Constructive in difficult times

Firstly I would like to wish you all a less turbulent 2009. Whilst I am not one for predictions I do believe that we in the treasury profession need to be planning for some unusual times in 2009 and 2010.

I joined the ACT a few weeks ago in a full-time capacity. Prior to becoming Chief Executive I spent many years as a finance practitioner and have been an ACT Member since the membership exams were launched.

I have spent my first few weeks working with Richard Raeburn and the team in Moorgate and some of the ACT’s many supporters. I always knew that this was going to be an interesting and testing time for the treasury profession – but after my first few days I realised just how much is going on and that the ACT is playing a key role. Recent activity includes a briefing note on Credit Default Swap based loan pricing, an extended and revised version of our briefing note Contingency planning for a downturn in the economy: a treasurer’s checklist and an update note on corporate reporting – going concern.

Gerry Bacon, Deputy President, and John Grout, Policy & Technical Director, have been talking to many of our members about developments in the credit, cash and derivatives markets. This work is ongoing and we will be publishing the outcome in the new year. We will use the results of these discussions to brief our contacts in the relevant authorities about the general picture. We are working to be constructive in difficult times. It is crucial that we hear what is happening in the banking markets and in today’s environment, to keep up-to-date. Please discuss your experiences with John Grout or Martin O’Donovan. We will be discussing and updating the findings of our member survey at the Annual Conference in April 2009. Can there be a more important year to attend our conference? Well perhaps 2010’s conference will also be a must attend event.

The Corporate Reporting Users Forum has recently emphasised the need for improved cash reporting. We at the ACT endorse their approach and believe that in addition to movements in net debt between balance sheet dates companies also need to focus on dynamic measures such as average net cash/net debt and the relationship between cash and profit – see my previous blog. Our 5th Annual Cash Management Conference is taking place on 27-28 January 2009 and I would recommend this as a valuable update for treasury teams. We will also be running one of our most popular courses – Understanding Corporate Treasury – in London in early February, a must for those new to treasury.

Many companies will be well on with their year-end planning – and never before has the going concern assessment had so much attention. The UK’s Financial Reporting Council and Auditing Practices Board has published very useful guidelines for directors including An update for directors of listed companies; going concern and liquidity risk (November 2008) plus a bulletin from the Auditing Practices Board that deal with different approaches to the auditors’ wording given several scenarios. Whilst this approach is most sensible, companies will need to be well prepared to satisfy auditor requirements in this area. We are sure that auditors will want to stress test your forecast for the next 18 months or so – be prepared.

Coming back to the ACT team – I would like to thank Richard Raeburn and the team at Moorgate for helping to integrate me into the ACT at such a busy time.

Still, I hope that you are all now fully refreshed and optimistic about the future whilst planning for a testing time!

By Stuart Siddall