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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

A bank's internal audit finds that the monthly liquidity risk report is reconciled to the general ledger only quarterly, manual adjustments are made without documentation, and the report is circulated only to the treasurer. Which set of BCBS 239 reporting practice weaknesses is correctly identified?

The weaknesses are accuracy and integrity plus distribution. Quarterly reconciliation and undocumented manual adjustments undermine the reliability of the numbers, while circulating the report only to the treasurer fails to get risk information to all relevant decision-makers, as BCBS 239 requires.

  1. AAccuracy and integrity (reconciliation, manual adjustments) and distribution (limited recipients)Correct
  2. BTimeliness (reconciliation) and clarity (documentation)
  3. CComprehensiveness (reconciliation) and frequency (limited recipients)
  4. DAdaptability (manual adjustments) and timeliness (limited recipients)

Explanation

Infrequent reconciliation to source records and undocumented manual adjustments undermine accuracy and integrity, which require reconciliation and validation of reports. Circulation only to the treasurer fails distribution, which requires reports reach all appropriate parties who need them. The other pairings mismatch the weaknesses to the principles.

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