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Boards Make Liquidity Scrutiny Job One

More boards are reassessing treasury investment policies, survey says

By Susan Kelly | Updated on June 15, 2009

With the economic downturn and the problems that emerged last year in the supposedly low-risk money markets, more boards are riveting their attention on liquidity and investment policies, according to a survey from KPMG. Fifty-seven percent of directors and finance executives say their boards have taken a closer look at treasury investment policies and procedures, while another 9% say the board has talked about doing so. Of the companies that have reassessed treasury investing practices, 16% have altered the investment authority granted to treasury so that more transactions require board approval.

Jim Negus, a principal in KPMG’s financial risk management practice, says this reassessment is just part of boards’ newly awakened interest in corporate liquidity. “Most of the liquidity conversations we’re having today begin with the board,” Negus says. “The board is trying to answer the question, ‘Are we liquid?’”

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