Guidelines, work instructions, process descriptions: Every company has them. Many firms indeed seem to have no end of organisational frameworks. However, given all the changes and advances in IT and processes in recent years, more and more companies are asking themselves: Do all these guidelines, instructions and descriptions truly reflect the way things really get done in today's treasury organisation? Or has progress long since rendered this framework obsolete?
Guidelines primarily address the following questions: What key goals is the treasury department pursuing? What are the "rules of the game" with which we must always comply? What functions must be covered? Who is to be given authority to execute these functions, and how is that to be done?
Guidelines give clear instructions to both the corporate treasury and the subsidiaries. Ideally, they will also model the key tenets of a company's strategy and functions across all relevant topics. Yet at the same time, guidelines provide audit-proof documentation and should align with the German Control and Transparency Act (KonTraG), guidelines published by the Association of German Treasurers (VDT) and the Minimum Requirements for Risk Management (MaRisk). The segregation of duties and dual control are the kind of topics that should be covered in guidelines.
It is not unusual to find these painstakingly produced masterpieces being locked away in a drawer and forgotten as soon as they have been written. If they are genuinely to provide treasuries and related departments with useful guidance, however, guidelines must be regularly adapted and aligned with corporate requirements. Where factors such as growth, restructuring, re-organisation and regulatory changes alter the challenges faced by the company, this leads to changes in processes - and these must also be reflected in the guidelines. Just one practical example: How you already included your EMIR compliance requirements and the processes that have been adapted accordingly?
Once the CFO has approved new or adapted guidelines, it is absolutely critical to communicate them properly. During the production or adaptation of guidelines, it is therefore essential to ensure both appropriate communication with all subsidiaries and the monitoring of compliance. It is equally important to define in advance who is responsible for these tasks.
In the context of our projects, we see different approaches to internal communication with subsidiaries. Some companies publish their guidelines only on the intranet and circulate e mails to let people know about them. Others organize web-based training courses to communicate the main points via the spoken word and offer Q&A sessions. Another development involves presenting guidelines in the form of an internal reference work, an online lexicon. In some cases, this approach is combined with regular training courses and tests.
We recommend that active communication should always be accompanied by regular internal audits - not only to ensure compliance with the guidelines across all relevant units and companies, but also to validate the content of the guidelines themselves in light of actual company processes. Only then can all group companies pull in the same direction and operate in compliance with current, valid guidelines.
Source: KPMG Corporate Treasury News, Edition 52, February 2016
Author: Yvonne Bamberger, Manager, YBamberger@kpmg.com
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