This unit aims to discuss financial management roles in terms of the quality of the chain of responsibilities and the financial goals of the organizations as a whole. According to Al Balooshi, Iannino, and Abedifar (2020), the economic hierarchy of organizations varies according to their activities and objectives; for example, a family-owned and not offered stock trading will not care about the movement of the stock market, and therefore, there will be no financial manager for investor relations.
In this paper, I will choose an organization as a case study, explain why I chose it, and then apply the discussion questions to it.
Choosing the Organization:
Because of my work in construction, I chose AECOM as the leader in this field. I will present it in the following few lines, as my discussions will continue during this course.
According to (Cayer, 2019), AECOM was founded in Oklahoma in 1910 by J. Fred Miles. In 1945, the organization formed a consortium with several other engineering offices, namely Daniel, Mann, Johnson, and Mendenhall; it was restructured in 2012 to become the world's most significant architecture, engineering, and urban planning conglomerate, the company is now listed on the New York Stock Exchange (NYSE) under the ticker symbol (ACM) and on the Frankfurt Stock Exchange under the ticker symbol (E6Z) and is ranked 157th on the 2019 Fortune 500 list., on the personal side, I have a close friendship with one of its regional managers in New York, which can help me in obtaining the required data during the study period for this course.
The Objectives of Financial Management:
According to (Chandra, 2013), the main objective of any publicly traded organization is to maximize shareholder wealth and the company's long-term value, then come other goals like (Proper Utilization of Financial Resources - Meeting Financial Commitments with Creditors - Decreasing the Cost of Capital - Decreases Operating Risk - Developing Financial Scenarios - Business Survival), according to (AECOM, 2020), the primary stated financial objective of AECOM, it is the application of cash collection objectives and mitigation of liquidity risk by generating cash from its operations.
The Organization's Financial Hierarchy:
According to (TUW, 2022), the financial hierarchy can be defined as the hierarchy and description of the sections that manage the financial department and the responsibilities of their managers. Looking at the financial hierarchy of AECOM, we find the following:
However, according to (TUW, 2022), the ideal hierarchy that organizations should have is as follows:
The Suitability of the Financial Hierarchy of AECOM
When comparing the AECOM financial hierarchy and the hierarchy of AECOM (TUW, 2022), we find the following:
1. according to (Garrison, Noreen, Brewer & Mardini, 2003), the lack of a managerial accounting department is vital in using accounting information in decision-making and performance monitoring.
2. As shown in the hierarchy (TUW, 2022), financial and accounting operations management are not separated. The purpose of this chapter is to better align each department's responsibilities.
AECOM Financial Leadership
According to (Rao, 2017), there are three types of leadership: (Inspiring Leadership, Democratic Leadership, and Strategic leadership); I see that AECOM Financial leadership is based on the third type, which depends on the long-term vision and the formulation of a roadmap to achieve this, there are financial years that have stumbled, but they rise again and gain new ground in countries that they have not previously entered.
Conclusion
Financial management has many roles in organizations, from preparing financial reports to current operations, forecasting future financial risks, developing financial flow statements and profit forecasts, managing credit and budgets, and finally, fulfilling legal and ethical requirements about accounting and financial operations. AECOM's financial management system can be considered efficient and stable despite the large number of competitors in the field of engineering services globally. However, AECOM has established itself as a leader in this field for a long time.
References
AECOM. (2020). Annually Financial Report, AECOM_Holdings_Limited_FY20_signed_FS
Al Balooshi, S., Iannino, M. C., & Abedifar, P. (2020). Islamic Securities in Corporate Financial Hierarchy. Available at SSRN 3644234.
Cayer, A. (2019). Shaping an Urban Practice: AECOM and the Rise of Multinational Architecture Conglomerates. Journal of Architectural Education, 73(2), 178-192.
Chandra, R. (2013). Financial management. BookRix.
https://e.pdfpremiumfree.com/downloads/financial-management-prasanna-chandra-solution-manual/
Garrison, R. H., Noreen, E. W., Brewer, P. C., & Mardini, R. U. (2003). Managerial accounting. New York: McGraw-Hill/Irwin.
Rao, S. K. (2017). Techno-Financial Management Approach to Business Organization Culture: A New Paradigm for Sustained
Techno-Economic Innovation. Journal of Financial Management & Analysis, 30(2), 41–47. Retrieved from EBSCO multi-search
TUW. (2022). An Overview of Financial Management. Retrieved from http://www.csun.edu/~zz1802/Finance%20303/Web-Stuff/Lecture-Notes-Mid1.pdf