Le Magazine du Trésorier - n°63 - 3ème trimestre 2008 - (Page 24)

FORUM OF ADVERTISERS Treasurers are facing many challenges! ments regarding financial instruments. The survey shows that most difficulties were found in complying with all the disclosure requirements, the significant amount of work needed for historical data research and the liquidity and sensitivity analysis. Despite being implemented several years ago, IAS 39, a standard which establishes principles for recognizing and measuring financial instruments, is still a major challenge for most companies questioned.A great proportion found difficulties in the strict rules, which limit the eligibility of some hedged items to be designated as part of a hedging relationship and in testing hedge effectiveness. CASH FORECASTS Cash management remains a main concern for European treasurers, not only because of the subprime crisis, which has led to a reduction in liquidity, but also because of the need to allocate resources in an efficient way. In contrast with the 2006 results, our survey shows the growing need for corporate treasurers to carry out daily treasury forecasts (half of the companies questioned versus two-fifths two years ago) reflecting the threat of uncertainty and liquidity risk arising in global capital markets in the last few months. The balance sheet approach is a popular route that both shareholders and senior management tend to take when producing a cash forecast. Just as income statements show the accounting profit for the year gone by, and balance sheets show the company at a point in time, so cash flow statements provide a link between this year and the next. Interest in published cash flow statements has created an extra focus on timely and accurate submission of forecasts.While it is widely recognized that the likely result of a cash flow statement varies greatly over a year because of fluctuations in foreign exchange (FX), interest rates, commodity prices and general business performance, increasing emphasis has been placed on the accurate and reliable production of cash forecasts – from the bottom up. Furthermore, the implementation of the Single Euro Payments Area (SEPA) will enable companies to improve the efficiency of international payments, through payment factories for example, although the survey shows that a great proportion of European companies will adopt a “wait and see” strategy. Olivier Drion rnst & Young has surveyed 55 large companies across Europe through interviews with treasury managers. Treasury function trends appear to be independent from the industry and size of companies. The ongoing uncertainty and turmoil in the capital markets in the last months make the key role played by corporate treasurers in their aim to soften the effects of volatility in their respective company’s results essential. But this is not the only challenge that the Treasury function is facing today. Other challenges include regulation, financial risks, cash forecasts, tools and tax risks. MAIN FINANCIAL RISKS As far as financial risks are concerned, foreign exchange and interest rate risks continue to be the main worries for European corporate treasurers. But there are other emerging risks, according to the survey, on which treasurers are focusing due to the subprime crisis and the consequent slowdown of the world economy: liquidity and credit risk. It is also worth mentioning the market risk impact on commodity prices, which has led to a doubling of the price of oil in less than one year. The vast majority of European companies (three-quarters of respondents) measure their risk exposure at a central level, and complex models of risk valuation such as Value at Risk (VaR) and sensitivity analysis are widespread. Nevertheless, more than one-half report difficulties in measuring these risks and still only two fifths of the corporate treasurers report to their Audit Committee, illustrating the long road ahead for risk management in the future. REGULATION Corporate treasurers have had to embrace several changes in regulation over recent years: SOX Act, Basel II, IAS 39. When IFRS 7 was first adopted it proved to be very difficult for many European companies. This new standard requires companies to enhance the disclosures contained in their financial state-

Table des matières de la publication Le Magazine du Trésorier - n°63 - 3ème trimestre 2008


Le Magazine du Trésorier - n°63 - 3ème trimestre 2008