CTP Treasury Operations and Controls 2 — Questions and Answers
Question 1: Which internal control technique requires two separate individuals to authorize and execute a treasury transaction?
- Dual control (Correct answer)
- Segregation of duties
- Reconciliation
- Audit trail
Correct answer: Dual control
Dual control requires two individuals to jointly authorize a single transaction, preventing unilateral fraud.
Question 2: A treasury management system (TMS) automates which of the following to reduce manual errors in cash management?
- Credit underwriting decisions
- Bank account reconciliation and cash positioning (Correct answer)
- Equity issuance pricing
- Tax return filing
Correct answer: Bank account reconciliation and cash positioning
A TMS automates bank reconciliation, cash positioning, and forecasting to reduce manual errors.
Question 3: What is the primary purpose of a treasury policy statement?
- To set employee compensation levels
- To establish guidelines and limits for managing financial risks and operations (Correct answer)
- To replace external audit requirements
- To define marketing strategies
Correct answer: To establish guidelines and limits for managing financial risks and operations
A treasury policy statement documents authorized instruments, risk limits, and procedures governing treasury activities.
Question 4: Which control best prevents a treasury employee from both initiating a wire transfer and approving it?
- Job rotation
- Segregation of duties (Correct answer)
- Fidelity bond
- Background check
Correct answer: Segregation of duties
Segregation of duties assigns initiation and approval of transactions to different employees, reducing fraud risk.
Question 5: A company's treasury department identifies a $50,000 discrepancy during daily bank reconciliation. What is the FIRST step?
- Write off the discrepancy immediately
- Investigate and identify the source of the difference (Correct answer)
- Report it to regulators
- Close the bank account
Correct answer: Investigate and identify the source of the difference
The first step is always to identify the root cause before taking corrective action.
Question 6: Which payment method provides the LEAST float benefit to the paying company?
- Paper checks
- ACH debits
- Fedwire transfers (Correct answer)
- Draft payments
Correct answer: Fedwire transfers
Fedwire transfers are same-day final settlements, providing no float benefit to the payer.
Question 7: What does a Treasury Operations KPI of 'STP rate' measure?
- Short-term profit margin
- Straight-through processing rate of transactions without manual intervention (Correct answer)
- Stock trading performance
- Settlement time period
Correct answer: Straight-through processing rate of transactions without manual intervention
STP (Straight-Through Processing) rate measures the percentage of transactions processed automatically without manual touch.
CTP Treasury Operations and Controls 2
Which internal control technique requires two separate individuals to authorize and execute a treasury transaction?