Treasury Management (Finance)

Unit 1

Unit 1 Introduction to Corporate Treasury Management

Structure:
1.1
Introduction
Objectives
1.2
Treasury Management
Need for specialised handling of treasury
Benefits
1.3
Treasury Risk Management
Treasury exposures
Coping with treasury exposures
1.4
Treasury Functions
Traditional functions
Evolving functions
1.5
Formulation of Treasury Policy
Policy aspects of treasury
Liquidity policies
Treasury risk and return policies
Financial ratios tracking policy
Derivatives policy
Foreign exchange (Forex) policies
Statutory compliance policies
1.6
Treasury Organisation
Structure of the treasury organisation
Treasury: Cost centre or profit centre
Centralised and decentralised treasury management
The concept of integrated treasury
1.7
Summary
1.8
Glossary
1.9
Terminal Questions
1.10 Answers
1.11 Case Study

1.1 Introduction
Corporate Treasury Management is the planning, organising, and control of
funds or cash required by a corporate entity, with the objective of optimising
liquidity and minimising risk.
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In this first unit, we introduce the subject to you and discuss its need and
benefits, the activities involved, the requirement for a treasury policy, and
the fresh contours of the subject in the globalised environment today.
In this unit and in the rest of the book we will use the terms funds, cash
and finance interchangeably, to mean the same thing.
Objectives:
After studying this unit you should be able to:
explain treasury management and treasury exposure
describe the functions of treasury and its organisation structure
explain the process of treasury policy formulation
discuss the structure of treasury organisation
explain the concept of integrated treasury management

1.2 Treasury Management

Treasury management is the planning, organising and control of funds
required by a corporate entity. Funds come in several forms: cash, bonds,
currencies, financial derivatives like futures and options etc. Treasury
management covers all these and the intricacies of choosing the right mix.
According to Teigen Lee E, Treasury is the place of deposit reserved for
storing treasures and disbursement of collected funds. Treasury
management is one of the key responsibilities of the Chief Financial Officer
(CFO) of a company.
Figure 1.1 depicts the varied aspects of treasury management.

Fig. 1.1: Treasury Management

(Source: http://www.eurojournals.com/irjfe_19_15.pdf)
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1.2.1 Need for specialised handling of treasury

Treasury management should be practised as a distinct domain within the
Finance function of an organisation for the following reasons:
One of the most consistent demands on the CFO of a company is that
money must be available when needed, and this becomes a 24/7 task.
The cost of money raised for the business is probably the most crucial
metric in a company for many of its investment and operational
decisions. Hence cost of funds has to be tracked diligently.
Internal financial management in a multi-national corporate entity
requires monitoring of several global currencies.
Globalisation of business has thrown up an unbelievable basket of
opportunities for the CFO to optimise the utilisation of funds and
minimise its costs. This requires expert handling.
Globalisation has also brought in unexpected risks that are not visible to
the untrained eye but can even destroy a business. Who would have
thought that the crash of Lehman Brothers could impact business
houses in interior India? But that was what happened in 2009.
With increasing financial risk shareholders have become jittery about
their holdings and need reassurance often. For a company the
Treasurer is probably the best spokes person to allay the concerns of
stockholders and other interested parties.
1.2.2 Benefits
Managing treasury as an expert subject has many benefits:
Valuable strategic inputs relating to investment and funding decisions
Close monitoring and quick effective action on likely cash surpluses and
deficits
Systematic checks and balances that give early warning signals of likely
liquidity issues
Significant favourable impact on the bottom line for global corporations
through effective management of exchange fluctuation
Better compliance with the increasingly complicated accounting and
reporting standards on cash and cash equivalents
Self Assessment Questions
1. Globalisation of business has thrown up opportunities for optimising the
_________________ and minimising the _________ of funds.
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2. Treasury management improves bottom lines for multinationals through

effective management of _____________________.

