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Philippe Förster& Mihai Stroe (PwC): Controls in treasury : Margin for errors has decreased, their likelihood has risen 

 

François Masquelier, Chairman of ATEL sat down with Philippe Förster and Mihai Stroe, respectively

Director and Risk Assurance Manager at PwC too discuss the current trends in treasury management.

 

 

Hello Philippe, Mihai, the first question that comes in is why? Why did margin for errors decrease and why did their likelihood increase?

 

We are facing an increased pressure on profitability, liquidity and the need to have an accurate and timely view and access to cash positions.  Next to that, remote working, rapid digital transformation, or adaptation have led to potential weaknesses in the processes. 

 

Is Segregation of duties always ensured? How completeness and accuracy of FX open positions from business are ensured?  Is your governance model and related policies up to date with the “new normal”? A lot of questions may still be waiting for an answer.

 

Some organizations were ready to deal with remote working but not all of them were in that seat.  How should the latest act or react?

 

First step stands in quickly finding ways for teams to be able to work remotely and to communicate effectively.

 

With this first move (toward digitization), a significant alert is ringing around the robustness, adequacy and the effectiveness of the existing treasury control framework.

 

Having fixed those, the next step would be to ensure that the short term / quick fixes allow the organization to be fit for purpose on the long run.

 

Digital treasury is foreseen to be a permanent solution looking forward, can we fix Internal control once for all?

 

Lessons learnt show that the internal control framework needs to be constantly and pro-actively adapted to emerging situations.  Answer to your question is therefore: “no”.

 

Organizations should continuously ask themselves if their treasury team is really equipped to face different types of situations, considering business continuity plan but as well overall control framework.

 

 

What questions would be relevant for an organization to consider when performing such an assessment from the perspective of the treasury operations?

 

Having in mind that the “basics” are still fit for purpose; they should be able to answer some key questions organized according to COSO framework objectives. Those could be for example:

 

Operations- Effectiveness and Efficiency

  • Have you put in place measures to protect and ensure the availability of the workforce?

  • If not on demand, is your Treasury able to provide timely and accurate information on cash positions and/or forecasts?

  • Are your controls effectively designed to mitigate the new fraud and cyber risks resulting from the ‘remote work’ programs? (e.g. new virtual meetings platforms, cybercriminals, scams, teams receiving remote access to multiple new treasury systems)

               

Reporting- Reliability

  • Are your KPIs still relevant and accurately measured considering the FX volatility, available liquidities on the market? Are they reflecting properly any difficulties regarding cash flow challenges, covenant issues, hedging strategies?

 

Laws and regulations - Compliance

  • Do you have a relevant internal controls framework adapted to monitor and react to eventual changes in regulations (EMIR, IFRS, KYC)?

 

We also recommend using satisfaction surveys. In a dynamic and challenging context, the treasurers need to have timely feedback from their internal clients regarding the level of connectivity with the Treasury team, how high is the added value...

 

How can you support the organizations to achieve a robust internal control environment around their treasury operations?

 

Our team can help organizations to identify the key steps to manage these new risks, but also to update or develop an effective internal control framework using benchmarking to good practices,  expertise in treasury,  accounting and internal control.

 

 

Qotation: “With this first move (toward digitization), a significant alert is ringing around the robustness, adequacy and the effectiveness of the existing treasury control framework.”

 

Copyright: D.R./360Crossmedia

 

 

Auteurs:

Philippe Förster, Director, PwC

Mihai Stroe, Risk Assurance Manager, PwC