Describe about the Corporate Financial Management for Pension Fund Management.
A. Chief Financial Officer is a very important person of the company who is encompassing on the government entity and auditing committee. The company taken for answering the above question is Sacgasco Limited. Sacgasco Limited is oil and gas Exploration Company, basically based on California. The company is publically listed the company on the Australian Securities Exchange. In approximate the company has already issued 107 million shares (SACGASCO LIMITED.2016). The company also changed its name from Australian Oil Company Limited to Sacgasco Limited in October 2015. Sacgasco Limited is energy industry, Perth – based company which focuses on the conventional exploration of oil and gas, for the improvement and production on the onshore of California. SGC will be targeting substantial production of gas for supplying the initial demand of 2.5 TCF per year on the gas market of local California and will be supplying the burgeoning LNG market on the west coast of North America. The company is having the extensive appraisal of the portfolio and for the exploration of the gas prospect which will be included in the opportunity of the multi – TCF in the proved Sacramento Basin (SACGASCO LIMITED.2016). The Sacramento Basin has some improvement made upside due to gas which is underlying potential gas which was overlooked by the companies which are operated for producing widely used petroleum which has produced over 11 Trillion cubic feet. Dempsey conventional gas project is flagship prospect of SGC and will be remaining on focus for doing the development plans of the company. Dempsey Prospect will be having the potential for the near – term, conventional production of gas because it will be locating the SGC’s facilities of Production (SACGASCO LIMITED.2016).
Responsibilities of CFO
Chief Financial Officer has some duties and responsibilities which have a great impact on the fulfillment of the goals of the company. The responsibility of CFO has complexity. CFO is the person responsible for most of the operations of the company. There are few components which give rise to CFO. A successful and efficient CFO delivers the goal and aims of the company for getting the efficient operation to get completed. CFO is capable enough for fulfilling and delivering the goal and objective of the project. A successful CFO also finds ways for giving approximate way for the outlook process and evaluation of the industry. There are four important duties and responsibilities of CFO in Sacgasco Limited which are as follows:
Strategies used in forecasting and economics – CFO of Sacgasco Limited is the only one responsible for getting effected to the financial position, that will occur in the past and currently responsible for forecasting the future financial performance of Sacgasco Limited. CFO of Sacgasco Limited is successful in recording the experience with that of revenue growth and earning will be getting effected in the investment of Sacgasco Limited. CFO report of the company has successfully fulfilled is the role in improving the performance of the company. In the financial year 2015, the company did not pay any dividend and return of the companies shareholder’s this decision was taken by the CFO of Sacgasco Limited (SACGASCO LIMITED.2016).
The responsibility of Controlling – CFO of Sacgasco Limited will be having responsibility for the presentation of the report based on the historical information available for the company. Stakeholder of the company is included as employees, creditors, lenders, shareholders and the concerned people of management. The people who are directly and indirectly depending on the exact and prompt data achieved from the financial position of the company which will be involving in taking a major decision (Raddatz and Schmukler 2013).
The responsibility of the Treasury – Sacgasco Limited CFO is the sole person responsible for representing financial information regarding the annual report and investment related decision for the company which will be taking into factor the liquidity as well as a risk factor of Sacgasco Limited. It has been reported that company is continuously facing loss and is not utilizing its resources effectively, because of this company is facing loss from the operations. It has also been seen that company has only increased its finance income. The company further got involved into other income which was received because of Sacgasco Limited sold some of its owned subsidiary Calog LLC to Bombora Energy Pty Ltd. in this transaction (Sewell 2012).