1.3 Treasury Risk Management

In this section, we get a glimpse of the risks that are inherent in the treasury
function of a corporate entity and the ways and means adopted by
companies to cope with the risks.
1.3.1 Treasury exposures
The treasury function exposes an organisation to a number of risks:
Liquidity risks, arising from borrowings in the financial market and its
different constituents like banks, NBFCs etc.
Financial loss risks, arising from using a complex variety of financial
instruments such as derivatives.
Currency risks, arising from the fluctuation in the buying and selling
rates of foreign currencies handled.
Accounting risks, arising from decisions relating to accounting, reporting
and disclosure of foreign exchange transaction and translations
Political risks, arising from changes in economic policies and decisions
of governments in all countries in which the entity has business interests
1.3.2 Coping with treasury exposures
Any organisation has to have in place a competent system that:
identifies the exposures to each of the aforesaid risks (identification)
quantifies the impact of each risk to the extent possible (quantifying)
sets policy restrictions and systemic controls on risk taking (policy
formulation)
has a team in place that effectively monitors the external and internal
risks arising from Treasury operations
takes care of periodic reporting to the concerned stakeholders on
Treasury exposures
The treasury risk management team deals with events that impact the
financial results in such a way that the impact is favourable.
Self Assessment Questions
3. Accounting risks arise from decisions relating to accounting, reporting
and disclosure of foreign exchange transactions. (True/False)
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4. A corporation must have a team in place to deal with events that impact
the financial results. (True/False)

1.4 Treasury Functions

What are the typical activities of the Treasury function? We first look at the
traditional functions that Treasury has always handled, and then review the
changes that have evolved in the Treasury function in the 21stcentury.
1.4.1 Traditional functions
Funding Planning and controlling the sourcing of both equity and debt
funds for the business
Cash management organising and scheduling day-to-day movement
of cash and other money market instruments
Treasury cost control efficient negotiation of interest rates, bank
service costs and the cost of other finances raised for the business
Treasury administration Dealing with banks and other financial
agencies
Treasury accounting Complying with the relevant accounting
standards on accounting and reporting of cash and cash equivalents
Exchange management In the case of a multinational company,
managing currency fluctuation risks and deciding on actions to cope with
the risk.
1.4.2 Evolving functions
Strategic funds management The vanilla function of funding has now
given way to a strategic job of short-term and long-term sourcing and
use of funds that improves the financial health.
Systematic cash management Advanced cash management
services have come up in the last 20 years that focus on effectively
minimizing the cash float i.e. the sterile money in the pipeline, which
does not earn interest.
Treasury cost management It is no longer enough to control the
bank interest and service charges, in view of treasury cost variants
available now, like fixed and floating rate swaps and derivatives. As
instruments multiply, with newer and more attractive features, cash
management has to consider these and decide which ones to use in the
attempt to reduce treasury costs.
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Treasury administration The single-vendor concept has become

outdated, and businesses are working with multiple vendors in the
Finance space banks, NBFCs, loan syndicates and financial
consultants for specific purposes. The complexity of treasury
requirements has made specialisation mandatory.
Treasury accounting Accounting and reporting standards have
tightened across the globe, and after scams like Satyam it has become
crucial for companies to regularly monitor treasury reporting.
Exchange management Foreign exchange issues such as
fluctuation, inter-currency movement etc. have become far more
important with globalization of Indian business.
Advanced automation of Treasury The impact of Internet on the
contours of treasury management function has been phenomenal. Webbased tools, online transactions, and live monitoring of interest and
foreign exchange rates etc. have given a new dimension to Treasury.

The key differences between the traditional and the modern Treasury
functions are (a) the increase in complexity and (b) the recognition of
Treasury as a function that can add distinctly to the bottom line and become
a profit centre instead of being just a cost centre.
Activity 1:
Consider you are the chief financial officer of a software company. How
would you oversee the companys Treasury function?
(Hint: Treasury function to be seamlessly linked with (a) operations and
(b) the other finance functions. Different aspects of finance have to be
clearly tackled with an eye on treasury risks.)
Self Assessment Questions
5. Treasury accounting handles compliance with relevant ________
_________ in the accounting and reporting of cash.
6. The impact of _____________ on treasury management functions has
been phenomenal.

