Agenda. 1. Treasury Overview SAP Treasury Functional Overview. 6. Reporting. 7. Bank Account Management. 2. UNICEF Treasury Activities AS IS TO BE

Transcription

1 UNICEF Treasury

2 Agenda 1. Treasury Overview SAP Treasury Functional Overview 2. UNICEF Treasury Activities AS IS TO BE 3. Treasury Manage Financial Instruments AS IS TO BE 4. Treasury Manage Cash & Liquidity AS IS TO BE 6. Reporting 7. Bank Account Management 8. Summary of Significant Process Changes AS IS TO BE 9. Compliance with Audit Observations 10. Future Opportunities 5. Treasury Manage Financial Risk 2

3 1 Treasury Overview Standard Treasury Functions & SAP Architecture Treasury Functions Applications from SAP SAP Treasury and Risk Management Manage Financial Risks Risk Analyzer Credit Risk Market Risk Portfolio Analyzer Transaction Manager Manage Financial Instruments MM FX DER SEC SAP Cash and Liquidity Management Manage Cash and Liquidity Cash Management Liquidity Management SAP Bank Communication Management SAP ERP Finance Excellence Treasury FSCM Financial Core General Ledger FM AP/AR Controls GM MM = Money Market DER = Derivatives SEC = Securities FX = Foreign Exchange FM = Funds Management GM = Grants Management 3

4 Dealing Platforms Rate Feeds House Banks Other Trades Market Data EBS SWIFT 1 Treasury Overview (cont d.) Treasury modules in SAP SAP System External Systems mysap TM ERP SAP Treasury and Risk Management Credit Risk Analyzer Market Risk Analyzer Portfolio Analyzer Transaction Manager Money Management Foreign Exchange Derivates Securities SAP In-House cash SAP Cash and Liquidity Management SAP Financial Accounting SAP NetWeaver TM Portal, Security, Business Warehouse, and exchange infrastructure 4

5 1 Treasury Overview (cont d.) Functional Overview Front Office Back Office Accounting Reporting Exposure analysis Decision support Optimized deal entry Online limit check Position reporting Flexible process definition Confirmation Settlement Correspondence Interest Rate Adjustments Standing instructions Payments Proper recording of all aspects of Treasury in Financial Accounting Valuation according to Generally Accepted Accounting Principles (GAAP) IPSAS Standard Reporting Ad hoc Reporting Internal Controls Limit reporting Management Reporting KPI Reports Alert monitor 5

6 Morning 2. UNICEF Treasury Activities AS IS Morning Task Review the Manual MT940 (faxed by the Bank / extracted from Chase Insight) Identify transactions not front ended through SAP (Contributions, ZBA sweep, Bank Charges etc) Identify, create and post manual journal entries Compare MT940 transactions against the Treasury Daily Dairy Report Purpose To ensure the accuracy of all bank transactions To ensure that all trades are settled through the bank accounts To record transactions in SAP Update the Cash Position Report in Excel for USD / EUR Generate / Print MT942 from the bank Manually enter them in Excel Cash Position Report To ascertain the cash balance (Opening Balance for the day) To ascertain the current day cash transactions during the day (Transactions for the day) 6

7 All Day 2. UNICEF Treasury Activities AS IS All Day Task Buy / Sell Currencies and Investments Match Buy / Sell positions with counterparties Provide Liquidity for Cashiers to Transfer Cash to Country Offices globally (though cumbersome manual processes) Analyze Risks based on positions and market movements Enter Profit & Loss on Trades in Excel Purpose Risk, Liquidity & Investment Management To confirm trades with counterparties To provide Liquidity for business functions Risk Management MIS for Value add by Treasury Prepare manual deal tickets and create trades in SAP Create trades in SAP - original data input Update the Cash Position Report in Excel for all trades To determine the cash balance 7

8 Morning 2. UNICEF Treasury Activities TO BE Morning Tasks Execute Bank Statement Monitor (BSM) (BSM is a part of Bank Communication Management (BCM) This provides the upload status of the Bank Statements into SAP and identifies potential problems. Review MT940 excel output from the system (An excel output of the Bank Statement would be available with posted document numbers) Run the Cash Position Report (An excel output stating the Cash Position) Purpose Ensure that the Bank Statements have been received, are in sequence, have bank balances matching with GL and are processed in SAP. To ensure that the bank transactions are accurate. To determine opening cash position for the day 8

9 All Day Morning 2. UNICEF Treasury Activities TO BE All Day Tasks Upload bank transactions for contributions, ZBA sweep, bank charges etc.) (These transactions are not front ended by SAP and an excel upload would be available to the users) Upload the MT942 file received from the bank (MT942 is the intra day bank statement) Perform Treasury Functions: Buy / Sell Currencies Buy / Sell Investments Match Buy / Sell positions with counterparties Provide Liquidity to Country Offices globally Analyze Risks on account of currency and market movements Purpose Manual entries are avoided, reducing errors, time and enhancing efficiency To know the correct current day bank balances Everyday Treasury Functions 9

