Treasury Management Practices Phiroza Katrak

“Ah, that Treasury Management Practices document, I’ll get round to reviewing and updating it when I have that window of opportunity …. I know I must.”

Like many a resolution on diet and exercise, the will slowly wanes and, with an ever-increasing diary chockfull with priorities, this little promise soon gets sidelined.

In accordance with CIPFA’s recommendation in its Code of Practice on Treasury Management, public sector authorities adopt as part of their standing orders, financial regulations or other formal policy documents, a clause stating that the responsible persons will act in accordance with their organisation’s treasury policy statement and TMPs.   

Unlike the capital, treasury management and investment strategies which are prepared annually and submitted to the relevant committees and Council for approval, whether or not the TMPs are received by members is a matter for local decision.  It is natural that an annual scrutiny by members or internal audit will mean an annual review, at the very least.   

The TMPs are a practical but important internal working document in which the 12 key treasury management principles and accompanying ‘schedules’ set out your authority’s approach to decision making, your treasury procedures and how you identify and manage the associated risks.

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. 

The arrangements described in TMP 5 (Organisation, Clarity and Segregation of Responsibilities and Dealing Arrangements) which relate to the execution of treasury management activity would need to reflect of any re-allocation of resources and officer responsibilities. Has working from home necessitated any alteration to your dealing procedures and approval arrangements?  Does the decision-making process in TMP 3 need to be updated or enhanced? 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 your cashflow and cash management arrangements evolved?   Have your contingency arrangements changed? If so, the TMPs need to reflect them too.

CIPFA recently announced its consultation on changes to the Treasury Management and Prudential Codes. There’s time to go before the consultations close in April and more until revisions to these codes are published.  So even if there isn’t an annual scrutiny imperative at your authority and, tempting as it might appear to defer a review of your TMPs until later, good practice and governance should persuade you to review this document regularly and update it as necessary.