1.5 Formulation of Treasury Policy

Treasury policy provides the framework for treasury operations internally as
well as externally vis--vis related functions viz. Accounting and Finance.
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The policy framework comprises management thinking, dos and donts, and
treatment of exceptions. It helps the management keep control over the
function, and gives clarity to Treasury employees as regards their duties and
powers.
The steps in treasury policy formulation are:
1. Spelling out management thinking on the objectives of treasury
2. Writing out the procedures to be followed in implementing the policies,
the control limits, the exceptions and the escalation protocol, and the
process of making policy changes when needed
3. Communicating the policies to all concerned and ensuring they
understand and implement it in spirit
1.5.1 Policy aspects of treasury
While a function or an activity is largely described through a set of steps and
procedures, certain aspects of the activity are also usually governed by a
set of policies. Thus, a company normally has credit policy, which stipulates
policy guidelines on credit to be given to customers; or inventory policy,
which lays down minimum and maximum inventory levels and order quantity
etc. The functionary is expected to work within the framework of the policy.
In a similar manner Treasury function should work under policy guidelines
that cover the key aspects of Treasury. The facets of the Treasury function
that require enunciation in the policies are:
Liquidity or cash balance levels
Risk v. return the desired mix
Financial ratios applicable to Treasury
Dealings in derivatives, choice of instruments that can be used
Defining foreign exchange fluctuation risk levels
Statutory compliance
Cash here means liquid funds held in whatever form bank balances,
currency notes and coins, very short-period deposits etc.
It must be noted that policies take care of the normal circumstances and not
exceptional ones. Even the exceptions specified under each policy are small
and relatively low-end deviations. Major change in conditions may require a
fresh set of policies.

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1.5.2 Liquidity policies

Here we are concerned with
Long-term and short-term liquidity
Minimum and maximum idle cash
Forms in which cash is held
Handling of cash deficits
Investment of cash surpluses
Policy guidelines typically answer the following questions:
What constitutes long term and short term with respect to treasury
decisions?
What are the minimum and maximum cash balance levels?
In what form or forms is liquidity to be maintained? Which forms are not
to be used at all?
In case of cash deficit, what actions are permissible at each managerial
level? Which actions cannot be taken without Top management
approval?
How are long-term and short-term surpluses of cash to be disposed of,
and with whose approval in the organization?
1.5.3 Treasury risk and return policies
Treasury risk is the danger of not having the funds hen required. Treasury
return is the profit earned by investing surplus funds.
In delineating treasury risk-and-return policies we are concerned with
definition of acceptable risk level
definition of the cost of capital or discount rate for evaluating investment
criteria for short-term investment decisions
matching the tenure of investment to the tenure of funding
Policy guidelines typically specify answers to the following questions:
How is risk defined with respect to the financial instruments and other
treasury exposure?
What is acceptable risk level regarding receipt and payment of cash?
What is the companys weighted average cost of capital?
What are the criteria for decision on short-term investment options?
What is considered an appropriate match between the relative maturity
periods of the funding components and the investment portfolio?
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1.5.4 Financial ratios tracking policy

