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Internal Controls for the Treasury: The missing piece…

by François Masquelier, Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman, EACT

Many companies, because they are listed on the American stock exchange, have had to comply with Sarbanes-Oxley for five years or more. They must produce detailed reports of their internal controls, and  treasury is no exception. In Europe, the gradual transcription into domestic law of the EU’s Eighth Directive (e.g., the German BilMoG) makes it mandatory to document the existence of internal controls, thus supplementing risk management system measures. Unfortunately, although rules and policies often exist, the controls have not been made official and are not effective, particularly with respect to the treasury. In this article, we describe an approach for implementing these controls.

People often speak of internal controls, but few can define what an ‘internal control’ really is. It is the process by which an organisation structures its activities to accomplish its mission effectively and efficiently. It is an integrated process used by the managers and staff of a company or a department to handle risk. It also serves to provide reasonable assurance that, within the context of the organisation’s mission, the following general objectives will be met: 

1. Completion of well-ordered, ethical, economical, efficient, effective operations; 

2. Fulfilment of accountability obligations;