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However, the application of the 3% independent ownership has been restructured to make SPEs much clearer to delineate between parent company ownership and independent ownership.
Another major issue that arose out of the Enron scandal is the manipulation used by Anderson of derivatives. In a BBC report, Emma Clark explains, "If you dig deep enough into any financial scandal you can usually find a derivative or two to take the blame" (Callahan, npg). Derivatives are in fact financial products that derive their value from any underlying assets that a company might have. Enron, much like other companies used derivative trading in order to fully engage its business and reduce its business risks. Although it was actually profitable within its derivative trading, the accounting practices involved in calculating these profits allowed them to disguise heavy losses in its business sectors attributed to derivatives trading. Enron's case was especially severe "their dubious…
2003. 21 Aug. 2006 http://www.discourse.net/archives/2006/07 / enrons_special_purpose_entities.html>.
Callahan, Gene. "In Defense of Derivatives." Reason online. 20 Feb. 2004. 21
Aug. 2006 http://www.reason.com/0402/fe.gc.in.shtml .
Depending on the type and size of a particular health care facility, the generally accepted accounting principles (GAAP) used to conduct medical accounting can vary greatly, and these differences may have significant impact on the eventual delivery of medical services. According to the Financial Accounting Standards Board's (FASB) Accounting Standards Codification, which is "the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities," a conflict of interest routinely occurs when "some health care entities recognize patient service revenue at the time the services are rendered regardless of whether the entity expects to collect that amount" (FASB, 2011). Individual doctors working within the confines of a small family practice, who have not fully incorporated, typically rely on cash-basis accounting, which is the "major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid…
Accrual accounting (2010, May 09). Forbes Financial Glossary, Retrieved from http://www.forbes.com/sites/forbesfinancialglossary/2011/07/12/accrual-accounting/
Cash basis accounting. (2011, June 21). Investopedia, Retrieved from http://www.investopedia.com/terms/c/cashbasis.asp?partner=forbes-pf
Financial Accounting Standards Board of the Financial Accounting Foundation. (2011, July). Presentation and disclosure of patient service revenue, provision for bad debts, and the allowance for doubtful accounts for certain health care entities: A consensus of the fasb emerging issues task force . Accounting standards update: health care entities (topic 954), Norwalk, CT. Retrieved from http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=i 'd&blobwhere=1175822797036&blobheader=application/pdf
Wal-Mart Corporation Financial Analysis
Wal-Mart Corporation is considered the world's largest retailer, renown for it's low prices and high volume sales. Wal-Mart's emerging accounting practices include complete automation of accounting functions. Wal-Mart is considered a pioneer of sorts, enabling EDI or electronic transmission of inventory information and Just In Time ordering. As such, they have virtually eliminated the need of middlemen calculating future inventory needs, and assessed potential bottlenecks before they become a problem.
