Essentials of Treasury Management, 8th Edition


SUMMARY

This text updates the seventh edition to reflect the many changes that have taken place in the last three years to the responsibilities of treasury management professionals. 

Here’s some of what’s new in the 8th edition of The Essentials of Treasury Management:

  • The chapter on financial accounting and reporting has been reorganized to try to make it easier for the reader to navigate and understand.
  • The chapter on treasury technology has been restructured to focus on the components of a technology solution, specifically its functionality, communications and process management and the project management skills required to implement and operate a technology solution.
  • There is a greater attention to developments in technology, particularly the role of AI, and a discussion of the ethical use of financial data.
  • There is an increased focus on the importance of building and maintaining relationships both internally and externally.
  • The text has been updated to reflect market changes in payments, such as the introduction of real-time payments in the US and the adoption of ISO 20022.
  • The text has also been updated to account for changes in regulation since the previous edition, such as the changes to US money market fund regulations.
  • The text now includes an example of the use of AFP Service Codes in bank account analysis.
  • There is new content illustrating variance analysis.
  • The discussion on the role of treasury in corporate actions has been extended with a more detailed discussion of pre- and post-merger responsibilities.
  • The text includes a more detailed discussion of the links between the accounts payable and accounts receivable functions on one hand and company cash flow on the other.

As with any publication, there are errors found after printing.  This Errata will be updated as errors are reported.

AFP Publication Return Policy

2026-2028 CTP Exam Knowledge Domains

Content AreaPercentage of Test Items

I. Maintain corporate liquidity required to meet current and future obligations in a timely and cost-effective manner.

26%

II. Manage capital structure, manage costs of long-term capital and quantitatively evaluate long-term capital resource investments.

20%

III. Manage internal and external relationships.

20%

IV. Monitor and control corporate exposure to financial, regulatory and operational risk (including emerging and reputational risk).

 

22%

V. Assess impact of technologies on the treasury function.

 

12%

 

ESSENTIALS OF TREASURY MANAGEMENT, 8th EDITION CHAPTERS

Introduction to Study of Treasury Management
I. Introduction
II. The Evolving Role of the Treasury Professional
III. Organization of Essentials of Treasury Management
IV. Notes on Conventions Used in this Book
V. Summary
Chapter 1: The Role of Treasury Management
I. Introduction
II. The Role and Organization of Treasury Management
III. Finance and Treasury Organization
IV. Corporate Governance
V. Summary
Chapter 2: Legal, Regulatory and Tax Environment

I. Introduction
II. General Regulatory Environment
III. Financial Regulatory Regime
IV. National Approaches to Legislation and Regulation
V. Tax Considerations for Treasury
VI. Bankruptcy/Insolvency Laws
VII. Trends in Regulation
VIII. Summary

Appendix 2.1: Bankruptcy Procedures

Chapter 3: Banks and Financial Institutions
I. Introduction
II. Banks
III. Nonbank Financial Institutions: Functions and Services
IV. Fiduciaries
V. Summary
Chapter 4: Payment Instruments and Systems

I. Introduction
II. Payment Overview
III. Payment Instruments
IV. Payment Systems
V. Payment Regulation
VI. Summary

Appendix 4.1: US ACH Standard Entry Class (SEC) Codes and Payment Types
Appendix 4.2: Check Return Reasons
Appendix 4.3: Sample US Business Check
Appendix 4.4: Most Common NACHA Return Reasons Codes
Appendix 4.5: Banking and Payment Systems Information for Selected Countries

Chapter 5: Money Markets
I. Introduction
II. Money Market Participants
III. Money Market Instruments
IV. Summary
Chapter 6: Capital Markets
I. Introduction
II. Structure of the Capital Markets
III. Debt Market
IV. Equity Market
V. Summary

Appendix 6.1: Listing of the World’s Top Stock Exchanges
Chapter 7: Capital Markets Relationship Management and Financial Service Provider (FSP) Selection
I. Introduction
II. Bank Relationship Management
III. FSP Selection
IV. Assessing the Risk of FSPs
V. Summary

Appendix 7.1:Some Bank Account Identification Formats Around the World
Appendix 7.2: Sample RFP Design – Global Treasury Services
Chapter 8: Financial Accounting and Reporting
I. Introduction
II. Accounting Concepts and Standards
III. Uses of Financial Statements
IV. Financial Statement Reporting
V. Auditing and Financial Statement Reliability
VI. Accounting for Foreign Exchange (FX)
VII. Accounting for Derivatives and Hedges
VI. Accounting for Governmental and Not-For-Profit (G/NFP) Organizations
VII. Summary
Chapter 9: Financial Planning and Analysis
I. Introduction
II. Time Value of Money
III. Capital Budgeting
IV. Budgeting
V. Cost Behavior
VI. Financial Statement Analysis
VII. Summary
Chapter 10: Introduction to Working Capital Management
I. Introduction
II The Link Between Cash and Working Capital
III. Components of the Capital Cash Conversion Cycle (CCC)
IV. How Changes in Current Balance Sheet Accounts Impact External Financing
V. Strategies for Investing In and Financing Working Capital
VI. Management of Trade Credit and Accounts Receivable (A/R)
VII. Management of Inventory
VIII. Management of Accounts Payable (A/P)
IX. Working Capital Management Tools for Corporate Groups
X. Summary
Chapter 11: Working Capital Metrics
I. Introduction
II. Fundamental Working Capital Metrics
III. The Cash Conversion Cycle (CCC)
IV. Calculations for Trade Credit Decisions
V. Accounts Receivable (A/R) Monitoring
VI. Summary
Chapter 12:  Disbursements, Collections and Concentration
I. Introduction
II. Disbursements
III. Collections
IV. Concentration of Funds
V. Summary
Chapter 13: Short-Term Investing and Borrowing
I. Introduction
II. Managing Short-Term Investments
III. Pricing and Yields on Short-Term Investments
IV. Managing Short-Term Borrowing
V. Debt Financing
VI. Market Information for Investors and Borrowers
VII. Summary

