The Role and Organization of Treasury
Management (Chap 1)
What are the 8 major objectives of Treasury Management?
LORS-T and GICL-T - correct answer 1. Maintain Liquidity
2. Optimize Cash Resources
3. Manage Risk
4. Maintain access to short-term financing
5. Maintain Investments
6 Maintain access to medium and long term financing
7. Coordinate financial functions and share financial information
8. Enhance global and cross-border focus
What is Counterparty Risk - correct answer the probability that a counterparty will
not correctly complete the transaction as expected, the risk that an issuer will default
What are some of the actions that can mitigate counterparty risk? - correct answer
1. Add to the number of counterparties to increase diversification
2. Eliminate specific counterparties
3. Implement or adjust single counterparty balance limits
4. Rebalance liquidity allocations amount counterparties
5. Adopt third-party custodians for investments
What was the impact of the Great Recession on Treasury? - correct answer 1.
Difficulty finding credit
2. Turmoil in financial markets reduced number of suitable investments
3. Continued consolidation of banks and other financial service entities
What was the Dodd-Frank Wall Street Reform act of 2010 - correct answer The
Dodd-Frank Wall Street Reform Act was the most comprehensive financial reform since the Glass-
,Steagall Act. Like Glass-Steagall, it sought to regulate the financial markets and make another economic
crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Bliley Act, which repealed Glass-
Steagall. Dodd-Frank proposed eight areas of regulation.
What are the primary methods that companies are using to optimize their treasury operations? - correct
answer 1. Streamline processes
2. Implementing new or upgraded technology
3. Adopting new or improved bank/financial services products
4. Outsourcing selected treasury functions
Who oversees treasury functions in a company? - correct answer CFO
What is capital budgeting? - correct answer Capital budgeting pertains to the
allocation of capital among alternative investment opportunities. The process of evaluating, comparing,
and selecting capital projects to a achieve the best return on the investment over time
What is the Sarbanes-Oxley Act (SOX) - correct answer a United States federal law
enacted on July 30, 2002, which set new or enhanced standards for all U.S. public company boards,
management and public accounting firms. The act covers issues such as auditor independence,
corporate governance, internal control assessment, and enhanced financial disclosure.
Who in a company is responsible for accurate financial reporting? - correct answer
CFO
What are the corporate treasurers primary responsibilities? - correct answer 1.
Managing financial Risk
2. Ensuring liquidity and cash management
3. Arranging external financing
4. Managing relationships with banks
5. Investing for short and long term
6. Developing and implementing reasury policies and procedures
May also include FX risk and cross border funds flow
, Other functions may include managing dividend disbursements, insurance and pension assets
Who serves as the general authority for treasury operations? - correct answer BOD
What are the 6 tasks of Daily funds management? - correct answer 1. Preparing a
cash position worksheet
2. Monitoring cash balances
3. Collecting concentrating and disbursing cash
4. Investing and borrowing funds on a short-term basis
5. Researching and reconciling exception items
6. Coordinating functions with other finance areas
What is a corporate resolution? - correct answer Corporate resolutions are
documents that are prepared and approved by the Board of Directors of a given corporation. A
corporate resolution is considered to be a legally binding action until it is amended by further action on
the part of the board. It gives specific people authority to open or close bank accounts
What is a certificate of incumbency? - correct answer An official document,
authorized by the BOD that lists the names of incumbent directors and officers within an organization,
and their corporate position within it. An Incumbency Certificate is used as confirmation of the identity
of the signing authorities of a company and to prove that they are authorized to enter into legally-
binding transactions on the company's behalf.
What is benchmarking? - correct answer Examining and comparing the core
activities within an industry for thepurpose of identifying best practices. Goal is to create improvements
in quality, productiviety, cycle time and reductions in costs and error rates.
What is Reengineering? - correct answer Radical redesign of business processes
with the goal of continuous improvement.
What is Six Sigma? - correct answer A business improvement approach that seeks to
find and eliminate causes of defects and errors in manufacturing and service processes by focusing on
outputs that are critical to customers and a clear financial return for the organization.