Part of Wal-Mart's success lies in its ability to negotiate TOC practices, JIT and EDI. Wal-Mart has successfully moved toward improving performance by identifying potential bottlenecks or constraints, and also implementing innovative inventory practices and electronic dissemination of information (JIT and EDI). How does Wal-Mart do it? Wal-Mart focuses of EDI enabled JIT purchasing mechanisms. Wal-Mart shifts the "burden" of inventory to the supplier. Inventories move very swiftly with Wal-Mart, due in part to the substantial…
Hood and Strong. (2002)"Identify, Eliminate Bottlenecks that Impede Manufacturing." Fall, 2002. Manufacturing Monitor. March 14, 2003, http://aolsearch.aol.com/aol/redir?src=websearch&requestId=4ba2219e7cf1443a&clickedItemRank=6&userQuery=%22theory+of+constraints%22+and+WalMart&clickedItemURN=http%3A%2F%2Fwww.hoodstrong.com%2FMFG%2F2002%2FMM%2520Fall02%2520articles.html
Gentry, James K. (1996). "Reading Business Financial Statements." February 16, 2000, http://www.facsnet.org/tools/biz_econ/covering_biz/part2.php3
Scot/Sys 2000, "Electronic Data Interchange http://www.scotsystems.com/ScotSys_2000/EDI/body_edi.html
Sitcur. "Sitcur Analysis." Los Angeles, CA. March 13, 2003, http://aolsearch.aol.com/aol/redir?src=websearch&requestId=25026abf644b8000&clickedItemRank=2&userQuery=JIT+and+EDI+with+WalMart&clickedItemURN=http%3A%2F%2Fwww.sitcur.com%2Feasycomm.htm
Bristol-Myers Squibb (BMS) is a multinational pharmaceutical company founded in 1989 from two other companies founded in the 1800s. It is headquartered in New York City with revenues of over $9 billion and almost 30,000 employees worldwide. The company manufactures pharmaceuticals in several therapeutic areas: cancer, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis, HIV, and psychiatric disorders. The company's primary research sites are located in New Jersey, Connecticut, Belgium, Tokyo, and Bangalore, India. The company has had some rough times in the past few years, and has been involved in a major restructuring that focuses on both the pharmaceutical and biological products divisions. This restructuring also includes productivity initiatives and cost-cutting/streamlining business operations through a program of layoffs and reduced subsidies for retirees and pensions plan reductions (Dey, 2010).
Accounting Fraud - BMS was involved in a major accounting scandal in 2002 that resulted in the need to drastically restate revenues…
Bristol-Myers Squibb Company. (2012). Audit Committee Charter. Retrieved from:
Dash, E. (August 5, 2004). Bristol-Myers Agrees to Settle Accounting Case. The New York
Times. Retrieved from: http://www.nytimes.com/2004/08/05/business/bristol-myers-agrees-to-settle-accounting-case.html
Distributive Justice and Accounting Practice:
Every society has an economic framework governed by laws, policies, and institutions that contribute to distinctive distributions of economic incentives and burdens among the members of the society. The economic frameworks are usually brought by human political processes and they usually change across societies and within societies over time. Economic frameworks play an important role in the society because their structures significantly influence the economic distributions, which in turn affect people's lives. One of the most significant aspects of economic frameworks is accounting principles and practices that play a significant role in the effectiveness of these systems. From a wider political/economic view, understanding the function of accounting is crucial for understanding how a society's economic framework operates. Generally, accounting is entrenched in a capitalist, free-market, and economic system through promoting the values upon which the system is based.
The topic of distributive justice…
"Federal Income Tax Brackets 2013." (n.d.). The 2013 Federal Tax Rates and Brackets.
Retrieved March 31, 2013, from http://www.taxbrackets2013.com/
Garrison, R.W. (1996, October 1). The Flat Tax: Simplicity Desimplified. Retrieved March 31,
2013, from http://www.fee.org/the_freeman/detail/the-flat-tax-simplicity-desimplified#axzz2P932Q1P5
Economic Value Added (EVA) Accounting Practice
Although Economic Value Added (EVA) is not a new concept in economics and financial theory and is based on the 19th century concept of "economic profit," it has only been widely adopted recently by business firms as an accounting practice. In this paper we shall describe what EVA is, and look at its pros and cons from the point-of-view of the company adopting the practice and the investors. We shall also discuss how EVA differs from some other emerging accounting practices and the major issues relating to EVA as compared to other commonly used accounting principles. Finally, the possible problems and opportunities that a company adopting EVA principles can face shall be examined.
What is Economic Value Added (EVA)?
