Chapter 11

Cash and Investments

Sound cash management is a basic financial function. Although it is usually the responsibility of the senior financial officer, the controller has an important role to play. This chapter reviews phases of cash management that the controller either handles or has a direct interest in.

Objectives of Cash Management

Cash is a particularly vulnerable asset because, without proper controls, it is easily concealed and readily negotiable. Cash management has these objectives:

  • Provide adequate cash for both short- and long-term operations
  • Utilize company funds effectively at all times
  • Establish accountability for cash receipts and provide adequate safeguards until the funds are placed in the company depository
  • Establish controls to ensure that disbursements are made only for approved and legitimate purposes
  • Maintain adequate bank balances to support proper commercial bank relations
  • Maintain adequate cash records

Role of the Controller

With respect to cash management, a cooperative relationship should exist between the controller and the treasurer. Duties and responsibilities will vary, depending on the type and size of the company. The treasury staff has custody of cash funds and administers the bank accounts. The treasurer is responsible for maintaining good relations with banks and other investors, providing the timely interest and principal payments on debt, and investing the excess cash. In addition, the treasurer usually has responsibility for cash ...

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