The liquidity risk in the banking companies audit

Author:university professor, PhD. Veronel AVRAM, university professor, PhD. Marioara AVRAM



Keywords:liquidity risk, efefctive liquidity, necessary liquidity, liquidity indicators, maturity range

Banks ususally confront with a multitude of risks, one of them being the liquidity risk which can be expressed as the possibility at at given moment not correlate the assets and liability maturity on maturity ranges. The paper starts from the Norms of the National Bank of Romania no. 1/2001 and no. 1/2002, prezenting a calculation for the liquidity indicator. For this purpose, the appendixes 1a) and 1c) are given, with their help identifying the total effective liquidity, starting from 1 month up to assets for which the remaining life is more than an year, stating the basic rules for a correct reporting. By the appendixes 1b) and 1d) the necessary liquidity has been identified, also for the total, splitted on the same maturity ranges and stating the basic rules which allows to establish a hierarchy in time of the payables. \r\n\r\nBy making a report between the effective liqiuidity and the necessary liquidity, the global liquidity indicator could be calculated for the global amount and by maturity ranges, the calculated value not being possible to be subunitary. The complexity of the calculations, the issues related to evaluation and existance of the assets, liabilities and of the off balance sheet items makes the management of the banking liquidity factor an issue of a primary importance. Moreover, the banks by internal regulations, are able to follow in more details, more restrictively, the liquidity indicator, this leading to an increase in fraud and error risks. \r\n\r\nFor the auditor, to undertsand the issues the liquidity management raise is of an essential nature, considering that the liquidity risk, the credit risk, the interest risk, the operational risk, and the reputational risk are all interrelated, taking over a series of vulnerabilities that leads to an increase in the auditor`s professional judgement complexity.