Appendix 13.1: Selected Risk-Free Rates
Appendix 13.2: Listing of Some Major Credit Rating Agencies
Chapter 14: Cash Flow Forecasting
I. Introduction
II. Purpose of Cash Flow Forecasting
III. Types of Forecasts
IV. Forecasting Process
V. Forecasting Methods
VI. Best Practices for Cash Flow Forecasting
VII. Summary
Chapter 15: Technology in Treasury
I. Introduction
II. Technology for Treasury
III. Treasury Technology Solutions
IV. Project Management
V. Emerging Trends in Technology
VI. Summary

Appendix 15.1: Outline of Different ISO20022 Message Types
Chapter 16: Enterprise Risk Management
I. Introduction
II. Risk Management
III. Categories of Risk
IV. Techniques Used to Measure Risk
V. Managing Insurable Risks
VI. Disaster Recovery and Business Continuity
VII. Summary

Appendix 16.1; Types of Insurance Coverage
Appendix 16.2: Disaster Recovery Checklist
Chapter 17: Financial Risk Management
I. Introduction
II. Types of Financial Risk
III. Managing Financial Risk
IV. Derivative Instruments as Financial Risk Management Tools
V. Managing Interest Rate Exposure
VI. Managing Foreign Exchange (FX) Exposure
VII. Managing Commodity Price Exposure
VIII. Accounting, Tax and Regulatory Issues Related to Financial Risk Management
IX. Hedging Policy Statement
X. Summary
Chapter 18: Treasury Policies and Procedures
I. Introduction
II. Overview of Treasury Policies and Procedures
III. Creating a Treasury Policy Document
IV. Overview of Key Treasury Policies
V. Summary

Appendix 18.1: Sample Short-Term Investment Policy
Chapter 19: Long-Term Investments
I. Introduction
II. Valuation of Capital Market Securities
III. Managing Capital Market Investments
IV. Summary
Chapter 20: The Capital Structure Decision and Management
I. Introduction
II. Capital Structure
III. Raising Long-Term Capital
IV. Managing Long-Term Capital
V. Alternative Financing
VI. Summary

EXCERPT

Essentials of Treasury Management, 8th Edition, Chapter 8: Financial Accounting and Reporting

B. Audit Opinions

There are four types of audit opinions rendered by the independent auditor.18 The highest is the unqualified opinion. If an unqualified opinion cannot be rendered, then the appropriate opinion depends on the nature and materiality (i.e., degree) of the exceptions identified by the auditor. Each type of opinion is described below:

  • Unqualified opinion. The auditor concludes that the financial statements fairly represent the company’s activities and that the following conditions were met:◊All required financial statements were provided.
    • Generally accepted auditing standards (GAAS) were followed in conducting the audit.
    • The statements were presented in accordance with the appropriate accounting standards (e.g., IFRS or US GAAP).
    • The statements were consistent with and comparable to the prior year’s statements.
  • Qualified opinion. If the financial statements fairly reflect the company’s activities and generally comply with the appropriate accounting standards, but there are some specified issues (e.g., a departure from GAAP or a lack of disclosure in the specified area), then a qualified opinion is given. The issues are noted in the written opinion.
  • Adverse opinion. An adverse opinion is required when the financial statements do not fairly reflect the company’s activities in accordance with the appropriate accounting standards, such that the auditor determines the financial statements may be misleading.
  • Disclaimer of opinion. A disclaimer is a statement that the auditor cannot render an opinion. A disclaimer is required if the scope of the audit is so limited that no basis for forming an opinion exists.

Generally, end users give more credence to audited financial statements than to unaudited financial statements, and in turn give more credence to audited financials with an unqualified opinion versus those that are qualified. Even so, since the opinion is not a comment on financial fitness, an end user must still carefully analyze the information contained in financial statements when making decisions.

It should be noted that in the United States, only publicly traded companies are required to have their financial statements audited.19 While some nonpublic companies may have audited financial statements, they are not typically required to do so, unless there are regulatory or debt requirements that mandate an audit. Unaudited financial statements prepared by an external accountant are referred to as compilations and do not include an auditor’s opinion. While companies that do not require an audit may have external accounting firms assist int he preparation of financial statements, these statements are not considered audited financial statements because they do not involve the level of review or verification required for an audit.