Appendix A

 

 

TREASURY MANAGEMENT PRACTICES (TMPs)

                

 

TMP1             RISK MANAGEMENT

 

                        General Statement

 

This Council regards a key objective of its treasury management activities to be the security of the principal sums it invests. Accordingly, it will ensure that robust due diligence procedures cover all external investment.

 

The Director of Corporate Services or those persons to which delegation has been made will design, implement and monitor all arrangements for the identification, management and control of treasury management risk, will report at least annually on the adequacy/suitability thereof, and will report, as a matter of urgency, the circumstances of any actual or likely difficulty in achieving the organisation’s objectives in this respect, all in accordance with the procedures set out in TMP 6 Reporting requirements and management information arrangements. In respect of each of the following risks, the arrangements which seek to ensure compliance with these objectives are set out below.

 

 

1.1                   Credit and Counterparty Risk Management

 

                        Explanation

 

The risk of failure by a third party to meet its contractual obligations to the Council under an investment, borrowing, capital, project or partnership financing, particularly as a result of the third party’s diminished creditworthiness, and the resulting detrimental effect on the Council’s capital or current (revenue) resources.

 

Council Action

 

This Council regards a key objective of its treasury management activities to be the security of the principal sums it invests. Accordingly, it will ensure that its counterparty lists and limits reflect a prudent attitude towards organisations with whom funds may be deposited, and will limit its investment activities to the instruments, methods and techniques referred to in TMP4 Approved instruments, methods and techniques and listed in the Annual Treasury Management Policy and Strategy Statement. It also recognises the need to have, and will therefore maintain, a formal counterparty policy in respect of those organisations from which it may borrow, or with whom it may enter into other financing arrangements.

 

A detailed list of counterparties to which the Council will lend is appended to the Annual Treasury Management Policy and Strategy Statement.

 

 

 

 

 

 

 

1.2                   Liquidity Risk Management

 

                        Explanation

 

The risk that cash will not be available when it is needed, that ineffective management of liquidity creates additional budgeted costs, and that the organisation’s business/service objectives will therefore be compromised.

 

Council Action

 

The Council through its Treasury Management officers will ensure that at all times there will be a surplus of cash available which can be called upon at a moment’s notice.  Through its investments the Council holds cash on call account(s) which is available at any time.   By the use of an effective projected cash flow exercise the likelihood of cash being not readily available when required would be rare.

Robust daily, weekly, monthly and annual cash flow forecasting is in place. Call accounts and fixed term investments are utilised to their full potential.

This Council will only borrow in advance of need where there is a clear business case for doing so and will only do so for the current capital programme or to finance future debt maturities.

 

 

1.3                   Interest Rate Risk Management

 

                        Explanation

 

The risk that fluctuations in the levels of interest rates create an unexpected or unbudgeted burden on the organisation’s finances, against which the organisation has failed to protect itself adequately.

 

                        Council Action

 

This Council will manage its exposure to fluctuations in interest rates with a view to containing its interest costs, or securing its interest revenues, in accordance with the amounts provided in its budgetary arrangements as amended in accordance with TMP6 Reporting requirements and management information arrangements.

 

It will achieve this by the prudent use of its approved financing and investment instruments, methods and techniques, primarily to create stability and certainty of costs and revenues, but at the same time retaining a sufficient degree of flexibility to take advantage of unexpected, potentially advantageous changes in the level or structure of interest rates. This should be the subject to the consideration and, if required, approval of any policy or budgetary implications.

 

 

 

                                   

 

 

 

 

1.4                   Exchange Rate Risk Management

 

                       

Explanation

 

The risk that fluctuations in foreign exchange rates create an unexpected or unbudgeted burden on the organisation’s finances, against which the organisation has failed to protect itself adequately. The Council is awarded grant from specific programmes in Euro currency and consequently receives grant income in this currency.  Where the Council is a joint beneficiary and not a lead beneficiary, payments are received from the lead beneficiary in Euros into the Council’s Sterling bank account.

There is a negligible risk where the Council is a joint beneficiary.

