The scope of the treasury function receives a delineation once it is put into its broader context of other functions of government financial management:

1. The treasury function receives the substance it administers from macroeconomic and fiscal planning and management and the programming of social and economic action programmes. All these precede logically the treasury function.
2. According to Ter-Minassian et al. (1995) the task of the treasury function is to optimise the financial management of government operations.
3. Government auditing logically supersedes the treasury function as independent checking of legality, regularity, adequacy of accounting and its reports. As the case may be, the auditing may also check upon efficiency and effectiveness.
4. The government revenue function, importantly tax administration, is hard to include into the domain of the treasury.

Despite that there is much common in the treasury function over countries, there are also differences:

• There are differences in the way how the function is actually organised in different countries. This concerns both the number and the type of the organisations involved and the degree of hierarchical decentralisation between organisations and in terms of regions and localities.
• Names may be misleading in that there are countries where the organisation named Treasury carries out only part – and sometimes no part – of the treasury function. The organisation named Treasury may also have other functions beyond those of the treasury.
• There are considerable differences between countries in the way how they have defined and organised the various sub-functions that belong to the domain of the treasury.

The maximum scope of the treasury function is considerable. Following Ter-Minassian et al. (1995) we can distinguish six main subfunctions and their further subfunctions:

1. Managing the government budget

1. Planning the execution of the central government budget
2. Controlling the execution of the central government budget

2. Monitoring operations of off-budget funds, this technical term referring to funds owned by the government or only administered by it and excluded from the sphere of the regular government budget
3. Government finance, but excluding revenue administration

1. Day-to-day cash management, including control of inflows and outflows into government accounts with the banking system
2. Securing viable financing of government expenditures

4. Borrowing and lending

1. Managing government borrowing, including managing of government issues of securities
2. Managing government lending
3. Managing debt guarantees given by the government

5. Managing the portfolio of government financial assets, including equity holdings in public entreprises organised using the form of the business company
6. Accounting

1. Accounting of government operations, with a not untypical solution of organising the central accounting in a particular organisation
2. Developing and maintaining government financial information systems.

In the Member States of the European Union there are different ways of organising the treasury function. There are two basic alternatives. In most of the Member States the function is largely concentrated in the hands of a Ministry of Finance, or there are separately such a ministry and one or several other organisations under that ministry for parts of the treasury function.

• There are countries that are examples of the former model; there, various subfunctions of the treasury function are organised into different directorates of the ministry:

• Britain (Her Majesty’s Treasury)
• The Netherlands (Ministry of Finance)
• Spain (Ministerio de Economia e Hacienda)

• There are countries that are examples of the latter model, with two organisations the second of which is carrying out part of the more technical parts of the entire treasury function:

• Austria (Bundesministerium für Finanzen; Österreichische Bundesfinanzagentur)
• Finland (Ministry of Finance; Treasury)
• Note that the European Comission has also applied a variant of the latter model, with a Directorate General of Budgeting and a Directorate General of Financial Control.

• There may be more than two organisations in the field of the entire treasury function:

• Sweden has three organisations in the field: the Ministry of Finance; Swedish National Debt Office; the Swedish National Financial Management Authority). The venerable Swedish Treasury, statskontoret, has developed into an organisation of administrative development and is no more carrying out any part of the treasury function.

To elaborate through an example, in Finland the Ministry of Finance has kept most of the politically relevant functions of the treasury function, and alienated to the Treasury only the technical part of the subfunctions 1.2 and 2. and the functions 3-6. The Ministry drafts the legislation concerning the subfunctions of the treasury function it has delegated, it supervises the implementation of that legislation, and it makes the policy decisions. Let us note that the Finnish Treasury also has important functions outside the treasury function and the entire government financial administration, namely in the administration of government personnel.

Thus one of the dimensions of the treasury function is its separation from or its coexistence with other functions of government financial management. Let us also analyse the case of the United Kingdom in terms of the list of tasks that Her Majesty’s Treasury announces to pursue (Exchequer 1999, 1):

1. Maintaining a stable macroeconomic framework with low inflation.
2. Maintaining sound public finances in accordance with the Code for Fiscal Stability.
3. Improving the quality and cost effectiveness of public services.
4. Increasing the productivity of the economy and expanding economic and employment opportunities for all, through productive investment, competition, innovation, enterprise, better regulation and increased employability.
5. Promoting a fair and efficient tax and benefit system with incentives to work, save and invest.
6. Maintaining an effective accounting and budgetary framework and promoting high standards of regularity, propriety and accountability.
7. Securing an efficient market in financial services and banking with fair and effective supervision.
8. Arranging for cost effective management of the government's debt and foreign currency reserves and the supply of notes and coins.
9. Promoting international financial stability and the UK's economic interests and ideas through international cooperation as a way of increasing global prosperity including seeking to protect the most vulnerable groups.

