Describe about the Corporate Finance for Financial Officer Designation.
The chief financial officer designation varies with the nature of the business of the company. The CFO of a company is directly concerned with the financial control and planning. CFO comprise of the top management member. The staff and the line opportunities of the company is concerned with the duties of CFO. The chief financial officer is known with different names such as the financial manager or the financial controller. There are also people working under the supervision of CFO. The selected company for discussion is Real Energy Corporation limited which is listed on the stock exchange and is an explorer of gas and oil. The company was established in the year 2009 and has retained interest of 100% and possesses the potentiality of funding in the future (Asx.com.au 2016). The company is one of the most prolific petroleum producing basin on the conventional offshore. However, the current market capitalization of the company does not reflect the potential of enormous gas resource. All the projects undertaken by the company is wholly owned by the company. The company contributes to the operation of several tenements in the Copper Eromanga Basins. The company signed a letter of intent in the year 2015 with the Incitec Pivot regarding the supply of gas from the basin of project of Real Energy Cooper basin and the agreement was signed for the period of 10 years. The company has strong commercial and the technical team. The current financial controller of the company is Ying Ou B who is a master of business administration and has experience in the joint venture, corporate accounting and the finance in the industry of resource and oil (Realenergy.com.au 2016). The responsibility and the objectives of the CFO or the financial controller of the company regarding the company’s financial position are discussed below:
CFO or the financial controller responsibility- A CFO who is successful is well capable to deliver the responsibilities and the goal of the company regarding its financial reporting. The effective CFO provides the company with the effective outlook for the proper evaluation of the financial records of the company.
The report on the financial status of the company is provided by the CFO and is responsible to keep the accurate financial records. The CFO of the smaller organization is concerned with the handling of the basic duties of accounting and is liable to produce the accounting reports on the monthly and the annual basis. On the other hand, in the larger organization, the responsibilities shifts form handling the accountings and producing the annual reports to the analysis, managing and the oversight (Bishop et al. 2014). The reporting and the actual accounting of the company Real energy Limited is done by the departments or the divisions and in order to gain the complete scenario of the financial status of the company, the CFO needs to review such reporting. However, the board of director needs the annual financial report to be provided by the financial controller in the meeting of board of directors. The financial controller of the company has the responsibility to present the past and the updated financial information of the company to its various stakeholders such as the creditors, employees, debtors and the management and the board of the directors. This would enable them to get the appropriate and the exact information about the financial status of the company (Brausch 2014).
Budgeting and the management-
The CFO is concerned with the overseeing the matters relating to the financial statements of the company such as budgeting, salaries, cash flow and investments in the smaller organization. The paychecks of the employees are signed by the finance controller in smaller corporations. In the larger organization, the CFO is concerned with the handling of the administrative role with respect to the budgeting and allocating the resources. On the basis of the reports provided by the division managers, the finance controller of the company makes the administrative decisions such as deciding the pay of scales, budgeting and the resource allocation. The finance controller of the company has an important contribution in the management of the financial risks and the capital acquisition and the strategy of investments. He or she is also responsible for making the capital investment in the company (Frahm 2014).
All the financial reports are analyzed and according the finance controller takes the financial decisions. The budget of the company is planned in such a way that all the debt of the company would be paid off when they fall due. The financial mangers maintain the conservative capital structure of the company and this would make the strategy of financing of the companies attractive to the investor and the shareholders. The CFO makes use of debt financing and equity financing in an appropriate way so that the capital structure is at low risk and the return gets maximized (Friedman 2015).
The long term strategic plan of the company is formulated with inclusion of the CEO and CFO of the company as the finance controller is increasingly partnering with the Chief financial executive to take part in the strategic plan formulation. The CFO is concerned with further enhancing the profitability of the company. The productivity of the Real energy limited is evaluated by the finance controller and he is responsible for searching the areas of efficiency which would be enhanced. The finance manager is responsible to call upon and use their knowledge of marketing and funding of the resources and the company is expected to provide the general outlook of the company with regard to its economies and assist in taking decisions about the resource allocation and taking the risk with regard to the financials of the company (Kliger and Gurevich 2014). The responsibility of the financial position of the company is solely provided by the CFO and the analysis of the present and the past records of the financial reports are done by him or her. It is also the responsibility of CFO to forecast the future aspects of the financial reports and its effect on the financial position and the financial status of the company.
The CFO of the company is involved with the growth of the business and its profitability and he is also concerned with the acquisition of the properties of production. The acquirement of Mosaic by entering into the arrangement with the AGL limited and the finance manager was instrumental in achieving the decisions. The CFO is liable to perform the technicalities in the financial management. The objectives of the company are aligned with the planning of the integrated business of real energy Corporations Limited. The managers and the board of directors make sure that the objectives and the goals of the company are met and is aligned with the favorable financial status of the company. In achieving the strategic aim and the financial objectives of the company the CFO of the company act as the catalyst in stimulating the company’s behavior regarding the same. In order to achieve the higher aim of the business, the CFO intends to perform the operational structure of the company (LeBlanc 2012). The volatility of the financial market affects the functioning of the company and indirectly effect the share price of the company and he is responsible to imbibe the volatility in the true and the beneficial sense of the company. The various fulfillment of the company regarding the financial reporting is performed by the company’s finance controller. The efficiency in the objectivity of the costs and the various strategic objectives of the Real Energy Corporations Limited is performed by the CFO of the company. The CFO is also responsible on the acquisition for the mergers and the business combination of the company and he is also held responsible for accounting of the management of the performance of the various properties of the company. Whether the company is holding the diversified portfolio and is able to handle the financial risk and its efficiency depends upon the skills and the knowledge of the finance managers (Lee and Zhang 2012). The portfolio is built in such a way that it becomes the energy service provider globally to the potential clients all over the world. The financial goal of the CFO of Energy limited is attained successfully by making the working of the company effective and generates the profits and it also depends upon the knowledge of the company. The financial position of the company gets triggered by the incorporation of the skills and the talent of CFO in handling the various financial objectives of the concerned company. The budgeting, planning and the financial reporting of the company are integrated to achieve the better financial position of the company in the present scenario (Mohanty 2014). The agreement which the company entered provides the investment of $ 35 million toward the project development. This provide for the negotiation so that the sale agreement of gas gets finalized.
