The Treasury Team is usually divided into three offices such as front, middle, and back, each of which performs particular functions. The given case study shows that inappropriate actions led to serious consequences: the difference in numbers in Treasury and control systems. Based on the role played by the messages that were stored in the inbox of the Treasury team members, it is essential to invest in the middle office that is responsible for control, reconciliation, risk reporting, performance evaluation, and model validation (Rajendra 48). Since the European technology company was unable to maintain its reporting transparent and accurate, it is better to assign the reconciliation task to its middle office.
The activities of deal origination, booking, and decision-making should be separated so that the middle office may independently monitor and manage reconciliation issues. In its activities, the identified office should link the front and back ends and oversee their performance. The independent reporting to either a chief financial officer (CFO) or controller is likely to ensure that data would be documented with minimal errors and omissions. It is critical that management should receive timely updates on the recent adjustment of requirements.
It should also be emphasized that if the Treasurer conducts transactions regularly, which is not clear in the given case, it is better to invest in the back office that would be responsible for reporting and reconciliation. The key operations and executions are to be done autonomously by the back office and the controller in terms of transaction processing and basic reconciliation (Rajendra 48). In general, continuous review and control are two key issues that should be taken into account by the CFO and the responsible office.
Work Cited
Rajendra, Rajiv. The Handbook of Global Corporate Treasury. John Wiley & Sons, 2013.