Financial ratios are an integral part of a companys analysis of its financial
position and performance. Ratios measure a number of metrics related to
the companys finances, including profitability, liquidity, solvency and market
performance.
Here we are concerned with
o treasury metrics that have to be tracked and kept under control like
current ratio, debt equity ratio and debt service coverage ratio
o specific financial ratios that have to be measured regularly
o range within which each ratio should move
o action to be taken when ratio goes out of range
Policy guidelines typically specify answers to the following questions:
Which parameters of treasury performance will be monitored? The most
crucial parameter usually is liquidity. Other metrics are idle cash, float,
returns on short-term investment, etc.
Which ratios will be used to measure these parameters? Classic ratios
of liquidity are current ratio and acid test ratio. Many others may be used
depending upon the specific entity and business situations.
What constitutes the acceptable range for each ratio?
What action is required at different managerial levels if the ratio goes out of
range? For instance, if a credit purchase decision will push the acid test
ratio below the minimum, the purchase may have to be cleared by a senior
manager in Commercial.
1.5.5 Derivatives policy
The US Department of Treasury defines derivatives as a wide variety of
financial instruments or contract whose value is derived from the
performance of underlying market factors such as market securities or
indices, interest rates, currency exchange rates and commodity, credit and
equity prices. Derivative transactions include a wide assortment of financial
contracts including structured debt obligations and deposits, swaps, futures,
options, caps, floors, collars, forwards and various combinations thereof.
The derivatives policy is concerned with the following:
Different types of derivatives
Managing risk through the use of derivatives
Derivatives as investment options
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Policy guidelines typically specify answers to the following questions:

Should the entity handle derivative products at all?
From the types of derivatives available which ones should be selected?
What is the selection and implementation process?
1.5.6 Foreign exchange (Forex) policies
Foreign exchange is the conversion of one currency into another currency.
For instance, the US dollar would be foreign exchange for an Indian
company, and will need to be converted to INR for being used in India.
The foreign exchange policies concern the following:
Global nature of the entity
Foreign exchange transaction in the company
Foreign exchange conversion
Methods of managing foreign exchange fluctuation risk
Policy guidelines typically specify answers to the following questions:
What is the entitys exposure to foreign exchange fluctuation risks and
what is the managements risk appetite?
How does the management want to respond to foreign exchange risks in
transactions, that is, imports and exports?
What is the policy with respect to translation risks in financial reporting?
Which methods are to be adopted for containing these risks and which
are to be avoided?
1.5.7 Statutory compliance policies
Statutory compliance policies concern the following:
The statutory regulations that the entity has to observe and comply with
The approach to compliance
Action to be taken if there are compliance issues
Policy guidelines typically specify answers to the following questions:
What are the laws applicable to the business in general and treasury in
particular?
Would the compliance requirement related to an activity be an important
consideration in deciding to take it up?
What level of compliance reporting would be required of the officers on
compliance issues, to the Board and to shareholders?

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What would be the companys attitude to compliance issues, for

example notice received from a government authority regarding a
delayed filing?

Self Assessment Questions

7. The last step in treasury policy is to __________ the policies to all
concerned and ensure that they ______________ the policies in spirit.
8. _______________ policies deal with handling cash deficits and
disposal of cash surpluses.

1.6 Treasury Organisation

Organising the treasury function of a corporate entity effectively is crucial to
the success of the function and eventually of the entity itself. The tasks
involved here are the following:
1. Defining the organisation structure for the treasury function
2. Deciding whether treasury should be a cost centre or a profit centre
3. Deciding whether to centralise or decentralise the treasury function
The answer to 1 (structure) will depend upon the authority and responsibility
bestowed on the function, which in turn will depend upon the answers to 2
(cost centre or profit centre) and 3 (centralised or decentralised).
1.6.1 Structure of the treasury organisation
Figure 1.2 depicts the structure of a comprehensive treasury organisation.

Fig. 1.2: Structure of a Treasury Organisation

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The treasury of a large corporate with Forex exposure is handled by the

