Association of Corporate Treasurers (ACT) Qualifications Treasury Fundamentals and the Treasury Function Syllabus

Treasury Fundamentals and the Treasury Function syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Treasury Fundamentals and the Treasury Function in Association of Corporate Treasurers (ACT) Qualifications, not a summary of it.

1. 1

   The Role and Scope of Corporate Treasury

   4 topics

   • Purpose and mandate of the treasury function
     • Liquidity, funding, risk and capital management remit
     • Treasury as service provider vs. profit centre vs. cost centre
     • Strategic, financial and operational levels of treasury activity
   • Treasury organisation and operating models
     • Centralised, decentralised and hybrid structures
     • In-house bank and shared service centre models
     • Regional treasury centres and location drivers
   • Treasury policy framework
     • Setting objectives, mandates and delegated authorities
     • Policy ownership, approval and review cycles
   • Stakeholders and reporting lines
     • Board, audit committee and CFO relationships
     • Interaction with FP&A, tax, procurement and the business units
2. 2

   Treasury Governance, Controls and Operations

   5 topics

   • Front, middle and back office segregation
     • Deal execution, risk control and settlement responsibilities
     • Segregation of duties and the four-eyes principle
   • Treasury operational risk and controls
     • Authorisation limits and dealing mandates
     • Confirmation, reconciliation and settlement controls
   • Treasury management systems (TMS) and technology
     • Core TMS functionality and selection criteria
     • Bank connectivity, SWIFT and APIs
   • Fraud prevention and cyber resilience in treasury
   • Internal and external audit of treasury
3. 3

   The Economic and Financial Environment

   4 topics

   • Macroeconomic drivers relevant to treasury
     • GDP, inflation, employment and the economic cycle
     • Monetary policy and central bank operations
     • Fiscal policy and government borrowing
   • Interest rates and the yield curve
     • Term structure theories and curve shapes
     • Real vs. nominal rates and the Fisher relationship
   • Financial markets and their participants
     • Money markets, capital markets and FX markets
     • Roles of banks, investors and intermediaries
   • Regulation of the financial system
     • Basel framework and bank capital/liquidity rules
     • Conduct and market regulation (FCA, PRA roles)
4. 4

   Ethics, Sustainability and Professionalism

   4 topics

   • Professional ethics in treasury
     • ACT code of professional conduct
     • Conflicts of interest and confidentiality
   • Corporate governance principles
     • UK Corporate Governance Code and board responsibilities
     • Risk appetite and three lines of defence
   • Sustainable finance and ESG in treasury
     • Green, social and sustainability-linked instruments
     • Climate risk disclosure and TCFD
   • Anti-money laundering and financial crime awareness

Treasury Fundamentals and the Treasury Function flashcards for Association of Corporate Treasurers (ACT) Qualifications

22 of 53 cards from the Treasury Fundamentals and the Treasury Function deck — real questions with worked answers.

1. What are the three core purposes (the 'mandate') of the corporate treasury function?

   To manage (1) liquidity and cash, (2) financial risk (FX, interest rate, commodity, credit), and (3) funding and capital structure — ensuring the firm always has enough cash to meet obligations while optimising returns and protecting value.

2. Define the treasury function in a non-financial corporate.

   The specialist function responsible for managing the organisation's holdings of, and dealings in, money and financial instruments — covering cash and liquidity management, funding, banking relationships, and financial risk management.

3. What is the primary, overriding objective of treasury that takes priority over profit?

   Ensuring liquidity — that the organisation can always meet its financial obligations as they fall due (solvency/going concern). Liquidity protection ranks above return generation.

4. Distinguish a 'cost centre' treasury from a 'profit centre' treasury operating model.

   A cost centre treasury manages risk passively to support the business and is not expected to generate profit (success = control and efficiency). A profit centre treasury actively takes positions to generate returns and is measured on profit, accepting more risk.

5. What are the three common treasury operating/structural models for a group?

   (1) Centralised treasury (one central team controls all activity), (2) Decentralised treasury (each subsidiary runs its own), and (3) Hybrid / 'centre of excellence' (central policy and oversight with some local execution).

6. List two key advantages of a centralised treasury structure.

   Economies of scale and netting of exposures (lower costs, fewer external transactions), plus consistent control, standardised policy, better visibility of cash, and stronger expertise/negotiating power with banks.

7. What is an in-house bank (IHB) in treasury organisation?

   A centralised structure where the parent treasury acts as a bank to group subsidiaries — providing internal accounts, intercompany loans/deposits, netting, and payments-on-behalf-of (POBO), reducing reliance on external banks.

8. What is a treasury 'shared service centre' (SSC)?

   A centralised operational unit that processes transactional treasury and finance tasks (payments, reconciliations, settlements) for the whole group to gain efficiency and standardisation.

9. What is the purpose of a treasury policy framework?

   To set out the agreed objectives, authorities, limits and controls within which treasury must operate — translating board risk appetite into rules so activity is consistent, controlled and aligned with the organisation's strategy.

10. Name four typical components of a treasury policy document.

    (1) Objectives/scope, (2) approved instruments and counterparties, (3) limits (counterparty, position, currency, maturity), and (4) delegated authorities, dealing mandates, reporting and control requirements.

11. Who should approve the treasury policy, and how often is it typically reviewed?

    The board (or a delegated board committee) approves treasury policy, and it is normally reviewed at least annually or when circumstances/strategy change materially.

12. What is a counterparty (credit) limit in treasury policy and why is it used?

    A maximum permitted exposure to any single counterparty (often tiered by credit rating). It controls concentration/credit risk so that the failure of one bank or counterparty cannot cause material loss.

13. Who are the typical key stakeholders of the treasury function?

    The board/CFO, business units, shareholders/investors, lenders and banks, rating agencies, regulators, auditors, employees, and suppliers/customers — all with an interest in the firm's liquidity and financial stability.

14. To whom does the Head of Treasury (Group Treasurer) most commonly report?

    The Chief Financial Officer (CFO), who in turn reports to the CEO and board — establishing treasury's reporting line within the finance function.

15. What is the purpose of segregating treasury into front, middle and back office?

    To separate dealing, risk control and settlement so that no single person can initiate, value/monitor and settle a transaction — preventing fraud, error and unauthorised dealing.

16. What does the treasury FRONT office do?

    Executes deals — dealing/trading, managing cash positions, raising funding, hedging risk, and managing bank relationships. It originates transactions and takes/manages market positions.

17. What does the treasury MIDDLE office do?

    Independent risk management and control — monitors compliance with limits and policy, measures and reports exposures and P&L, performs valuations, and produces management/risk reporting.

18. What does the treasury BACK office do?

    Processes and settles deals — confirmation, settlement, payments, reconciliation, accounting and record-keeping. It ensures deals are valid, correctly recorded and settled.

19. Why must the back office confirm deals independently of the front office?

    To verify that each transaction the dealer claims to have made actually exists and matches the counterparty's record — an independent check that detects unauthorised, fictitious or erroneous trades.

20. Define operational risk in the treasury context.

    The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events — e.g. errors, fraud, system failure, mis-settlement, and process breakdowns (distinct from market or credit risk).

21. Name three key controls used to mitigate treasury operational risk.

    Segregation of duties, dual authorisation/four-eyes on payments, dealing limits and mandates, independent confirmation and reconciliation, and a secure standing-settlement-instruction (SSI) database. (Any three.)

22. What is the 'four-eyes principle' in treasury controls?

    A control requiring at least two people to authorise an action (e.g. a payment or deal release) so that no single individual can complete a sensitive transaction alone.

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