In the list only tasks ii, vi and partially viii belong to the treasury function. Tasks i and in part v can be categorised into other parts of governmental financial management, largely the part numbered as I at the beginning of this section. Tasks iii, iv, vii and ix hardly belong to financial management at all.

Professor Allen Schick (1997) a world authority in budgeting, has made important remarks on three points regarding government financial management including the central budget offices and treasuries:

1. Regarding what he calls aggretage fiscal discipline he points out that in the 21th century developing and operating a medium-term public expenditure and revenue framework is a task much superseding the concerns related to the annual budget.
2. Regarding allocative efficiency Schick warns against risks of adverse consequences of a strict fiscal discipline in that it may freeze existing government programmes and their priorities, which calls for shifting the initiative to agencies making their budget proposals to accomplish reallocations.
3. Regarding technical efficiency Schick calls for objective, systematic and reliable means to measure the volume and cost of outputs across a range of public services.

Professor Schick’s consideration includes an important message for developing the treasury function. The list of its subfunctions as provided by Ter-Minassian et al. (1995) is neutral with respect to the overall orientation of the government financial management. The list applies to an orientation that only covers the meticulous management of the budget items decided upon by the appropriate authorities, executed by other authorities, and recorded as part of the treasury function. The list also applies to an orientation towards efficiency and effectiveness to be achieved in and by the means of performance-oriented public expenditure management.

In a review of recent developments in the OECD countries, most of which are also EU Member States, OECD (1999) distinguishes four trends, by the way largely corresponding to directions that Schick (1997) above saw as desirable:

• Multi-year frameworks as the basis for the annual budget process
• Top-down spending ceilings whereby total expenditure ceilings are set and then allocated to individual ministries preparing their budgets within these ceilings
• Increased operating flexibility to ministries and agencies in implementing the budget
• Increased use of performance information in the budget process

The OECD message is even stronger than the one of Schick for finding a direction to develop the treasury function. The direction would go towards flexibility and decentralisation, including performance data and indicators in the accounting systems, and promoting the utilisation of the data and the indicators.

Note that the European Commission has lately announced of its plans to scrap a large part of its established treasury function by abolishing the General Directorate of Financial Control and its long-established function of meticulous, centralised ex ante financial control of expenditures. That would be the end of the venerable visa control. (Kinnock 2000.)

The Commission intends to join to the group of the Member State reformers and the other OECD reformers by decentralising financial management to the specialist General Directorates, and establishing a Central Financial Service under the Budget Commissar and an Internal Audit Service under another commissar. At the same time, the Commission takes steps towards a performance orientation by introducing integrated accounting of all costs of each of its activities, thereby making an end to the long-established separation between the administrative and the operational programme expenditures. (Kinnock 2000, Schreyer 2000.)

The Commission – nor the Council nor the European Parliament – have authority over the organisation of the treasury function in the members states. However, the example of the Commission in its treasury reform and its overall financial management reform may have effects of attraction towards those Member States that have hesitated before similar solutions.

Here, it is necessary to issue a word of caution. The World Bank (1998, 8), by the way referring to a study named "Getting the Basics Right" made by the above Professor Schick, forewarns that the promotion of performance in government cannot be achieved at once, but the following advice should be taken into account:

• Foster an environment that supports and demands performance before introducing performance and outcome budgeting.
• Control inputs before seeking to control outputs.
• Account for cash (i.e., accounting once cash is received or paid out) before accounting for accruals (i.e., accounting once an input comes into the custody of an organisation or once it gives away any of its outputs).
• Establish external controls before introducing internal control.
• Operate a reliable accounting system before installing an integrated financial management system.
• Budget work to be done before budgeting for results to be achieved.
• Enforce formal contracts in the market sector before introducing performance contracts in the public sector.
• Have effective financial auditing before moving to performance auditing.
• Adopt and implement predictable budgets before insisting that mangers efficiencly use the resources entrusted to them.

The message to the pre-accession states is clear. First, they have to build the basics in their treasury function and in other parts of the government financial management. Only next they can proceed towards turning the financial management including the treasury function into efficient engines to promote efficiency and effectiveness.

Finally, all Member States must have developed suitable treasury procedures to deal with their contributions to the Communities’ own funds and to fit together with their role as beneficiaries of the Common Agricultural Policy funds and the Structural Funds resources. There are ample examples to follow in this respect in the present pre-accession states. (Sigma 1997.)

To finish, the pre-accession states meet a triple challenge in developing their treasury function:

• First, they must "get the basics right".
• Second, they must create the necessary capacity to adhere to the requirements of a Member State as concerns the treasury function.
• Third, they can gear the treasury function towards the promotion of efficiency and effectiveness.