Compliance – CFO of Sacgasco Limited has the problem of addressing and which the CFO oversees. The publically listed company has additional compliance issues that of privately owned company do not have. Cfo is responsible for handling these issues. CFO oversees the duties and responsibility of the shareholder for handling problem related to a dividend. CFO even is responsible preventing the fraud and theft which will be occurring due to the financial aspect(Lee et al. 2014)
CFO of Sacgasco Limited is responsible for attaining the objective of the company and financial aspect. For managing incompatibility, unrelenting and increased conflicting goals of the company is only for doing an individual discovery. Due to this deficiency, there is a lack of linking between the financial and operating goal for resulting in the inefficiency and increasing cost. CFO of Sacgasco Limited is responsible for broadcasting the outlook under the whole company (Schinckus et al. 2016)
In Sacgasco Limited, the CFO is the person responsible for identifying issues related to the working condition of the employee working in the line – manager. This is only done for enhancing the standardization, quality, and operational agility. The CFO of the company is responsible for making planning for the integrated business report. The company CFO acts as the catalyst for stimulating the order of behavior in the company for getting achieved a financial and strategic objective of the company. On the overall basis for fulfilling the major objective will be observing the result of the historical cost laid in the financial statement. CFO also focuses of the having a partnership of the firm with that of other for the fulfillment of the business objective as well as the financial objective of the company. Sacgasco Limited CFO has a great capacity in fulfilling the responsibility of the company with a view of increasing the volatility in the stock market related to the share price of Sacgasco Limited (Habib and Hossain 2013).
Sacgasco Limited CFO will act as financial caretaker for guiding the company for achieving the goal. CFO of the company is leading the team in respect of taking decision-related to the operation of the business. The company is involved in the leadership program for fulfilling the objective of Sacgasco Limited. The CFO of Sacgasco Limited will be maintaining the transactional and cost effectiveness for adding value to Sacgasco Limited (Rose 2016).
Sacgasco Limited CFO has the duty in reporting the external finance, capital management and planning of management of tax and also maintaining the relation with that of an investor. CFO is the person accountable for ensuring the performance of the management in the property of the company for giving advice on the strategic decision of the company. The CFO of the company should have knowledge about energy sector in Australia. The CFO of the company should have some effectiveness in taking decision-related to the strategy involving for the improvement in the energy sector (Rozanov 2015).
The CFO of Sacgasco Limited has successfully fulfilled his responsibility and duty for doing complete evaluation of the company related to the financial component of the company. The company is also aiming at expanding the business globally. The role and responsibility of the company are totally affecting the company. Strategies adopted by CFO for the company will be offering strategic solution related to the energy sector. The energy sector of Australia focuses on conventional use of exploration of Oil and gas. In Australia, the energy sector can get successful attainment of the goal because of the favorable presence of environment, social and political factor present for the company for the expansion of the business (Agrawal et al. 2013).
Sacgasco Limited is experiencing a low growth of the in the current years, and it is because the decision taken due to negligent decision was taken by the CFO of the company. CFO is the person responsible for taking decision-related to financial performance of the company. A single wrong decision will take the company in getting loss from its operation of the business. CFO of the company has not fulfilled his duties and responsibility in true to its attempt. Otherwise, Sacgasco Limited would have got a sufficient of profit for the fulfillment of the duties (Engel et al. 2014).
From the critical evaluation of Sacgasco Limited, it has been analyzed that CFO of the company is responsible for fulfilling the financial and company’s goal. The CFO of the company has truly fulfilled the aim and objective regarding the financial company. CFO has truly fulfilled the responsibilities and duties of the company, which is strategies used in forecasting and economics, a responsibility of controlling, responsibility of the treasury and compliance. The responsibility of CFO has been fulfilled with the best effort of CFO, then also the company is suffering from loss because of unavailability of the suitable resources required for the production (Friedman 2015).
B. Efficient Market Hypothesis (EMH) is theory of investment states that it is next to impossible to “beat the market” because efficiency of the stock market is causing the earlier existing share prices for always incorporating and reflecting all the information, which are relevant. As per EMH most of the time stock is traded at fair value on the exchange, either causing difficulty for the investors for purchasing stocks which are undervalued or selling of stocks at prices during inflation (Woods and Urwin 2012). EMH regarding financial economics also states the available information is totally reflecting the price of the assets. There are three variants of the hypothesis which is weak, semi – strong and strong. “Weak” EMH claims only on that price of traded asset which is already reflecting all the prior publically present information. “Semi – Strong” claims both the prices, which will be reflecting in the past, as well as prices which instantly changes for reflecting new information in the public. “Strong” claims to that price which is instantly reflected even if there is hidden information. The investors of market want high return, and this can be only achieved only when the stock as high risk. Therefore, with this effect, the equilibrium in the number of assets are getting increased and earning huge amount of revenue regarding tax (Bedard et al., 2014).
