Chapter 19 by HC120808165830

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									            Chapter 19

                                          Formatted
            Chapter 19

Treasury Information Management




               Contents

      Key Information Flows
      Electronic Data Interchange
      E-Commerce and the Internet
      Auditing the Short-Term Financial
         Management Information System




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Answers to Questions:
1.    The three main information level needs are: the first level is an operations level
      dealing with routine daily operations and cash management activities, the second
      level is a management level focusing on analysis and decision support rather than
      being transaction oriented, the third level is an executive level focusing on critical
      success factors such as preservation of capital, liquidity, and yield.

2.    Electronic data interchange (EDI) is the electronic movement of information and
      funds between buyer and seller for the purpose of facilitating a business
      transaction.

3.    The three components of EDI consist of: electronic business data interchange
      (EBDI), financial EDI (FEDI), electronic funds transfer(EFT).Electronic
      Commerce (EC) includes all types of EDI exchanges, as well as electronic funds
      transfer (EFT)

4.    Benefits of EDI:
      a.)    improvement in the quality of services offered to customers.
      b.)    employee productivity is enhanced
      c.)    operations are streamlined by shortening the processing timeline
      d.)    it provides a means for more effective asset management converting
             working capital into cash more efficiently and more effectively managing
             payables and the disbursement of cash.
      e.)    cash management becomes more efficient by reducing the required
             number of banks relationships and improving cash flow forecasting.

      Problems or costs with EDI:

      a.)    development and acceptance of data transmission standards
      b.)    concerns about data communication security and authorization
      c.)    legal issues dealing with liabilities resulting from failure of various
             components of the system
      d.)    reluctance to renegotiate different credit terms for electronic collection of
             funds owed.

54.   A Treasure Workstation functions include:               Balance Reporting, Bank
      Information, Cash Mobilization, Consulidation of Information, General
      Investment Management, General Debt Management, Communications, and
      Vendor Services and Support. A Treasury Workstation is a computer terminal
      and appropriate software that lets the treasury or cash manager oversee:
      a.)    BANKING: communicate with banks for balance reports, account
             analysis, ACH transactions and cash mobilization.
      b.)    FINANCIAL MARKETS: manage investments and debt by keeping track
             of maturing investments and loans and portfolio performance history
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       c.)    ACCOUNTING: interface with the firm's general ledger,
       d.)    INTERNAL: cash forecasting and variance analysis.                               Formatted: Bullets and Numbering


6.      Enterprise Resource Planning systems are accounting-oriented information
systems used for identifying and planning the enterprise-wide resources needed to take,
make, ship, and account for customer orders. ERP systems consist of software modules
that help manage the many different activities in different functional business areas.

EBDI represents those information flows between corporate trading partners such as the
      electronic transmission of purchase orders and invoices.

       Financial EDI refers to the electronic exchange of business information between
       a firm and its bank encompassing lockbox information reports, daily balance
       reports, and monthly account analysis.

       EFT: primarily deals with the actual electronic transfer of payments or value
       between trading partners.

5.     A VAN (value added network) is a service provider which takes electronic
       information in one format and sends it out in another format which is accepted by
       the ultimate receiver of the information. A bank that provides such services for
       information related to payments is referred to as a value added bank (VAB).

6.     Benefits of EDI:
       a.)    improvement in the quality of services offered to customers.
       b.)    employee productivity is enhanced
       c.)    operations are streamlined by shortening the processing timeline
       d.)    it provides a means for more effective asset management converting
              working capital into cash more efficiently and more effectively managing
              payables and the disbursement of cash.
       e.)    cash management becomes more efficient by reducing the required
              number of banks relationships and improving cash flow forecasting.

       Problems or costs with EDI:

       a.)    development and acceptance of data transmission standards
       b.)    concerns about data communication security and authorization
       c.)    legal issues dealing with liabilities resulting from failure of various
              components of the system
       d.)    reluctance to renegotiate different credit terms for electronic collection of
              funds owed.

7.     A treasury workstation is computer terminal and appropriate software that lets the
       treasury or cash manager:
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a.)   BANKING: communicate with banks for balance reports, account
      analysis, ACH transactions and cash mobilization.
b.)   FINANCIAL MARKETS: manage investments and debt by keeping track
      of maturing investments and loans and portfolio performance history
c.)   ACCOUNTING: interface with the firm's general ledger,
d.)INTERNAL: cash forecasting and variance analysis.                        Formatted: Bullets and Numbering

								
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