Where the Council is a lead beneficiary for a grant and is receiving income in Euro currency on behalf of other beneficiaries, the income is received into and payments made in Euros from the Euro bank account.

 

 

                      

Council Action

 

Currently the Council only invests in sterling products. Hence, there is no exchange rate risk with regard these investments. For grants where the Council is lead beneficiary, receiving income in Euro currency on behalf of other beneficiaries and reimbursing them, exchange risk is mitigated by using an Euro bank account.

 

 

 

1.5                   Inflation Risk Management

 

                        Explanation

 

Inflation risk, also called purchasing power risk, is the chance that the cash flows from an investment won’t be worth as much in the future because of changes in purchasing power due to inflation.

 

                        Council Action

 

                        The Council will keep under review the sensitivity of its treasury assets and liabilities to inflation, and will seek to manage the risk accordingly in the context of the whole Council’s inflation exposures.

 

 

 

 

 

 

 

 

1.6                   Refinancing Risk Management

 

                        Explanation

 

The risk that maturing borrowings, capital project or partnership financing cannot be refinanced on terms that reflect the provisions made by the organisation or those refinancings, both capital and current (revenue), and/or that the terms are inconsistent with prevailing market conditions at the time.

 

                        Council Action

 

                        This Council will ensure that its borrowing, private financing and partnership arrangements are negotiated, structured and documented, and the maturity profile of the monies so raised are managed, with a view to obtaining offer terms for renewal or refinancing, if required, which are competitive and as favourable to the Council as can reasonably be achieved in the light of market conditions prevailing at the time. It will actively manage its relationships with its counterparties in these transactions in such a manner as to secure this objective, and will avoid overreliance on any one source of funding if this might jeopardise achievement of the above.

 

 

 

1.7                   Legal and Regulatory Risk Management

 

                        Explanation

 

                        The risk that an organisation itself, or a third party with which it is dealing in its treasury management activities, fails to act in accordance with its legal powers or regulatory requirements, and that the organisation suffers losses accordingly.

 

 

                        Council Action

 

            This Council will ensure that all of its treasury management activities comply with its statutory powers and regulatory requirements. It will demonstrate such compliance, if required to do so, to all parties with whom it deals in such activities. In framing its credit and counterparty policy under TMP 1 credit and counterparty risk management it will ensure that there is evidence of counterparties’ powers, authority and compliance in respect of the transactions they may effect with the organisation, particularly with regard to duty of care and fees charged.

 

                        This Council recognises that future legislative or regulatory changes may impact on its treasury management activities and, so far as it is reasonably able to do so, will seek to minimize the risk of these impacting adversely on the Council.

 

 

 

 

 

 

1.8                   Fraud, Error and Corruption, and Contingency Management

 

            Explanation

 

                 The risk that an organisation fails to identify the circumstances in which it may be exposed to the risk of loss through fraud, error, corruption or other eventualities in its treasury management dealings, and fails to employ suitable systems and procedures and maintain effective contingency management arrangements to these ends.   It includes the area of risk commonly referred to as operational risk.

 

            Council Action

 

            This Council will ensure that it has identified the circumstances which may expose it to the risk of loss through fraud, error, corruption or other eventualities in its treasury management dealings.   Accordingly, it will employ suitable systems and procedures, and will maintain effective contingency management arrangements, to these ends.

 

 

 

 

 

 

 

1.9                   Price Risk Management

 

                        Explanation

 

                        The risk that, through adverse market fluctuations in the value of the principal sums the organisation invests, its stated treasury management policies and objectives are compromised, against which effects it has failed to protect itself adequately.

 

                        Council Action

 

                        This Council will seek to ensure that its stated treasury management policies and objectives will not be compromised by adverse market fluctuations in the value of the principal sums it invests, and will accordingly seek to protect itself from the effects of such fluctuations.

 

 

 

 

TMP2             PERFORMANCE MEASUREMENT

 

                        Explanation

 

                        Performance measurement is a process designed to calculate the effectiveness of a portfolio’s or manager’s investment returns or borrowing costs and the application of the resulting data for the purposes of comparison with the performance of other portfolios or managers, or with recognised industry standards or market indices.

