Tax, Accounting & Legal
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Journey into the Unknown – Internal auditing in the treasury function

by Thomas Schräder, Partner, and Birger Wriedt, Senior Consultant, at PricewaterhouseCoopers, Düsseldorf

The sub-prime market has clearly shown that treasury risks were not adequately valued in the past. The internal auditing function therefore needs to work much harder in this area, say our authors.

In-depth monitoring by the internal auditing function is an important part of the internal control and management system. Internal auditing thereby supports senior management by means of independent auditing and advice. This provides a comprehensive and differentiated judgement of the risk position and contributes to the security, value growth and improvement of business processes. However internal auditing often only fulfils this duty for the traditional managerial business processes such as the purchasing, production and sales triad, or the connection between accounting and financial controlling.

In-depth monitoring by the internal auditing functions is an important part of the internal control and management system.

Treasury generally only manages to occupy a shadowy existence in the internal auditing plan. The scope and depth of the auditing activities mostly do not match the risk potential it contains. Recent key events such as blacklisted payments and bank accounts, incorrect accounting procedures, losses from the late discovery of trader speculation or entering into structured financial products as well as incorrect assessment of the risks of sub-prime investments, are reasons enough to investigate this phenomenon.