following three key departments:
1. Treasurer-Research The Treasurer-Research and the team handle
all the research and analysis needed for both domestic and foreign
market operations. Policy-making, budgeting, setting and reviewing the
cost of capital the most crucial metrics of the treasury function are
the key responsibilities of this department.
2. Front Office Manager The Front Office Managers responsibility can
be divided into two parts: (1) money market operations, which are dealt
with by the Money Market Desk and (2) foreign exchange operations,
managed by the Foreign Exchange Desk. The Front Office closely aligns
its strategies and decisions with the analytical inputs provided by the
Treasurer-Research. Fund-based and non-fund-based facilities, Forex
risk measures and money market instruments are planned here and the
plans are relayed to the Middle Office. This department plans the
sourcing of fund- and non-fund-based facilities required by the business.
Decisions include debt v. equity, specific financing alternatives, securing
limits for bank guarantees and letters of credit, and guidance to middle
office on policy requirements of the Treasury in respect of each of these
areas of action.
3. Middle Office Manager The Middle Office mainly functions as a link
between the Front Office and the Back Office, in the sense that specific
market initiatives and course corrections are directed by it with inputs
from the Front Office and implemented with the help of the Back Office.
The role of the Middle Office is crucial in the effective management of
float, short-term investment planning and execution, organising fundbased and non-fund-based facilities and/or limits, within the policy
guidelines of the Front Office. It also ensures effective guidance to the
Back Office for day-to-day management of the activities related to
treasury.
4. Back Office Typically, the Back Office is a section of the Controllers
Office and not part of the treasury. It has to receive the right inputs and
signals on market movements and on the actions to be taken on a dayto-day basis. Only then the policies and strategies evolved by the Front
Office and directed by the Middle Office will be effectively implemented.
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1.6.2 Treasury: Cost centre or profit centre

The treasury function of a company can be viewed in two ways:
As a cost centre This means the function is a cost to the company,
working within a cost budget and providing the services described in the
previous section.
As a profit centre Here the function is regarded as a revenuegenerating unit and its services to the company are ascribed a market
value. The costs incurred by the function to render the services are
deducted from this revenue and its profit is the basis for evaluating how
well the function has performed.
The revenue ascribed for the services is only an imputed figure and not the
actual revenue for the company. Operations are debited for treasury
services at market rates.
Advantages of viewing Treasury as a profit centre:
It helps in providing market rates to the individual business units for the
services provided and thereby making operating costs more realistic.
The treasurer is motivated to ensure that efficient services are provided
and he makes a good profit.
Disadvantages:
The profit motive could tempt the treasurer to engage in activity that may
be inadvisable in the companys larger interests. It should be noted that
this is not the core business of the entity.
Time would be wasted in arguments between business units and
treasury with respect to charges for the services provided by the
treasury.
The accounting and administrative costs of this treatment could be high.
1.6.3 Centralised and decentralised treasury management
Treasury can be handled either as a central function to the entire company
or managed by individual units within an enterprise separately.
Centralised treasury
The process of centralisation consists of:
Fully centralised management of policies and strategies of the Treasury
function

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Providing centralised liquidity management, foreign exchange and

interest risk management across all geographies in which the company
operates
Cash and bank services management for all units of the company