10 3. Treasury Manage Financial Instruments Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Bank Statement Monitor (BSM) Bank Statement Monitor (BSM) displays the status of bank statements from individual house bank accounts A bank statement that is delayed or that does not reach the monitor can be immediately as well as any differences occurring between the bank statement balance and the internal G/L account balance Key Benefits: Treasury starts the day with determining the cash balance. BSM ensures that the balance in SAP matches the bank balance Any missing bank statements are identified Note: BSM is part of the BCM (Bank Communication Management) 10

11 3. Treasury Manage Financial Instruments (cont d.) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity MT940 upload Once MT940 is uploaded, VISION will specified Treasury users a Daily Report in an excel format. Show MT940 uploaded transactions (previous day transactions) Identify transactions to be uploaded (non SAP front ended) including a prefilled up upload sheet Have a Cash Position Report (previous day - Actual) Forecast current day Cash Position Report based on Treasury, AR & AP Treasury starts the day by having the previous day Cash Balances reconciled Key Benefits: Eliminates time spent on reconciliation Automatic upload of transactions streamline data input for non-treasury flows Cash Balance updated in SAP Reduce operational risks 11

12 3. Treasury Manage Financial Instruments (cont d.) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity MT942 upload Treasury receives the MT942 file from the bank and uploads it in SAP All same day transactions are recorded in SAP treasury (not in FI) Cash Management positions are updated Cash Management report forecasts cash position for the future Current data Cash Position Report (based on actual data ) is generated Treasury executes transactions with accurate cash balances in the system Key Benefits: Accurate cash position visible at all times in Cash Management Eliminates reconciliation Optimizes investment of available funds Mitigate overdraft risk 12

13 3. Treasury Manage Financial Instruments (cont d.) ( As Is ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity 1 Paper document These transactions are manual and entered twice (once in the trading system and then again in 2 SAP) Front Office Confirmation Process Generate Letters Signature Fax 3 Paper document 5 4 SAP (VISION) 7 Back Office 6 Counterparty Deal created Paper documents Telephone call SAP Transactions 13

14 3. Treasury Manage Financial Instruments (cont d.) ( To be ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Front Office Create Deal 1 Trade confirmations are executed via a deal matching service provided by SWIFT, called ACCORD SAP (VISION) 2 Matching Services Back Office Settle Deal 3 4 Payment SWIFT Services 4 All the above transactions are automated and need to be entered only once Counterparty 14

15 4. Treasury Manage Cash & Liquidity Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Liquidity Management is one of the core terms of Reference for the Treasury Unit. UNICEF Treasury works to ensure that there is sufficient Liquidity at the Country Offices. Treasury ensure liquidity by: a. Provide liquidity for the Cashier to transfer Currency directly to the Country Office House Bank Accounts or third parties b. Sale of Currency to a counterparty (who then remits the value in the Country Office currency) 15

16 4. Treasury Manage Cash & Liquidity (cont d.) ( As Is ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Treasury USD CHASE 2 Cash flow to Country Office from Treasury (1/2) DONORS 1 1 Headquarters Cashiers Main USD CHASE Cashiers-TRF USD CHASE India INR SBI 2 Transfer of funds through the FV60 route is a workaround and carries substantial risk Receipt of Contributions Zero Balance Sweep Transfer through FV60 Settle AP or Expense Payment India USD CHASE Vendor F02401 Field Office India - Main INR SCB India INR SCB

17 4. Treasury Manage Cash & Liquidity (cont d.) ( As Is ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Flow through the Accounts Payable Route Treasury USD CHASE Cashiers USD CHASE Headquarters Park Invoice Post Invoice Payment through F110 ZBA Sweep Post Invoice 1 Park Invoice Internal Vendor India - Main INR SCB CO Bank Account 17 Country Office

18 4. Treasury Manage Cash & Liquidity (cont d.) ( As Is ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Treasury USD CHASE Treasury Bank Accounts Treasury EUR CHASE 107XXXX Treasury Other Currencies Any Bank 3 Cash flow to Field Office from Treasury (2/2) Counterparty Headquarters TX14 Get Rate from CP 2 3 Sale of major currencies held by Treasury for Country Office currencies through banks. This process is handled through the Manage Financial Instruments process 1 TX13 Request for Currency India - Main INR SCB Country Office Request for Currency Get Rate from CP 18 Sale of Currency

