Treasury Operations and Controls Flashcards
7 cards from real CTP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Treasury Operations and Controls flashcards as text
A treasury department uses a 'positive pay' service with its bank. What does this control prevent?
Answer: Check fraud through altered or counterfeit checks
Positive pay requires the company to transmit issued check data to the bank, which rejects checks not matching the file.
Under the CTP exam framework, which document governs how treasury interacts with subsidiaries for intercompany transactions?
Answer: Intercompany loan agreement or transfer pricing policy
Intercompany loan agreements or transfer pricing policies establish terms and rates for intercompany treasury transactions.
Which risk is MOST directly mitigated by implementing a bank account rationalization program?
Answer: Operational risk from managing too many idle or redundant accounts
Bank account rationalization reduces operational complexity and fraud exposure by eliminating unnecessary accounts.
What is the key operational difference between a concentration account and a zero-balance account (ZBA)?
Answer: A ZBA automatically sweeps its balance to a master account at day-end, while a concentration account collects funds manually
ZBAs automatically transfer all end-of-day balances to a master concentration account, optimizing cash pooling.
Which of the following is an example of a preventive control in treasury operations?
Answer: Requiring dual authorization before releasing a wire payment
Requiring dual authorization before releasing payments prevents unauthorized transactions from occurring.
When a company implements an in-house bank (IHB), what primary operational benefit does it provide?
Answer: Centralizes intercompany payments and cash management to reduce external banking costs
An IHB centralizes intercompany flows, netting transactions and reducing the number and cost of external bank transactions.
A company's treasury policy sets a maximum single-counterparty exposure of $10 million. This limit is BEST described as a:
Answer: Credit limit or counterparty risk limit
A counterparty risk limit caps the total financial exposure a company will accept with any single counterparty.