Advantages:
Centralisation allows the treasurers to exercise greater control over
cash.
It enhances economies of scale and reduces costs for bulk services.
Centralisation can achieve low cost debt, increase investment returns,
reduce financial risks and ensure liquidity across the organisation.
It promotes specialisation of treasury management skills.
Disadvantages:
Delay in operations waiting for approvals from HQ
Central treasury taking decisions without considering local conditions
Increased cost of centralized control especially if the company has
operations in many countries
A good example of centralised treasury is Infosys Ltd, Bengaluru. All
treasury decisions are centralised and executed from the head office at
Bengaluru and almost all foreign operations are executed in the branch
model. Branches do not have the authority or the responsibility to source or
otherwise manage funds except as provided from the central office.
Decentralised treasury
In a decentralised environment, the company allows its subsidiaries,
divisions and Strategic Business Units (SBUs) to manage their treasury
function themselves within the overall policy guidelines. Corporate treasury
remains only a strategic hub responsible for laying down and implementing
treasury policy and overall liquidity management.
A good example of decentralised treasury is Axiata, the Kuala Lumpurbased telco enterprise (IDEA is its Indian extension) with revenues of over
$5.7 billion in 2012. Axiata has a fairly independent system for treasury
management at the units, the central control being limited to policy-making
and key decisions. The company has of course recently undertaken a
review of the system and elected to centralise its Treasury functions in more
areas.
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Advantages:
There are major challenges for large multinationals in managing treasury
in many countries operating out of the headquarters. Decentralising is
inevitable to some extent for them.
It facilitates quick and prompt decisions, which make sure that
operations do not get held up unduly for want of approvals from the
Head Office.
It helps develop all-round managerial talent across the organisation
since the divisional managers become adept at managing funds.
Decentralised treasury can enable the units to use local features of the
function to the benefit of the company, which may not even be known to
the officers in head office. India, for instance, has pre-shipment credit
facility for exports, which a global company can use effectively; however,
the headquarters of that company in some other part of the world may
not be aware of this.
Disadvantages:
Dilution of control over finance and related treasury functions
Scope for companys policy being violated due to abuse of power by
local units
Lack of expertise in the management of treasury as the job may not be
done by professionals at the divisional level
An effective solution is a mix of both approaches. While areas involving
domain expertise like foreign exchange or derivatives should only be
handled centrally, regular bank and cash operations and such other simpler
tasks are better left to the local units.
1.6.4 Concept of integrated treasury
Traditionally, foreign exchange dealings and money market operations were
considered as separate in a corporate organisation. However, with the
interest rate deregulation, liberalisation of foreign exchange activities and
development of foreign exchange market, a need for integrating foreign
exchange dealings and money market dealings arose and grew rapidly.
Integrated treasury manages all market risks associated with the
organisations liabilities and assets in all geographical locations. It
strategises the companys funding to balance cost and liquidity. Integrated
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treasury provides benchmark rates for cost of capital in consonance with the
degree of risk involved.
Activity 2:
Consider you are a member of treasury policy committee in a software
company. What will your policy framework contain?
(Hint: http://www.financeasia.com/News/174076,how-infosys-excels-atcurrency-management.aspx (Interview with the CFO of Infosys on 10
May 2010))
Self Assessment Questions
9. As a profit centre, treasury is regarded as a _______________ unit and
its services to the company are ascribed a _______________.
10. In a decentralised environment, the company allows its subsidiaries to
manage their treasury functions within overall ______ ___________.
11. Risk management deals with balancing risks and _________.
12. Integrated treasury manages all __________________ associated with
the organisations __________________ in all geographical locations.

1.7 Summary

Corporate Treasury Management is the process of managing a business

entitys financial resources in the most efficient manner.
The function has been recognised as a domain with distinct expertise
that can benefit a company in many ways and also expose the company
to a number of risks.
Treasury management functions include funding or financing, cash
management and accounting & reporting, The focus should always be
on the overall cost of the function.
The formulation of treasury policy is a prime task before the companys
CFO, and covers diverse subjects like liquidity, risk v. return, ratio
analysis of key treasury performance parameters, compliance matters
and foreign exchange transactions and translations.
The structure of a typical Treasury organisation has departments for
policy-making, funds & non-funded facilities and foreign exchange.
The company should decide whether its Treasury would be a cost centre
or a profit centre; and whether the function is to be decentralised or

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centrally directed from HO. The decision would depend upon a variety of
factors.
Integrated treasury is a concept that has emerged in the last couple of
decades as an effective solution for global treasury issues.

1.8 Glossary

Disbursement: Payment to discharge a debt or expense.

Legislative: Possessing the power to make laws or law-making.

Retention: The act of keeping in self-possession.

Surplus: Amount in excess of what is required.

Tenor: Period for which money is borrowed or lent.

1.9 Terminal Questions

1. Explain corporate treasury management, its need & benefits and the
meaning of treasury exposure.
2. List and briefly describe treasury functions.
3. What are the different aspects of treasury policy?
4. Draw up a typical treasury organisation and explain its different sections.
5. What are the pros and cons of decentralising the treasury function?

