Risk Management in Treasury Operations Group 2: Albania, Azerbaijan, Belarus, Georgia, Kazakhstan, Tajikistan, Ukraine Vienna May 31st, 2017

Q1 and Q2 for following Treasury’s functions: Appropriation Control CONTENT I-Q1. Is risk management part of regular responsibilities of any of the functions / units of the treasury in your country? Q1 and Q2 for following Treasury’s functions: Appropriation Control Payment Processing and Revenue (Collection) Recording and Reporting Oversight of Bank Accounts and Basic Cash Management Assets and Liability Management Financial Reporting Accounting and Internal Control Policies In-year budget execution reporting ICT Other – please Specify I-Q2. Was formal risk analysis / assessment undertaken for any of the treasury functions / processes? If yes, specify the functions / processes and context of the analysis. Is this a regular / periodic activity or a one – time undertaking? I-Q3. Does your treasury have internal documents / methodology that define approaches to risk management? If yes, specify the documents. II-Q1. Do you consider that the concept of the ‘green corridor’ could work in your countries? What are the benefits, risks and mitigation of risks.

ANSWERS I-Q1. Considering the distinguish between controll activities-Risk management-Order functions of Treasury we have concluded that Risk management is an informal part of all treasury operations across all the functions identified. Risk management unit doesn’t exist within the treasury structure. I-Q2 and I-Q3. Formal risk management however, in most countries is limited to the ICT function. The one exception is Albania which has a risk register in the Treasury which identifies all risks, the probability of the risk occurring and the impact of the risk.

ANSWERS (continuing) ANNEX Regjistry of Risk for Ministry of Finance Name of Organization Raported from: Ministry of Finance   Mision of the Ministry Collection and using of public funds with efficency, effectivity and transparency in compliance with government program and national strategy for development and integration. 1 2 3 4 5 6 7 8 9 10 No Description of the risk Risk before the control Existed controls Risks after existed ontrols The need for further controls Actions to address the gaps Holder of the risk The changes on the risk since of the last action (deteriorated => improved <= unchanged =) Coments General Directorate of Treasury Objektivat: Enhancement of AGFIS to generate the consolidated reports on budget implementation/execution and submition in time to Supremme Audit Non functioning of AGFIS for shortcoming’ reason (internally) 6 (high/medium) - Back up system; - Recovery plan after a tragedy; - Testing of the recovery plan after a tragedy; - Reserve plan that will support the manual system in the case of the problems or system stoping. 3 (high/ low)   General Director of Treasury Unchanged (=)

ANSWERS II-Q1 We have concluded that the green corridor is a good initiative in conditions of Georgia‘s Treasury. All countries are very supportive of the overall conceptual framework. The implementation in our countries is depended by some factors considering and analysis as following: No. Benefits Risks Mitigation of risks (hedging elements) 1 Simplify the payments‘ procedures (one step less) Dublication of payments Develop IT for automatic checking 2 Save the working time of central treasury‘s staff, because there is not a manual control on justified documents Compliance with special criteria of the system Integrated FMIS (to interface with other sistems such as tax administration database for identification of receivers etc.) 3 Prompt to third parties Scanned invoiced (not check with original one) Electronic invoice to replace the original invoice. Not scanned, but generated automatically by the system of the receiver of the payment, interface to treasury system (in the distant future)-very costly to adapts the all systems of Receiver-BO’s-Treasury 4 No limits of cash Transfer the payments‘ processing to back office which try to get access in IT functions as an administrator for manually processing Digital signiture 5 Security of the IT system considering the using of VPN for above point 4 Sample checking Always we have to consider the cost/benefit report, their equilibrum to get optimum solution.

ANSWERS II-Q1 (continuing) - In fact countries: Kazakhstan and Belarus have something similar in place. - Most countries felt that this works best focussing on the types of payments similar to Georgia, although Kazakhstan also uses a ceiling or threshold approach where low value payments are fast tracked. - Two countries, Albania and Ukraine, felt their ICT environment needed further development before this concept could be put in place. - There was extensive discussion regarding certain risks, including duplicate payments.  - Risk mitigation - Azerbaijan highlighted that there appeared to be limited risks and so you would not want to inhibit the operation of the corridor, so one way of mitigating risks would be to undertake sampling of transactions which would be subject to additional review and inspection.