TM M2 CH5

The following controls can improve on the inherent control of a physical sweep system, except:

• A. Review target balances

• B. Compare intercompany loans rates to market rates

• C. Verify the target control

• D. Verify the calculation of intercompany loan balances

 A notional pooling system does not create an inherent control over physical cash        balances, as was the case with a physical sweep, since cash is still sitting in what may be a large number of accounts in multiple locations.

• A. True

• B. False

There are three key policies required for cash concentration, which is one that places responsibility for cash concentration on a specific group within the company. 

• A. False

• B. True

All cash concentration activities shall not be managed by the corporate treasury department.

• A. True

• B. False

 Depending on the circumstances, it may be necessary to allocate interest earned back to the subsidiaries. If so, verify that the calculation is consistently applied across all subsidiaries.

• A. Verify the calculation of intercompany loan balances. 

• B. Review excluded accounts. 

• C. Verify the allocation of interest income to subsidiaries.

All are disadvantages of Cash Concentration, except:

• A. It increases liquidity and lessens reliance on short-term finance.

• B. Cash fund centralization might be expensive.

• C. At the level of a sub-account, it can generate a liquidity risk.

A crucial element for treasury management is the cash concentration procedure.

• A. True

• B. False

The company shall engage in cash concentration with a “  physical sweeping”  strategy.

• A. Small-Company Policy

• B. Large-Company Policy

The company shall engage in cash concentration with a  “ cross - currency notional pooling”  strategy.

• A. Small-Company Policy

• B. Large-Company Policy

A cash receipt is when your business receives money from a commercial transaction. 

• A. True

• B. False