 

 

Council Action

 

            This Council is committed to the pursuit of value for money in its treasury management activities, and to the use of performance methodology in support of that aim, within the framework set out in its treasury management policy statement.

 

            Accordingly, the treasury management function will be the subject of ongoing analysis of the value it adds in support of the Council’s stated business or service objectives.   It will be the subject of regular examination of alternative methods of service delivery, of the availability of fiscal or other grant or subsidy incentives, and of the scope of other potential improvements.

 

 

 

 

TMP3             DECISION MAKING AND ANALYSIS

                 

Explanation

 

            It is vital that the treasury management decisions of organisations in the public service should be subjected to prior scrutiny.  The treasury management strategy is approved annually by full council and supplemented by the provision of monitoring information and regular review by councillors in both executive and scrutiny functions.  In addition all records should be kept of the processes and the rationale behind those decisions.   In respect of each decision made the Council should:

 

 

3.1          ensure that its results are within the limits set in the Prudential Indicators.

 

3.2       be clear about the nature and extent of the risks to which the Council may become exposed.

 

3.3       be certain about the legality of the decision reached and the nature of the transaction, and that all authorities to proceed have been obtained.

 

3.4       be content that the documentation is adequate both to deliver the Council’s objectives and protect the Council’s interest, and to deliver good housekeeping.

 

3.5       ensure that third parties are judged satisfactorily in the context of the Council’s credit worthiness policies, and that limits have not been exceeded.

 

3.6       be content that the terms of any transactions have been fully checked against the market, and have been found to be competitive.

 

3.7       in respect of borrowing the Council should evaluate the economic and market factors that influence the manner and timing of any decision to fund.

 

 

3.8       consider the merits and demerits of alternative forms of funding, including funding from revenue, leasing and private partnerships.

 

3.9       consider the alternative interest rate bases available, the most appropriate periods to fund and repayment profiles to use and, if relevant, the opportunities for foreign currency funding.

 

3.10    consider the ongoing revenue liabilities created, and the implications for the Council’s future plans and budgets.

 

3.11    in respect of investment decisions, the Council should consider the optimum period, in the light of cash flow availability and prevailing market conditions.

 

3.12    consider the alternative investment products and techniques available, especially the implications of any which may expose the Council to changes in the value of its capital.

 

 

 

Council Action

 

This Council will maintain full records of its treasury management decisions, and of the processes and practices applied in reaching those decisions both for the purposes of learning from the past, and for demonstrating that reasonable steps were taken to ensure that all issues relevant to those decisions were taken into account at the time.

 

TMP4             APPROVED INSTRUMENTS, METHODS AND TECHNIQUES

 

Explanation

 

It is important that the Council is clear about the treasury management instruments, methods and techniques used as one of the main issues to be taken into account when reaching decisions in the need to protect public funds. This treasury management practice requires that the Council is equipped with the skills and experience to evaluate and control the risks and advantages associated with using the instruments available to it before including them in the approved list. Only instruments that the organisation has the skills and experience to evaluate should be included in their approved list, even if they are legally permitted to do so. This principle applies to investment, borrowing and other means of raising capital and project finance, and to the use of one off-market or financial derivative instruments such as interest rate swaps. The consideration of skills and experience is particularly critical where organisations request to be treated as professional clients under MIFID II. Designation under MIFID II should be endorsed by the treasury management strategy and regularly reviewed to ensure that designation remains appropriate.

 

 

 

Council Action

 

This Council will undertake its treasury management activities by employing only those instruments, methods and techniques detailed in the policy, and within the limits and parameters defined in Treasury Management Practice 1 Risk Management.

 

 

This Council has reviewed its classification with financial institutions under MIFID II and has set out in the schedule to this document those organisations with which it is registered as a professional client and those with which it has an application outstanding to register as a professional client.

 

 

 

 

TMP5             ORGANISATION, CLARITY AND SEGREGATION OF RESPONSIBILITIES, AND DEALING ARRANGEMENTS

 

Explanation

 

It is considered vital that there should be a clear division of responsibilities, included in a written statement of the duties of each post engaged in Treasury Management. It is especially important that staff responsible for negotiating and closing deals are not responsible for recording them, or for maintaining the cash book. This is in order to create a framework for internal check, and reflects both the variety of activities in treasury management and the very often large sums involved.

