Listing of Principles :
4 Operations
4.2 Middle and back office
Principle no. 27: Valuations
Formally documented and approved policies and procedures should be used for the revaluation of positions. Valuations should be based on an appropriate bid or offer level obtained from a recognised provider of market data and, where applicable, calculated using standard market techniques and models. This should be in compliance with generally accepted accounting standards.
Principle no. 28: Profit and loss reporting
Preparation of profit and loss statements for the companyís portfolios should be performed on a regular basis consistent with the nature and complexity of the companyís treasury activities.
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Principle no. 29: Price verification
Prices and rates used for revaluation should be taken from independent sources. Where in-house prices are used, independent review procedures should be in place, including independent models.
Principle no. 30: Trade processing
Approved transactions should be processed in a timely manner, with an audit trail that links the transaction to the initiator.
Principle no. 31: Confirmation
All transactions should be confirmed independently of the trading function with the trading counterparty within defined time constraints. All outstanding confirmations should be reported and followed up on a daily basis.
Principle no. 32: Settlements
All cash and security movements should be properly authorised by senior staff and be executed by staff independent of the trading, trade processing and reconciling functions, with each movement requiring the involvement of at least two such independent staff.
Principle no. 33: Reconciliation
Independent reconciliation should be carried out with third parties on a regular basis (consistent with the level of transactions) and internal reconciliation should be performed as appropriate.
Principle no. 34: Asset control
Controls should exist to ensure that all assets (the companyís own and third parties) are safeguarded and those belonging to third parties are identified and segregated.
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