FX and Treasury 360 Check
IFA conducts a comprehensive audit of all treasury functions to ensure that they are in line with industry best practices.
The objective of conducting a treasury audit is to ascertain the effectiveness of the current treasury management process, both from a strategic and an operational standpoint, to highlight the gaps therein (if any) and to identify ways in which the process can be improved upon. It also ensures that evaluation of FX risks becomes an integral component of the business decision making fabric and costing/pricing decisions. This is important to ensure sustained competitiveness in the global markets.
It includes a comprehensive audit of all treasury operations - front office, mid-office and back-office - to ensure they are in line with latest and best practices. It involves a thorough examination of the term sheet to ensure that the cost of the various fund based, non fund based and trade finance facilities availed by the firm are in line with what banks offer other comparable sized firms. A thorough backtesting of spot rates, forward rates, option prices is conducted to ensure that they are close to interbank rates and are fair and transparent.
We have seen the treasury audit exercise translate into an improvement in operating margins by anywhere between 0.50% to 1%. IFA Global is considered to be the pioneer of forex audit service in India. Over time it has developed the capability to become a leading provider of end to end treasury audit service in India. The salient features of the service are as follows:
- It is a Comprehensive audit of all treasury functions; Strategic and Operational
- On the Strategic front it involves:
- Analyzing the average realization rate in relation to the underlying exposure rate
- Analyzing the quarter on quarter P&L volatility.
- Ensuring that all relevant funding options are thoroughly evaluated. (This involves exploring all short-term and long-term financing options in Rupee and foreign currency and selecting the most viable funding option)
- On the operational front it involves:
- A thorough analysis of the term sheet.
- Ensuring that the charges, spreads, fees, margins are in line with industry standards for fund based, non-fund based and trade finance facilities availed
- Back testing of spot rates, forward rates and option premium quoted to the firm
- Ensuring that available cash at hand is deployed optimally, i.e. maximizing yield while ensuring adequate liquidity to meet specific and contingent outflows.
- Ensuring compliance with all applicable regulations.