 

 

 

Council Action

 

This Council considers it essential, for the purposes of the effective control and monitoring of its treasury management activities, for the reduction of the risk of fraud or error, and for the pursuit of optimum performance, that these activities are structured and managed in a fully integrated manner, and that there is at all times a clarity of treasury management responsibilities.

 

The principle on which this will be based is a clear distinction between those charged with setting treasury management policies and those charged with implementing and controlling these policies, particularly with regard to the execution and transmission of funds, the recording and administering of treasury management decisions, and the audit and review of the treasury management function.

 

If and when this Council intends, as a result of lack of resources or other circumstances, to depart from these principles, the responsible officer will ensure that the reasons are properly reported in accordance with Treasury Management Practice 6 Reporting requirements and management information arrangements, and the implications properly considered and evaluated.

 

The Director of Corporate Services will ensure that there are clear written statements of the responsibilities for each post engaged in treasury management, and the arrangements for absence cover.

 

The Director of Corporate Services will ensure there is a proper documentation for all deals and transactions, and that procedures exist for the effective transmission of funds.

 

 

 

TMP6             REPORTING REQUIREMENTS AND MANAGEMENT INFORMATION ARRANGEMENTS

 

Explanation

 

It is recommended that the Council’s treasury management policy statement should specify formal reporting arrangements by the Director of Corporate Services to full Council, to include at a minimum annual reports both before, mid-year and after the year-end.

 

Council Action

 

This Council will ensure that regular reports are prepared and considered on the implementation of its treasury management policies, on the effects of decisions taken and transactions executed in pursuit of those policies, on the implications of changes, particularly budgetary, resulting from regulatory, economic, market or other factors affecting its treasury management activities and on the performance of the treasury management function.

 

 

The following reporting process has been agreed by the Council:

 

            6.1       Annual Reporting Requirements before the start of the year:

 

·         Review of the Council’s approved clauses, treasury management policy statement and practices

 

·         Strategy report on proposed treasury management activities for the year

 

·         Proposed Treasury Management and Prudential Indicators

 

           

            6.2       Quarter 1 and Quarter 3 Reporting Requirements during the year which will be presented to both Executive Board and Policy and Resources Scrutiny Committee:

                                

·         Activities undertaken

 

·         Variations (if any) from agreed policies/practices

 

·         Performance report

 

·         Performance against Treasury Management and Prudential  Indicators

 

            6.3       Mid Year Reporting Requirements during the year which will be presented to Council, Executive Board and Policy and Resources Scrutiny Committee:

                                

·         Activities undertaken

 

·         Variations (if any) from agreed policies/practices

 

·         Performance report

 

·         Performance against Treasury Management and Prudential  Indicators

 

           

            6.3       Annual Reporting Requirements after the year end

 

·         Transactions executed and their revenue (current) effects

 

·         Report on risk implications of decisions taken and transactions executed

 

·         Compliance report on agreed policies/practices, and on statutory/regulatory requirements

 

·         Performance report

 

·         Report on compliance with Revised CIPFA Treasury Management Code of Practice 2017 recommendations

 

·         Performance against Treasury Management and Prudential Indicators

 

 

By undertaking the above it will ensure, as a minimum, that those with ultimate responsibility for the treasury management function appreciate fully the implications of treasury management policies and activities, and that those implementing policies and executing transactions have properly fulfilled their responsibilities with regard to delegation and reporting.

 

 

 

 

 

TMP7       BUDGETING, ACCOUNTING AND AUDIT ARRANGEMENTS

 

Explanation

 

It is recommended that the Council brings together for budgeting and management control purposes, all of the costs and revenues associated with the Council’s treasury management activities, regardless of how the Council has actually organised the treasury management function. In this context the Council’s treasury management budgets and accounts should clearly identify.

