UNDERSTANDING FINANCIAL STATEMENT

What is the purpose of financial information?

For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include four basic financial statements:

1.     Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time.

2.     Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.

3.     Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.

4.     Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

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TREASURY MANAGEMENT TOOLS AND TECHNIQUES

Definition:

Treasury management (or treasury operations) includes management of an enterprise's or government’s financial holdings like bonds, currencies, financial derivatives, stocks and many other securities.

All banks have departments devoted to treasury management, as do larger corporations. For non-banking entities, Treasury Management and Cash Management are sometimes used interchangeably. The treasury operations come under the control of CFO of the concern or the Vice-President / Director of Finance.

It is necessary to understand and appreciate the three distinct roles Treasury is

expected to play:

a. Liquidity Management: Treasury is responsible for managing short term

funds across currencies, and also for complying with reserve requirements (e.g. CRR)

b. Proprietary Positions: Treasury may trade in currencies, securities and other financial instruments, including derivatives, in order to contribute to Bank’s profits

c. Risk Management: Treasury will aid Management on one hand and Bank’s clients on the other hand, in managing market risk, using derivative instruments.

 These multiple roles necessitate Treasury to manage an ALM Book for internal risk management, a Merchant Book for client-related currency and derivative

transactions, and a Trading Book for managing its proprietary positions. ALM Book also includes traditional role of Treasury in liquidity management.

In an open economy, exchange rates are further influenced by macro-economic factors like relative inflation, GDP growth rate, stock markets and commodity markets. Treasury operates in markets which are almost free of credit risk, and hence requires very little capital allocation.

Secondly, the treasury activity is highly leveraged – the risk capital allocated to Treasury may range between 2% to 5% of the size of transactions handled, hence the return on capital is quite high. Treasury may do transactions similar to the ones done for the customers in forward market – buy forward and sell forward – without investing funds in actual purchase and sale of currency
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TREASURY MANAGEMENT

Treasury management (or treasury operations) includes management of an enterprise's or government’s financial holdings. It includes activities like trading in bonds, currencies, financial derivatives and also encompasses the associated financial risk management.

All banks have departments devoted to treasury management, as do larger corporations. For non-banking entities, Treasury Management and Cash Management are sometimes used interchangeably. The treasury operations come under the control of CFO of the concern or the Vice-President / Director of Finance.

Bank Treasuries may have the following departments:

• A Fixed Income or Money Market desk that is devoted to buying and selling interest bearing securities
• A Foreign exchange or "FX" desk that buys and sells currencies
• A Capital Markets or Equities desk that deals in shares listed on the stock market. (Stock Exchanges)

In addition the Treasury function may also have a Proprietary Trading desk that conducts trading activities for the bank's own account and capital, an Asset liability management or ALM desk that manages the risk of interest rate mismatch and liquidity; and a Transfer pricing or Pooling function that prices liquidity for business lines (the liability and asset sales teams) within the bank.

Banks may or may not disclose the prices they charge for Treasury Management products.

Functions of Treasury Management includes:
1. To maintain the liquidity of business

It is the main function of treasury management to maintain the liquidity of business. Without proper liquidity, it is risky for business to operate smoothly. By using cash flow analysis and working capital management. Treasury officers make good ratio of liquid assets and liquid liability.
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THE CONTRAPTION CALLED MICRO FINANCE BANK

THE CONTRAPTION CALLED MICRO FINANCE BANK

INTRODUCTION

The micro finance bank is a reincarnation of the community bank, and the community bank a product of Professor Yunis grammeen model of poverty alleviation  which was a successful programme in Bangladesh.

Prior to the introduction of community banks, were poverty alleviation interventions with such names as:

-         Better Life

-         National Directorate of Employment (NDE)

-         Family Economic Advancement Programme (FEAP)

-         National Poverty Eradication Programme (NAPEP)

-         People’s Bank etc, etc

All these programmes operated as direct intervention except the People’s Bank which operated the same way our present day micro finance banks operate.

