How recently have you reviewed your TMPs? Phiroza Katrak

When did you last review your Treasury Management Practices (TMP) document?  You may be aware - or even surprised – that it has been a while since you last did so.

CIPFA recommends that all public service organisations adopt four clauses as part of their standing orders, financial regulations or other formal policy documents. The first of these clauses states that as a cornerstone for effective treasury and investment management, the Authority will create and maintain suitable treasury management practises.

TMPs tend to get neglected, if only because of time or resource constraints, and with the every intention of reviewing the document at some convenient point in the year when the pressure of work is perhaps lighter, but which never quite materialises.  Unlike the requirement to take treasury and capital strategies for member approval each year, it isn't necessary to do likewise with the TMPs (whether or not the TMPs are received by your members is a matter for local decision).

TMPs are a practical, working document – they set out how the Authority seeks to achieve its treasury policies and objectives and prescribe how treasury activities are managed and controlled.  The principles and accompanying ‘schedules’ outline the approach to decision making, treasury procedures and how risk is identified and managed.

There were some changes in the 2021 edition of CIPFA’s Treasury Management Code of Practice. The schedules to your Authority’s TMPs should reflect these changes as well as those arising from any change in your Authority’s particular circumstance.   

As we’ve stated before, treasury management is not static; descriptions within the TMPs and day to day activity sometimes diverge, initially imperceptibly, and not from wilful disregard. However, the gulf can soon widen. 

Take a quick look at your TMP 5 (Organisation, Clarity and Segregation of Responsibilities and Dealing Arrangements) which relates to the execution of treasury management activity. Does it adequately represent any recent re-allocation of resources and officer responsibilities within your organisation?

Does the decision-making process in TMP 3 require updating or enhancing? Have the implications of the strategic decisions in your treasury strategy document, for example borrowing/investment instruments and sources, also been captured within TMP 4?  Have the reporting arrangements in TMP 6 been updated? Monitoring of the treasury management indicators is to now be reported quarterly along with other prudential indicators as part of general revenue and capital monitoring.

Good practice and governance should persuade you to review your Authority’s TMPs regularly and update them as necessary.  Arlingclose clients can access our TMP templates and adapt them to your individual circumstance.

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