 

·         Manpower numbers and related costs

 

·         Premises and other administrative costs

 

·         Interest and other investment income

 

·         Debt and other financing costs (or charges for the use of assets)

 

·         Bank and overdraft charges

 

·         Brokerages, commissions and other transaction-related costs

 

·         External advisers’ and consultants’ charges

 

 

It is normal practice for the external auditor to have access to all papers supporting and explaining the operation and activities of the treasury management function. The auditor will be expected to enquire as to whether the Revised CIPFA Treasury Management Code of Practice 2017 has been adopted, and whether its principles and recommendations have been implemented and adhered to. Any serious breach of the recommendations of the Revised CIPFA Treasury Management Code of Practice 2017 should be brought to the external auditor’s attention.

 

 

 

Council Action

 

The Director of Corporate Services will prepare, and this Council will approve and, if necessary, from time to time will amend, an annual budget for treasury management, which will bring together all of the costs involved in running the treasury management function, together with associated income. The matters to be included in the budget will at minimum be those required by statute or regulation, together with such information as will demonstrate compliance with TMP1 Risk management, TMP2 Performance Measurement, and TMP4 Approved instruments, methods and techniques. The Director of Corporate Services will exercise effective controls over this budget, and will report upon and recommend any changes required in accordance with TMP6 Reporting requirements and management information arrangements.

 

The  calculation  and  compliance  of Treasury Management and Prudential  Indictors  will  be  examined  by  the  Wales Audit Office.

This Council will account for its treasury management activities, for decisions made and transactions executed, in accordance with appropriate accounting practices and standards, and with statutory and regulatory requirements in force for the time being.

This Council will ensure that its auditors, and those charged with regulatory review, have access to all information and papers supporting the activities of the treasury management function as are necessary for the proper fulfillment of their roles, and that such information and papers demonstrate compliance with external and internal policies and approved practices.

 

 

 

 

 

 

 

TMP8        CASH AND CASH FLOW MANAGEMENT

 

 

                   Explanation

 

                   The preparation of cash flow projections on a regular and timely basis provides a sound framework for effective cash management. Procedures for their preparation and review/modification, the periods to be covered, sources of data etc. should be an integral part of the schedules to the Council’s approved treasury management practices.

 

 

                   Council Action

 

                   Unless statutory or regulatory requirements demand otherwise, all monies in the hands of the Council will be under the control of the Director of Corporate Services and will be aggregated for cash flow and investment management purposes. Cash flow projections will be prepared on a regular and timely basis, and the Director of Corporate Services will ensure that these are adequate for the purposes of monitoring compliance with Treasury Management Practice 1 (2) liquidity risk management.

 

 

 

 

TMP9        MONEY LAUNDERING

 

                   Explanation

 

                   Money Laundering has the objective of concealing the origin of money generated through criminal activity. Legislation has given a higher profile to the need to report suspicions of money laundering. Also, organisations such as Councils that undertake business under the Financial Services Act, or engage in certain specified activities, are required to set up procedures to comply with Money Laundering Regulations 2007. These require Councils:

 

·         To set up procedures for verifying the identity of clients

 

·         To set up record-keeping procedures for evidence of identity and transactions

 

·         To set up internal reporting procedures for suspicions, including the appointment of a money laundering reporting officer

 

·         To train relevant employees in their legal obligations

 

·         To train those employees in the procedures for recognising and reporting suspicions of money laundering

 

The Council should establish whether the Money Laundering Regulations 2007 apply to them. And it is for individual organisations to evaluate the prospect of laundered monies being handled by them, and to determine the appropriate safeguards to be put in place. It is the legal responsibility of every person engaged in treasury management to make themselves aware of their personal responsibilities, but the Revised CIPFA Treasury Management Code of Practice 2017 recommends that Councils bring them to their staff’s attention and consider the appointment of a member of staff to whom they can report any suspicions.

 

 

 

                    Council’s Action

 

                    This Council is alert to the possibility that it may become the subject of an attempt to involve it in a transaction involving the laundering of money.  Accordingly, it will maintain procedures for verifying and recording the identity of counterparties and reporting suspicions, and will ensure that staff involved in this are properly trained.