WHAT IS A MICRO FINANCE BANK

The word micro finance is a more inclusive term which encompasses credit, savings, and capacity building, and it is more preferable by developmental finance practitioners. The purpose of which is in accordance with the 2015 Millennium Development Goal which seeks to:

-         Eradicate extreme hunger and poverty

-         Provide Universal primary education

-         Ensure  gender equality and empower women

-         Reduce child mortality

-         Improve maternal health

-         Combat HIV/AIDS, malaria and other diseases

-         Ensure environmental sustainability

-         Global partnership for development

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STRATEGY AND FINANCE MASTER CLASS

Leading Winning Teams

When an organization is performing at its best, you'll usually find that each member has clear responsibilities. Just as importantly, you'll normally see that every role needed to achieve the team’s goal is being performed fully and well. But often, despite clear roles and responsibilities, an organization will fall short of its full potential.
How often does this happen in the teams you work with? Perhaps some of your members don't complete what you expect them to do. Perhaps some team members are not quite flexible enough, so things 'fall between the cracks'. Maybe someone who is valued for their expert input fails to see the wider picture, and so misses out tasks or steps that others would expect. Or perhaps one team member become frustrated because he or she disagrees with the approach of another team members.
 People in teams tend to assume different "team roles".  A "team role" is "a tendency to behave, contribute and interrelate with others in a particular way" as to ensure the success of the team.

Leadership Styles that Drive Success

From Mahatma Gandhi to Winston Churchill to Martin Luther King to Rudolph Giuliani, there are as many leadership styles as there are leaders. Fortunately, businesspeople and psychologists have developed useful and simple ways to describe the main styles of leadership, and these can help aspiring leaders understand which styles they should use.

So, whether you manage a team at work, captain a sports team, or lead a major corporation, which approach is best? Consciously, or subconsciously, you'll probably use some of the leadership styles in this article at some point. Understanding these styles and their impact can help you develop your own, personal leadership style – and help you become a more effective leader.

With this in mind, there are many different frameworks that have shaped our current understanding of leadership, and many of these have their place, just as long as they're used appropriately. Your success as a Leader will depend on which of the under listed styles of leadership you adopt and the circumstances in which you operate.

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RISK ASSESSMENT AND INTRODUCTION TO INTERNAL CONTROL

INTRODUCTION - RISK ASSESSMENT

We face a variety of risks from external and internal sources that must be assessed. A precondition to risk assessment is establishment of objectives, linked at different levels and internally consistent.  Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed.  Because economic, industry, regulatory and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. 

There are risks inherent in any activity.  Smart managers know the potential impact and likelihood of occurrence of any number of risks, and put in place cost-effective controls to manage those risks.  External risks such as vendor fraud could compromise health and safety of staff, clients, students, patients, customers depending on the nature of business of such organization.  Internal risks such as employee incompetence, unsafe buildings or ailing computer systems also imperil an organization.. It is important to get your entire organization involved, including executives and your board.

Now, let us refer to what the new SEC (Securities and Exchange Commission, Nigeria) says in respect of Risk Assessment in Part A, chapter 10:

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RECORDS AND INFORMATION MANAGEMENT

RECORDS AND INFORMATION MANAGEMNT

A record is a document or other electronic or physical entity in an organization that serves as evidence of an activity or transaction performed by the organization and that requires retention for some time period. Records management is the process by which an organization:

• Determines what kinds of information should be considered records.
• Determines how active documents that will become records should be handled while they are being used, and determines how they should be collected after they are declared to be records.
• Determines in what manner and for how long each record type should be retained to meet legal, business, or regulatory requirements
• Researches and implements technological solutions and business processes to help ensure that the organization complies with its records management obligations in a cost-effective and non-intrusive way.
• Performs records-related tasks such as disposing of expired records or locating and protecting records that are related to external events such as lawsuits.
• Determining which documents and other physical or electronic items in your organization are records is the responsibility of corporate compliance officers, records managers, and lawyers. By carefully categorizing all enterprise content in your organization, these people can help you ensure that documents are retained for the appropriate period of time. A well-designed records management system helps protect an organization legally, helps the organization demonstrate compliance with regulatory obligations, and increases organizational efficiency by promoting the disposition of out-of-date items that are not records.

A records management system includes the following elements:

• A content analysis that describes and categorizes content in the enterprise that can become records, that provides source locations, and that describes how the content will move to the records management application.
• A file plan that indicates, for each kind of record in the enterprise, where they should be retained as records, the policies that apply to them, how long they must be retained, how they should be disposed of, and who is responsible for managing them.

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