19 4. Treasury Manage Cash & Liquidity (cont d.) ( To be ) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity One of the major improvements of the transfer of funds from Headquarters to Country Offices would be to adopt Bank to Bank Transfer in SAP. This would eliminate the need to go through the Accounts Payable process. This would : Eliminate the Risk inherent tin the Accounts Payable process. Reduce lead time to complete a transfer Provide full control of Treasury / Cashier over the process Enable Treasury to front-end the lost trades This process would streamline the entire Cash Replenishment Process 19

20 4. Treasury Manage Cash & Liquidity (cont d.) ( To be ) SAP Integration of External Systems Dealing platforms (360t / Bloomberg) Data Feeds (Bloomberg / Moodys) Treasury Counterparty Other Vendors Trading Data flows SAP Treasury and Risk Management Payments Credit risk analyzer Market risk analyzer Portfolio analyzer Transaction Manager Money management FI Foreign exchange Derivatives Securities BANK ACCOUNT MANAGEMENT (BOLT ON) Matching Services HOUSE BANKS SWIFT Files Bank MGMT FINANCIAL CORE GL AR AP FM BANKS SAP BANK COMMUNUICATION MANAGER SWIFT SERVICES 20

21 4. Treasury Manage Cash & Liquidity (cont d.) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity Liquidity Planner The Liquidity Planner provides tools for entering, adjusting, aggregating, evaluating planned cash flows, and determining actual values. Cash Balances Treasury Flows Accounts Receivable Accounts Payable Open Purchase Orders Cash Management SAP (VISION) LIQUIDITY PLANNER (SAP & BI) / CASH ACCOUNTING Memo records from s PFP Data from Cognos Pipeline data from PARMO Other Sources Data from External Sources 21

22 5. Treasury Manage Cash & Liquidity (cont d.) Manage Financial Risks Manage Financial Instruments Manage Cash and Liquidity This would be through the implementation of the Analyzers Analyzer Credit Risk Analyzer Market Risk Analyzer Portfolio Analyzer Purpose Enables the active control of default risks by computation of attributable amounts and specification of risks. Requires Market data feeds. Example: Counterparty risks, Sovereign risks Analysis of Market risks in financial positions. Example: Risks on account of changes in interest and foreign exchange rates. Requires market data feeds and would allow for straight through market valuations on treasury positions as well as other risk metrics and modeling simulations Tools for the calculation of yield and performance figures, as well as the comparison of these key figures to benchmarks. Requires Market data feeds. Example: Comparison of existing investments to LIBOR 22

23 6. Treasury Reporting The effectiveness and oversight of the Treasury functions lies in timely reporting to the Senior Management. There is currently a large scope for improvement, notably: Improvements under study: 1. A self-reconciling report for Treasury is under development which replaces 5 reports in the current system. 2. Reports for cash positions generated from SAP eliminating the need for bank parser software saving $ 4000 per month on bank charges. 3. Timely Limit Management Reports 4. Report for Profit & Loss on daily FOREX trades Country Office market rate vs Actual treasury rate UNORE rate vs Actual rate 5. Various automated reports for FAC & Controllers Office(currently manual) 6. Reports on concentration of currency in Country Offices (for oversight purposes and to ensure adequate liquidity) 23

24 7. Treasury Bank Account Management ISSUE - We have various data related to banks in various places in SAP and they are not synchronized EXAMPLES: Count No. Data Point House Banks created in SAP (VISION) Number of Banks created in BCMS Number of Closed banks in BCMS Bank GL Accounts ACTIONS REQUIRED Cleanup and streamline Bank Account & Bank Master Management along with its dependencies like GL accounts, signatories Bank Account Management should capture additional data like Credit Ratings of Banks, Bank Hierarchy, last date of bank review, bank throughput, exceptions Signatories on accounts should be based on roles assignment to the post (through DHR) Options : Invest in BCMS (current) -Home grown solution with little integration Bolt on Solution -Buy Bolt on Solutions like ebam / Overture5 24

25 8. Summary of Significant Process Changes AS IS Cash Position is maintained outside the system Manual data for Cash Position, Bank entries, trade entries, and excel for MIS Reports created from data outside the system Analysis is cumbersome due to spread of data in various places Limited use of SWIFT. Transactions through multiple gateways like Chase, ebanking portals and the UN TO BE SAP will have reconciled cash balances thereby reducing operational risk and automating daily bank account reconciliation. Note: This is dependent on MT940 from the bank. Manual data entry eliminated to a large extent, thereby eliminating errors and corrections Accuracy of data will ensure quality reporting from the system Analysis possible as all data present within the system More robust rollout of SWIFT at HQ with SWIFT Alliance 25

26 10. Treasury - Future Opportunities Rollout of Automatic upload of bank transactions to HQ locations and / or Service Centers (non front ended through SAP) Use of SWIFT Services at Country Offices Cash Management at Country office Leverage BI for reporting Positive Pay File for Checks & Wire transfers 26