 

 

 

TMP10      TRAINING AND QUALIFICATIONS

 

                    Explanation

 

                    All Councils should be aware of the growing complexity of treasury management. Modern treasury management demands appropriate skills, including a knowledge of money and capital market operations, an awareness of available sources of funds and investment opportunities, an ability to assess and control risk, and an appreciation of the implications of legal and regulatory requirements.

 

                    Every Council should provide the necessary training, having assessed the professional competence of both those involved in the treasury management function, and those with a policy, management or supervisory role.   If necessary, they should ensure that access exists to the necessary expertise and skills from external sources.   Arrangements to ensure the availability of suitable skills and resources should recognize the prospect that staff absences may, at times, demand that others step in who do not normally have involvement on a day-to-day basis with the treasury management function.

 

                    When feasible in the context of the size of a particular organisation and its treasury management function, career progression opportunities should be provided and succession issues should be properly addressed. Secondments of senior management to the treasury management function for appropriate periods may benefit the effectiveness of the function as a whole.

 

 

 

Council Action

 

                    This Council recognises the importance of ensuring that all staff involved in the treasury management function are fully equipped to undertake the duties and responsibilities allocated to them. It will therefore seek to appoint individuals who are both capable and experienced and will provide training for staff to enable them to acquire and maintain an appropriate level of expertise, knowledge and skills. The Director of Corporate Services will recommend and implement the necessary arrangements.

 

The Director of Corporate Services will ensure that council members tasked with treasury management responsibilities, including those responsible for scrutiny, have access to training relevant to their needs and those responsibilities.

 

Those charged with governance recognise their individual responsibility to ensure that they have the necessary skills to complete their role effectively.

 

 

 

TMP11      USE OF EXTERNAL SERVICE PROVIDERS

 

                    There are a number of service providers available to support the treasury management activities of public service organisations.

 

                    Perhaps the most active and long-standing of these have been the money-broking companies, whose role it is to act as intermediaries, making introductions between the prospective parties to transactions.

 

                    It is not the role of brokers to provide advice on the creditworthiness of those organisations to which public service organisations may lend. They may provide information already in the public domain, but may not interpret it. The use of brokers is a matter for local decision. But it is considered good practice, if their services are used, to ensure that business is spread between a reasonable number of them, and certainly no fewer than two. And it is not uncommon for their services to be the subject of a competitive tendering process every few years.

 

                    Direct dealing with principals is a not uncommon feature of treasury management in the public services which, if nothing else, can provide a useful check on brokers’ performance.

 

                    An issue that causes some debate is whether it is necessary or desirable for public service organisations to tape conversations with brokers and principals. This is a matter for local discretion, particularly in the context of the costs involved, but is generally to be recommended.

 

                    Most public service organisations require the services of clearing bankers, and a growing number make use of the services of a wider group of banks, particularly to meet their need for private finance and partnership funding. The principles of competition need to be recognised here, too. Certainly, it is highly desirable to subject clearing banking services to competition, perhaps as frequently as every three or four years.

 

                    There has also been a growing tendency for public service organisations to employ external advisers and consultants, often for the purposes of a general treasury management advisory service, but also for specific purposes, such as the securing and structuring of funding and for partnership arrangements. These, too, should be the subject of regular competitive tendering.

 

 

 

                    Further, many public service organisations employ the services of external investment managers to help manage their surplus cash and, where relevant, their pension fund, trust fund or endowment fund assets.

 

                    CIPFA advises all organisations using the services of external service providers to document comprehensively the arrangements made with them.

                   

 

Council Action

 

                    The Council recognises that responsibility for treasury management decisions remain with the Council at all times. It recognises the potential value of employing external providers of treasury management services, in order to acquire access to specialist skills and resources. When it employs such service providers, it will ensure it does so for reasons which will have been submitted to a full evaluation of the costs and benefits. It will also ensure that the terms of their appointment and the methods by which their value will be assessed are properly agreed and documented, and subjected to regular review. And it will ensure, where feasible and necessary, that a spread of service providers is used, to avoid overreliance on one or a small number of companies.

