audit purposes of a structured approach to risk management which would be considered fundamental in the current corporate governance environment, bearing in mind that the Board of Directors are responsible under company legislation for the management of risk within a company.

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