Lack Of Formal Written Policies Puts Treasuries At Risk

Policies vary widely by types of activities.

Putting a treasury’s policies and procedures into written form seems like a good idea, but not all treasuries have formal written policies to guide the various types of work they do, according to a survey by the Association for Financial Professionals.

The incidence of formal written policies varies widely by the type of activity, with investment management policies the most common. More than half (56%) of the 554 treasury practitioners AFP surveyed said their company has a formal written policy for investment management, while 20% said they have written guidelines or procedures for investing and 13% use unofficial operating standards or rules of thumb.

Dan Carmody of TreasolutionDan Carmody, managing director at consultancy Treasolution in Chicago, said he was surprised at the number of treasuries that did not have formal written policies. “It’s a best practice to have a formal approved policy in place,” he said.

Carmody, pictured at left, said he has seen a trend toward more use of written policies among treasuries with which he has worked. “Primarily since the financial crisis, there’s been a large push toward documentation of policies and procedures,” he said, adding that the practice aids treasury departments in a number of ways, such as the support it provides for the cross-training of personnel.

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