 

 

 

TMP12      CORPORATE GOVERNANCE

 

                    The Revised CIPFA Treasury Management Code of Practice 2017recommends that public service organisations state their commitment to embracing the principles of corporate governance in their treasury management activities, notably openness and transparency.

 

                    It is CIPFA’s view that:

 

·         adoption of the principles and policies promoted in the Revised CIPFA Treasury Management Code of Practice 2017  and in these guidance notes will in itself deliver the framework for demonstrating openness and transparency in an organisation’s treasury management function

 

·         publication of and free access to information about an organisation’s treasury management transactions and other public documents connected with its treasury management activities will further assist in achieving this end

 

·         establishing clear treasury management policies, the separation of roles in treasury management and the proper management of relationships both within and outside the organisation will establish the integrity of the function

 

·         robust treasury management organisational structures, together with well-defined treasury management responsibilities and job specifications, will enhance accountability

 

·         equality in treasury management dealings, absence of business favouritism and the creation of keen competition in treasury management will lay the groundwork for fairness.

 

                    The following paragraphs further emphasise the practices that CIPFA believes an organisation should employ to ensure the principles of corporate governance are successfully implemented.

 

 

Procedural responses

 

                    The policies, strategies of treasury management should link clearly to the organisation’s other key policies and strategies. In the management of risk, in particular, treasury risk management should be an integral part of its overall risk management processes, culminating in a well-defined, organisation-wide strategy for the control of risk and contingency planning.

 

                    The management and administration of treasury management should be robust, rigorous and disciplined. Over the years, some of the most significant examples of treasury mismanagement, in both the public services and the private sector, have resulted from procedural indiscipline. This has frequently been as a result of a failure to apply otherwise well-documented management and administration systems, or through failures in transmission, documentation or deal recording processes.

 

                    Reporting arrangements should be applied so as to ensure that those charged with responsibility for the treasury management policy have all the information necessary to enable them to fulfil openly their obligations; and that all stakeholders are fully appraised of and consulted on the organisation’s treasury management activities on a regular basis.

 

                    The procedures for monitoring treasury management activities through audit, scrutiny and inspection should be sound and rigorously applied, with an openness of access to information and well-defined arrangements for the review and implementation of recommendations for change.

 

                    The application and interpretation of performance data should be clear, concise and relevant to the organisation’s treasury management activities.

 

Stewardship responsibilities

 

                    The Director of Corporate Services should ensure that systems exist to deliver proper financial administration and control, and a framework for overseeing and reviewing the treasury management function.

                   

As regards a control framework, an organisation’s formal policy documents should define clearly procedures for monitoring, control and internal check.

 

                    With regard to delegation it is vitally important that those involved in the implementation of treasury management policies and the execution of transactions are unambiguously empowered to undertake their tasks, and that reporting lines are well-defined.

 

 

                    An organisation’s adoption of and adherence to the Revised CIPFA Treasury Management Code of Practice 2017 should be widely broadcast, as should the principles of the Revised CIPFA Treasury Management Code of Practice 2017 and the method of its application in the organisation.

 

The organisation’s procedures for reviewing the value of the treasury management function, and the implementation of opportunities for improvement, should be both continuous and open to examination.

 

 

 

The governance of others

 

                    In respect of the organisation’s dealings with counterparties, external service providers and other interested parties, clear procedures should exist to enable the organisation, as far as is practicable, to monitor their adherence to the legal or regulatory regimes under which they operate.

 

 

 

Council Action

 

                    This Council is committed to the pursuit of proper corporate governance throughout its businesses and services, and to establishing the principles and practices by which this can be achieved.  Accordingly, the treasury management function and its activities will be undertaken with openness and transparency, honesty, integrity and accountability.

In respect of external service providers appropriate financial review procedures will be undertaken, including Profit and Loss, Balance Sheet and cash flow monitoring, as appropriate.

This Council has adopted and has implemented the key recommendations of the Revised CIPFA Treasury Management Code of Practice 2017. This is considered vital to the achievement of proper corporate governance in treasury management, and the Director of Corporate Services will monitor and, if and when necessary, report upon the effectiveness of these arrangements.