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Title: ACCA P4 AFM Advanced Financial Management Chapter_01_Role_&_Responsibility_of_the_Financial_Manager
Description: Role and Responsibility of Financial Managers Investment Appraisal Cost of Capital Adjusted Present Value (APV) Financing Decision Dividend Decision International Investment Appraisal International Financing Decision International Dividend Decision Option Pricing Corporate Failure Corporate Reconstruction Corporate Reorganization Risk Management Forwards Contracts Money Market Hedge Future Contract Option Contract Currency Swap Mergers and Acquisitions Business Valuations
Description: Role and Responsibility of Financial Managers Investment Appraisal Cost of Capital Adjusted Present Value (APV) Financing Decision Dividend Decision International Investment Appraisal International Financing Decision International Dividend Decision Option Pricing Corporate Failure Corporate Reconstruction Corporate Reorganization Risk Management Forwards Contracts Money Market Hedge Future Contract Option Contract Currency Swap Mergers and Acquisitions Business Valuations
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ACCAspace
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ACCA P4
Advanced Financial Management(AFM)
高级财务管理
ACCA Lecturer: Lily Wang
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This
section will normally cober significant issues relevant to the senior
financial manager or advisor and will be set in the form of a short
case study or scenario
...
Each question
will contain a mix of computational and discursive elements
...
Candidates will be expected to provide answers in a
specified form such as a short report or board memorandum
commensurate with the professional level of the paper
...
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3
Chapter Summary
Financial Strategy
Development
Policy Development
Mission
Policy framework
Financial policy
Policy setting
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Policy Issues
Investment selection
Raising finance
Dividend policy
Communication
Planning and control
Risk management
Use of resources
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2
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The FM should also consider the impacts of his role on
decisions made:
•
Strategic impact
•
Financial impact
•
Regulatory impact
•
Ethical impact
•
Environmental impact
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Key Role and Responsibility of Financial Manager
Key areas of responsibility of a Financial Manager
•
investment selection and capital resource allocation
•
raising finance and minimising the cost of capital
•
distribution and retentions (dividend policy)
•
communication with stakeholders
•
financial planning and control
•
risk management
•
efficient and effective use of resources
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Treasury
The Role of the Treasury Function
Developments in technology, the breakdown of
exchange controls, increasing volatility in interest
rates and exchange rates, combined with increasing
globalisation of business have all contrbuted to
greater opportunities and risks for entities
...
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Treasury
Treasury and Financial Control
•
the financial control function will be concerned primarily
with the allocation and effective use of resources, and
will have responsibility for investment decisions
...
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Treasury
Treasury and Financial Control
Close liaison is often required between financial control
and treasury, e
...
:
•
In investment apprisal decisions, the treasurer is best able to
assess the cost of capital and quantify the entity's aversion to
risk, while the financial controller relates these factors the
group strategy
...
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Incorporating interests of other stakeholders
Agency theory - conflict of interests
Strategies for managing conflicts between stakeholders:
•
hierarchies of decision making (corporate governance
codes)
•
the full board
•
individual executive derectors making operational decisions
•
non-executive dirctors ( audit, remuneration committee)
•
stakeholders in geral meeting
•
specific calsses of share holders where particular rights are
concerned
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Incorporating interests of other stakeholders
Performance monitoring and evaluation systems
(congruent with the maximisation of shareholders wealth)
•
Financial measures:
Accounting figures: EPS/ROCE/RI, DPS, EVA
Stock market figures :Share price, PE ratio
•
Shareholder value added (FCF)
•
Specific cost/revenue targets
•
Non-financial measures
Balanced scorecard, employee/satisfaction
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Incorporating interests of other stakeholders
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Incorporating interests of other stakeholders
Box A-Direction
Suitable for:
stakeholders who do not stand to lose or gain much from the
project AND whose actions cannot affect the project's ability
to meet bojectives
...
They are unlikely to be the subject of project activities or
involved in project management
...
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Incorporating interests of other stakeholders
Box B-Education and communication
Suitable for:
Stakeholders who stand to lose or gain significantly from the project BUT
whose actions cannot affect the project‘s ability to meet objectives
...
The
positively disposed groups from this box may lobby others to support the
strategy
...
Method:
Management should brief all groups on the reasonableness of project and
of any provisions being made for those affected by the decisions
...
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Incorporating interests of other stakeholders
Box C-Intervention
Suitable for:
Stakeholders whose actions can affect the projec's ability to meet its
objectives BUT who do not stand to lose or gain much from the
project
...
The key here is to keep the occupants
satisfied to avoid them gaining interest and shifting into box D
...
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Incorporating interests of other stakeholders
Box D-Participation
Suitable for:
Stakeholders who stand to lose or gain significantly from the project AND
whose actions can affect the project's ability to meet its objectives
...
The project needs to ensure that their interests
are fully represented in the coalition
...
Method:
Initially there should be education /communication to assure them that the
change is necessary, followed by discussion of how to implement it
...
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Impact of financial manager's decisions
Strategic impact
Fit with environment
use of resources
stakeholder reactions
impact on risk
Financial impact
NPV of project
share price
F/S
cost of capital
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Impact of financial manager's decisions
Ethical impact
•
society level
•
corporate level
•
individual level
ACCA code of ethics
•
integrity
•
objectivity
•
professional competence and due care
•
confidentiality
•
professional behaviour
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Impact of financial manager's decisions
Environmental impact
The United Ntions defines sustainable development as:
Development that meets the needs of the present without compromising
the ability of future generations to meet their own needs
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ACCAspace
Provided by
ACCA Research Institute
Title: ACCA P4 AFM Advanced Financial Management Chapter_01_Role_&_Responsibility_of_the_Financial_Manager
Description: Role and Responsibility of Financial Managers Investment Appraisal Cost of Capital Adjusted Present Value (APV) Financing Decision Dividend Decision International Investment Appraisal International Financing Decision International Dividend Decision Option Pricing Corporate Failure Corporate Reconstruction Corporate Reorganization Risk Management Forwards Contracts Money Market Hedge Future Contract Option Contract Currency Swap Mergers and Acquisitions Business Valuations
Description: Role and Responsibility of Financial Managers Investment Appraisal Cost of Capital Adjusted Present Value (APV) Financing Decision Dividend Decision International Investment Appraisal International Financing Decision International Dividend Decision Option Pricing Corporate Failure Corporate Reconstruction Corporate Reorganization Risk Management Forwards Contracts Money Market Hedge Future Contract Option Contract Currency Swap Mergers and Acquisitions Business Valuations