One of the major roles of the pension fund manager is to see the pension scheme of the company is running effectively and sustainability (Jenkinson et al. 2015). Another responsibility of the fund manager is also that under his duty, all the funds are being accumulated for some years for offering effectiveness in the advantages of retirement schemes. It is the duty of the pension fund manager to link the schemes with company’s employee. The view of implementing new pension schemes will be also looked by the pension fund manager. Duties and Responsibilities of the fund manager vary from company to company and as well as on the nature of the business. The fund manager is the person responsible for doing development in the pension fund of the company and for monitoring the entire administration. Fund manager of the company is totally responsible for discussing, auditing and contract to be done in the getting adopted to the frameworks of the company (Watson et al. 2016).
From the critical evaluation, it has been analyzed EMH theory is clarifying that stock is sometimes traded at fair value on the Stock Exchange. The role of the pension fund manager is to see the pension scheme of the company is running effectively, and sustainability with quality performance, quality, and targets of the clients will be fulfilled in compliance with the company standards. For ensuring the proper operations of the company, role of the pension fund manager is very necessary. Further, it has also been analyzed that Pension fund manager has become one of the important people in managing the funds of the retirement’s plan of the employees working in the company. So regarding selecting a portfolio EMH is considered to be true and pension fund manager is also stand as criteria (Blake et al. 2013).
Reference List
Agrawal, A., Goldie, J. and Huyett, B., 2013. Today’s CFO: which profile best suits your company. McKinsey Q, 1, pp.1-6.
Bedard, J.C., Hoitash, R. and Hoitash, U., 2014. Chief financial officers as inside directors. Contemporary Accounting Research, 31(3), pp.787-817.
Blake, D., Rossi, A.G., Timmermann, A., Tonks, I. and Wermers, R., 2013. Decentralized investment management: Evidence from the pension fund industry. The Journal of Finance, 68(3), pp.1133-1178.
Engel, E., Gao, F. and Wang, X., 2014. Chief Financial Officer Succession and Corporate Financial Practices. Fisher College of Business Working Paper No. RP, pp.02-005.
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.
Habib, A. and Hossain, M., 2013. CEO/CFO characteristics and financial reporting quality: A review. Research in Accounting Regulation, 25(1), pp.88-100.
Jenkinson, T., Jones, H. and Martinez, J.V., 2015. Picking winners? Investment consultants’ recommendations of fund managers. The Journal of Finance, 43(1), pp.99-126.
Lee, C.C., Tsong, C.C. and Lee, C.F., 2014. Testing for the efficient market hypothesis in stock prices: International evidence from nonlinear heterogeneous panels. Macroeconomic Dynamics, 18(04), pp.943-958.
Raddatz, C. and Schmukler, S.L., 2013. Deconstructing herding: evidence from pension fund Investment behavior. Journal of Financial Services Research, 43(1), pp.99-126.
Rose, P., 2016. Reframing Fiduciary Duties in Public Funds. Ohio State Public Law Working Paper, 8(7), p.8.
Rozanov, A., 2015. Public pension fund management: Best practice and international experience. Asian Economic Policy Review, 10(2), pp.275-295.
SACGASCO LIMITED. (2016). SACGASCO LIMITED. [online] Available at: https://www.australianoilcompany.com/index.html [Accessed 19 Sep. 2016].
Schinckus, C., Jovanovic, F. and Ausloos, M., 2016. On the” usual” misunderstandings between econophysics and finance: Some clarifications on modelling approaches and efficient market hypothesis. International Review of Financial Analysis, 10(2), pp.275-295
Sewell, M., 2012. The efficient market hypothesis: Empirical evidence. International Journal of Statistics and Probability, 1(2), p.164.
Watson, J., Delaney, J., Dempsey, M. and Wickramanayake, J., 2016. Australian superannuation (pension) fund product ratings and performance: A guide for fund managers. Australian Journal of Management, 41(2), pp.189-211.
Woods, C. and Urwin, R., 2012. Putting sustainable investing into practice: A governance framework for pension funds. In The Next Generation of Responsible Investing, 8(7), pp. 27-48.
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