Certified Treasury Professional Treasury Operations and Controls Questions and Answers

Question 1

A mid-sized company's treasury department has one employee who is responsible for initiating wire transfers, maintaining the vendor master file, and reconciling the bank account at the end of the month. Which of the following internal control principles is most significantly violated in this scenario?

Accepted Answer

Segregation of duties

Answer

The scenario describes a single person having control over multiple, conflicting parts of a transaction lifecycle (initiation, record-keeping, and reconciliation). This is a classic violation of segregation of duties, which is designed to prevent one person from being able to commit and conceal fraud or errors.

Question 2

What is the primary purpose of a corporate investment policy for managing short-term cash surpluses?

Accepted Answer

To provide a framework for ensuring the safety of principal and maintaining adequate liquidity.

Answer

The primary objectives of a short-term investment policy are, in order of importance, capital preservation (safety), liquidity, and then yield (return). The policy provides a guiding framework with approved instruments, counterparties, and limits, rather than specifying exact purchases.

Question 3

A company's treasury department is developing a business continuity plan (BCP) to ensure it can continue critical functions during a significant operational disruption. Which of the following is a critical component of this plan?

Accepted Answer

Procedures for accessing banking platforms from an alternate site.

Answer

A BCP is focused on maintaining essential operations during a disaster or disruption. Having established procedures to access critical systems, like banking platforms, from a backup location is a fundamental part of ensuring treasury functions (e.g., making payments, monitoring cash) can continue.

Question 4

A treasury manager is conducting a detailed review of the company's monthly bank account analysis statement. The statement shows collected balances, an earnings credit rate (ECR), and fees for various services like wire transfers and lockbox processing. What is the primary objective of this review?

Accepted Answer

To identify and negotiate reductions in excessive bank service charges.

Answer

The account analysis statement provides a detailed breakdown of bank service usage and associated costs. A primary reason for reviewing it is to ensure the fees are accurate, reasonable for the services rendered, and to identify opportunities for cost savings, such as by negotiating better rates or changing service levels.

Question 5

Under the Sarbanes-Oxley Act (SOX) of 2002, which aspect of treasury operations receives the most significant scrutiny regarding internal controls over financial reporting (ICFR)?

Accepted Answer

The documentation and testing of controls around cash management and payment processes.

Answer

SOX, particularly Section 404, requires management to assess and report on the effectiveness of their internal controls over financial reporting. Cash is a highly material and high-risk account, so the processes and controls surrounding cash handling, disbursements, and reconciliation are a primary focus of SOX compliance efforts within treasury.

Certified Treasury Professional Exam Practice Test

Certified Treasury Professional Exam Practice Test

Certified Treasury Professional Treasury Operations and Controls Questions and Answers