The efficient market hypothesis shows that the stock market performs efficiently as it reflect the relevant information and incorporate all the available information in the market and the individual investor cannot beat the market and the investor cannot earn extra profit by making investment as the information available is perfect. The investor has got tendency to invest in the undervalued securities which would yield more vale in the future and they expect to select the securities that would outperform the market. The investor needs to analyze the market and perform the investment after conducting the proper analysis (Westerlund et al. 2015). The efficient market exists because there exist extensive competition among the investors to earn the profits. The investor spends time in evaluating the stocks that are under priced or overpriced. The investor expecting high return should make the investment in the riskier stocks. This is so because a high risk stock comes up with the high return (Ortiz et al. 2015).
The pension fund manager is mainly involved with the implementation of the investment strategy relating to the funds which can be managed by him individually or three or more people. The investment quality of the fund is analyzed with regard to the duties of pension fund managers. The pension schemes working in an effective way is the responsibility of the pension fund managers and this would ensure sustainability. The funds of the pension are managed in an effective way by the pension fund manager. The retirement benefits program would be effective if the accumulated funds are managed in an optimum way. For the appropriate management of the funds, the fund managers call for the implementation of the schemes of the new pension funds (Pensions-institute.org 2016).
The experience level of the company determines the working of the pension funds managers and it varies ‘company to company’. The role of the fund managers comes in regard to the development of the various schemes of the pension funds so that it contributes to the benefits of the pension funds holders and the administration of the pension funds gets administered. The board of the company and the important investment decisions works with the responsibility of the fund managers regarding reviewing, discussing and agreeing with the framework of the various funding strategy. The addressing the performance of the pension funds and make it functions in efficient manner, the pension funds managers need to effectively perform its function along with its own line.
According to the efficient market hypothesis, the shares listed in the stock exchange is always traded at the fair value as there does not exist superior information in the market to gain something extra. The extra gain depends upon the willingness of the investors to take additional risks while making the investments. The investor needs to meet the criteria of the efficient market hypothesis. The pension fund manager is concerned with the diversification and the pooling of the pension funds and the financing pattern of the individual gets affected by the pension funds (Verma 2014).
Reference:
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Bishop, C.C., DeZoort, F.T. and Hermanson, D.R., 2014. The Effect of CEO Social Influence Pressure on CFO Financial Reporting Decisions.
Brausch, J., 2014. Becoming a winning CFO. Strategic Finance, 96(1), pp.19-20.
Frahm, G., 2014. A Modern Approach to the Efficient-Market Hypothesis(No. 1302.3001).
Friedman, H.L., 2015. The Strategic CFO? Implications of the CFO’s Role and Responsibilities. Implications of the CFO’s Role and Responsibilities (August 18, 2014). AAA.
Kliger, D. and Gurevich, G., 2014. Infrastructure: The Efficient Market Hypothesis. In Event Studies for Financial Research (pp. 5-18). Palgrave Macmillan US.
LeBlanc, B., 2012. Sustainability rises on the CFO’s’ to-do’list. Financial Executive, 28(2), pp.54-58.
Lee, A. and Zhang, T., 2012. Building the CFO Function: Roles and Responsibilities.
Mohanty, S.C., 2014. ‘The Role of the CFO has Changed Dramatically Over the Past Decade. The MA Journal, 49(6), pp.7-9.
Ortiz, R., Contreras, M. and Villena, M., 2015. On the Efficient Market Hypothesis of Stock Market Indexes: The Role of Non-synchronous Trading and Portfolio Effects. arXiv preprint arXiv:1510.03926.
Pensions-institute.org. (2016). [online] Available at: https://www.pensions-institute.org/workingpapers/wp0010.pdf [Accessed 29 Sep. 2016].
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Rick, A.H.I., Karidis, J.P., Pickover, C.A. and Wisniewski, R., International Business Machines Corporation, 2016. Introducing selective energy efficiency in a virtual environment. U.S. Patent 9,268,385.
Sun, L. and Rakhman, F., 2013. CFO financial expertise and corporate social responsibility: Evidence from S&P 500 companies. International Journal of Law and Management, 55(3), pp.161-172.
Verma, M., 2014. Priorities of a CFO. Effective Executive, 17(1), p.40.
Westerlund, J., Norkute, M. and Narayan, P.K., 2015. A factor analytical approach to the efficient futures market hypothesis. Journal of Futures Markets, 35(4), pp.357-370.
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