Management (Chap 1)
What are the 8 major objectives of Treasury Management?
LORS-T and GICL-T - correct answer 1. Maintain Liquidity
2. Optimize Cash Resources
3. Manage Risk
4. Maintain access to short-term financing
5. Maintain Investments
6 Maintain access to medium and long term financing
7. Coordinate financial functions and share financial information
8. Enhance global and cross-border focus
What is Counterparty Risk - correct answer the probability that a counterparty will
not correctly complete the transaction as expected, the risk that an issuer will default
What are some of the actions that can mitigate counterparty risk? - correct answer
1. Add to the number of counterparties to increase diversification
2. Eliminate specific counterparties
3. Implement or adjust single counterparty balance limits
4. Rebalance liquidity allocations amount counterparties
5. Adopt third-party custodians for investments
What was the impact of the Great Recession on Treasury? - correct answer 1.
Difficulty finding credit
2. Turmoil in financial markets reduced number of suitable investments
3. Continued consolidation of banks and other financial service entities
What was the Dodd-Frank Wall Street Reform act of 2010 - correct answer The
Dodd-Frank Wall Street Reform Act was the most comprehensive financial reform since the Glass-
,Steagall Act. Like Glass-Steagall, it sought to regulate the financial markets and make another economic
crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Bliley Act, which repealed Glass-
Steagall. Dodd-Frank proposed eight areas of regulation.
What are the primary methods that companies are using to optimize their treasury operations? - correct
answer 1. Streamline processes
2. Implementing new or upgraded technology
3. Adopting new or improved bank/financial services products
4. Outsourcing selected treasury functions
Who oversees treasury functions in a company? - correct answer CFO
What is capital budgeting? - correct answer Capital budgeting pertains to the
allocation of capital among alternative investment opportunities. The process of evaluating, comparing,
and selecting capital projects to a achieve the best return on the investment over time
What is the Sarbanes-Oxley Act (SOX) - correct answer a United States federal law
enacted on July 30, 2002, which set new or enhanced standards for all U.S. public company boards,
management and public accounting firms. The act covers issues such as auditor independence,
corporate governance, internal control assessment, and enhanced financial disclosure.
Who in a company is responsible for accurate financial reporting? - correct answer
CFO
What are the corporate treasurers primary responsibilities? - correct answer 1.
Managing financial Risk
2. Ensuring liquidity and cash management
3. Arranging external financing
4. Managing relationships with banks
5. Investing for short and long term
6. Developing and implementing reasury policies and procedures
May also include FX risk and cross border funds flow
, Other functions may include managing dividend disbursements, insurance and pension assets
Who serves as the general authority for treasury operations? - correct answer BOD
What are the 6 tasks of Daily funds management? - correct answer 1. Preparing a
cash position worksheet
2. Monitoring cash balances
3. Collecting concentrating and disbursing cash
4. Investing and borrowing funds on a short-term basis
5. Researching and reconciling exception items
6. Coordinating functions with other finance areas
What is a corporate resolution? - correct answer Corporate resolutions are
documents that are prepared and approved by the Board of Directors of a given corporation. A
corporate resolution is considered to be a legally binding action until it is amended by further action on
the part of the board. It gives specific people authority to open or close bank accounts
What is a certificate of incumbency? - correct answer An official document,
authorized by the BOD that lists the names of incumbent directors and officers within an organization,
and their corporate position within it. An Incumbency Certificate is used as confirmation of the identity
of the signing authorities of a company and to prove that they are authorized to enter into legally-
binding transactions on the company's behalf.
What is benchmarking? - correct answer Examining and comparing the core
activities within an industry for thepurpose of identifying best practices. Goal is to create improvements
in quality, productiviety, cycle time and reductions in costs and error rates.
What is Reengineering? - correct answer Radical redesign of business processes
with the goal of continuous improvement.
What is Six Sigma? - correct answer A business improvement approach that seeks to
find and eliminate causes of defects and errors in manufacturing and service processes by focusing on
outputs that are critical to customers and a clear financial return for the organization.