1.10 Answers
Self
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Assessment Questions
Utilisation, cost
Exchange fluctuation
True
True
Accounting standards
Internet
Communicate, implement
Liquidity
Revenue-generating, market rate
Policy guidelines
Returns
Market risks, assets and liabilities

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Terminal Questions
1. Treasury management is the process of planning, organising and
managing the organisations holdings. Treasury exposure opens up the
organisation to a number of risks. For further details, refer to 1.2 and
1.3.
2. Treasury functions comprise funding, non-funded facilities, foreign
exchange management and investment. Refer to 1.4.
3. Aspects of treasury policy include liquidity, risk v. return, foreign
exchange, derivatives and statutory compliance. Refer to 1.5.
4. Treasury-Research, Front office and Middle office are three sections
which report into the treasury Head. The back office, which is part of
the Controllers office, executes decisions taken by Treasury. Refer to
1.6.1.
5. Pros: quicker decisions, development of managerial talent in Treasury;
cons: lack of control, company policy dilution (refer to 1.6.3).

1.11 Case Study

Excerpts from the Annual Report of Saint-Gobain, 2011, page 92.
Treasury and Financing Department
The Treasury and Financing Department defines financing policies for the
entire Group (Compagnie de Saint-Gobain, the General Delegations and the
subsidiaries). Cash management transactions are subject to periodic
controls and at Group level the cash position is monitored at monthly
intervals based on detailed analyses of gross and net debt by currency,
maturity and type of interest rate (fixed or variable), before and after
hedging. Due to Compagnie de Saint-Gobains central role in the Groups
financing, its debt structure is monitored through a specific monthly reporting
system. The Internal Audit unit performs periodic reviews, on a rotating
basis, of transactions by the General Delegations cash management units,
to check their compliance with Treasury and Financing Department policies
and the quality of internal control. Internal controls over cash management
transactions are an integral part of internal audit plans for the subsidiaries
and are also examined by the subsidiaries external auditors. The Groups
risk factors are described on pages 100 to 106. The Treasury and Financing
Department has drawn up a set of procedures for managing these risks
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which is updated on a regular basis and applies to the subsidiaries and

General Delegations. The Department also performs compliance controls on
financial market transactions carried out by the Corporate Treasury unit.
In addition, the Companys external auditors carry out the following reviews
and audits of the Treasury and Financing Department:
a half-yearly review and an annual audit covering
o the type of treasury transactions carried out
o the accounting treatment used for these transactions and
o the underlying risks
an annual review of the security of information systems used by the
Department for conducting its operations
Discussion Questions
1. How is the Treasury function organised in Saint-Gobain?
2. What are the risks managed by the function?
Source: http://www.saint-gobain.com/files/Saint-Gobain-annual-report-2011.pdf

Hint: The Treasury & Financing Department of Saint-Gobain manages

Treasury in a part-controlled, part-decontrolled setup. Subsidiaries, General
Delegations and Corporate Treasury are permitted to function freely but
within the ambit of policies set by Treasury & Financing, and subject to
internal and external audits. You are encouraged to read the report fully.
References:
Bhole, L. M., & Mahakud, J. (2009). Financial Institution and Markets
(5thed.).India: Tata McGraw-Hill.
Khan, M. Y. (2009). Indian Financial Systems (6thed.). India: Tata
McGraw-Hill.
E-References:

http://books.google.co.in/books?id=s4keBrCF2wMC&pg=PA4&dq=
Functions+of+Treasury+Management&hl=en&ei=F9eFTJzvBoiksQOz_
vz6Dw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CDsQ6AEw
AQ#v=onepage&q=Functions%20of%20Treasury%20Management&f=
false(Retrieved on 13th September2010)

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Treasury Management (Finance)

Unit 1

http://www.acrobatplanet.com/non-fictions-ebook/pdf-ebook-treasurymanagement-versus-cash-management.html (Retrieved on 13th

September 2010)

http://www.citigroup.com/transactionservices/home/corporations/docs/
top_priorities_for_treasury.pdf (Retrieved on 13th September 2010)

http://www.ehow.com/about_5406415_role-corporate-treasurymanagement.html (Retrieved on 13th September2010)

http://www.eurojournals.com/irjfe_19_15.pdf

"Treasury Management: An Overview" by Teigen, Lee E. Business

Credit, Vol. 103, Issue 7, July 2001

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