This lesson examines the accounting principles and reporting requirements that apply to treasury transactions and operations .

2.1 Key Financial Statements

Treasury professionals must understand and interpret the key financial statements: the balance sheet, income statement, and statement of cash flows . The University of Birmingham module requires students to “assess the fundamental principles of financial reporting and taxation relating to treasury” and “prepare and analyse financial reports” . Understanding these statements is essential for assessing the organisation’s financial health, performance, and cash-generating ability.

2.2 International Financial Reporting Standards (IFRS)

Treasury transactions must be reported in accordance with international accounting standards. Key areas of focus include :

• Fair Value Accounting: The valuation of financial instruments at fair value, including derivatives and investments.

• Hedge Accounting: The treatment of hedging relationships under IFRS 9, including documentation and effectiveness testing requirements.

• Lease Accounting: The accounting treatment of leases under IFRS 16, which affects the balance sheet presentation of lease liabilities.

The ACT Diploma requires candidates to “analyse how treasury transactions should be reported and structured to ensure financial reporting implications are managed” .

2.3 Disclosure of Treasury Transactions

Treasury transactions require extensive disclosure in financial statements. The ACT syllabus includes “disclosure of treasury transactions” as a core learning area . This includes disclosure of financial instruments, risk management objectives and policies, fair value measurements, and hedge accounting relationships. Accurate and transparent disclosure is essential for regulatory compliance and investor confidence.