The real role of treasurer.

• Author: Svoboda, Ann Marie
• Position: Treasury

The corporate treasurer's world has undoubtedly changed in recent years. As banks received bailouts from taxpayers, treasurers found it harder to raise corporate capital. Then, as a new and unanticipated layer of vendors defaulted, treasury was forced to revise counterparty credit models. Simultaneously, as nearly every financial market heralded unprecedented volatility, treasurers needed to reinvigo-rate their hedging standards.

No one questions that many treasurers toiled long and hard to protect their firms from the material risks associated with these complex situations. Their success is not in question. The question is: Did anyone outside the treasury department care?

Treasury is a complex profession. The dynamics of market trading volatility and liquidity are not simple concepts for most finance staff to understand. As a result, the corporate treasury department can easily migrate to an isolated function. Its work can evolve to focus solely on central holding-company activities that are only ancillary to the firm's core operations. And this transition is allowed to happen because other finance staffers will not effortlessly grasp treasury's relevance to the firm's financial success. Treasury becomes sidelined as the pertinence of its work loses functional application for the rest of finance.

The same cannot be said for the accounting department. Certainly, the controller's work is just as complicated as the treasurer's. In fact, today's public company controllers must produce textbook-length reporting packages every three months as dictated by endless volumes of intricate accounting standards and "guidance."

The difference from the treasurer's work, though, is that the common finance staffer understands the contents of the standard income statement and balance sheet. The concepts of accrual accounting guide the vocabulary for which the firm's results are discussed. And the income statement forms the basis for most companies' financial objectives. As such, the controller's strategic influence is not only obvious, but embedded.

This divide is a result of historical design. The foundations of financial reporting were built around the concepts of accrued expectations--as reflected on the income statement and balance sheet--instead of realized economics, as reflected in the firm's bank accounts. So it is only natural that controllers, and not treasurers, find an unambiguous connection between their work and the firm's operations.

But this...