help needed for unit 15

asha.sharma

could someone tells me


"how is the management of cash balance in public sector organigation different from private sector organisation?"

kerryhill100

was that in your simulation?

As far as I'm aware it has to be more cautious when investing surplus cash as it is public money so unable to take risks.

beaneygirl

asha.sharma wrote: »

could someone tells me


"how is the management of cash balance in public sector organigation different from private sector organisation?"

In the private sector, large businesses will have an Accounts Dept to deal with liquidity management or investing funds. In the public sector large organisations such as the council function under the control of a treasurer. The public sector has a set of standing orders or regulations which dictate what kind of investments can be made.
Hope this helps

asha.sharma

yes it was in my simulation.

stevef

The public sector have to the follow the CIPFA Code of Practice on Treasury Manangement as well as statutory regulations on investments. These are very complex documents but basically require local autorities to:

Prepare Treasury Mangement Policies and practices each year;
To report to elected members on performance at least twice a year;
When choosing invesments to consider issues on security, liquidity and yield in that order (safety first, profit last);
To include in its TMP's an analysis of risk and plans on how to mitigate that risk;
To only invest in UK sterling denominationed instruments (no foreign exchange risk);
Not to rely on credit rating agencies solely;
To normally only invest in Uk organisaions with a high credit rating, and for less than a year, if it requires to do something different, it must produce a much more detailed risk analysis;
To set prudential indicators and ensure they are complied with.

asha.sharma

thanks all for your help