Economic Value Added (EVA) is the after-tax cash flow generated by a business minus the cost of the capital it has invested to generate that…
Keen, Peter. (1999). "Economic Value Added.(EVA)" Every Manager's Guide to Business Processes. Retrieved on April 20, 2003 at http://www.peterkeen.com/emgbp007.htm kel inen, Esa. (1998). "Economic Value Added as a Management Tool." Retrieved on April 20, 2003 at http://www.evanomics.com/
Shand, Dawne. (October 30, 2000). "Economic Value Added." COMPUTERWORLD. Retrieved on April 20, 2003 at http://www.computerworld.com/managementtopics/management/itspending/story/0,10801,53001,00.html
Stewart, Bennet (1999) "What is EVA?" Stern Stewart & Co. Web site. Retrieved on April 20, 2003 at http://www.sternstewart.com/evaabout/whatis.php
This cost reflects both the time value of money and compensation for risk -- the more risk associated with a firm, the greater the firm's cost of capital.
In aaccounting research, the model used would be called analytical modeling, which consists of sstudies that use models with no specific underlying economic theory but use mathematical techniques. The mathematical formulas are applied to test and establish laws and accounting practices. Simulation, or the practice where the analysis is so complex that it requires a computer, is also an example of an inductive accounting practice research methodology.
Finally, pragmatic research utilizes pragmatic validity, which views research from a prescriptive-driven perspective. For example, solutions to problems that actually occur in the complex and high field of practice are developed in a way that, while valid for a specific situation, need to be adjusted according to the context in which they are to be applied. In the accounting area, general empirical research is a catchall that includes primarily descriptive empirical work. Another example of an accounting research methodology that consists of pragmatic…
Blaikie, N. (2007). Approaches to Social Inquiry. ISBN 0745634486.
Fleming, R., Graci, S. & Thompson, J. (2000). Dawning of the Age of Quantitative/Empirical Methods in Accounting Research. The Accounting Historians
Journal. (June 2000).
This model could then be customized for the needs of the different companies.
Sankaran and AlHashim (2006) make a compelling case regarding the need for harmonized accounting standards and practices. In addition to the globalized economy, they also rightly point to the benefits of such harmonization for corporations - including a greater ability to keep track of expenses and a better way of reconciling different accounting practices in its branches worldwide. Furthermore, Sankaran and AlHashim (2006) also allay fears that harmonization is equivalent to imposing only one accounting system around the world. Instead, they highlight the need for commonality, for a web-based accounting system that lends itself to different accounting practices.
The paper makes a strong argument, and the data regarding the need for a harmonized accounting system is compelling. hile this article may present a challenge for readers unfamiliar with basic programming language, the inclusion of a generic algorithm…
Sankaran, Siva and Dhia D. AlHashim. 2006. "An Accounting Information System for Harmonization."
Journal of American Academy of Business, Cambridge. 9(2): September.
This discussion contains research pertaining to the impact of cash-basis accounting on the distortion of the financial position and operating results of a business.
We began our discussion with a definition of cash base analysis. We concluded that this accounting tactic is used to examine cash and cash equivalents. This is done by separating cash flow transaction into one of three activities which include; operating, financing and investing activities.
Our investigation then explored why and how financial statements completed using cash-basis accounting can be distorted to present a misleading picture about the financial position and operating results of a company. Our investigation found that these distortions exist when accountants fail to provide a report of additional information that may not appear on the face of the financial statement. Additionally, we found that inconsistencies in the presentation of a financial statement can greatly influence the distortion of information that is…
Financial Reporting under the Cash Basis of Accounting (2000) Standards Report International Federation of Accountants.
Live on the Lakeshore Financial Statements. (2003) Retrieved August 19, 2003 at http://aliveonthelakeshore.gospelcom.net/aotlfinancial03.pdf.
Navani, Vinay S. (2002) IRS eases cash-accounting rules for small businesses
Journal of Accountancy, Vol. 193
Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.
Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure…
Marshall, David H.; McManus, Wayne W & Viele, Daniel F. (2008). Accounting - What the Numbers Mean. McGraw-Hill/Irwin, New York, 2008.
Then again, even the sites that allow for such commentary often don't receive any. PwC IFS hasn't received any comments in the past month on any of its articles, for instance, though it does provide accurate and fairly up-to-date information. Part of the reason for this could be the fact that this blog, like many others in the accounting world, are run by large firms -- Price Waterhouse Coopers, in this case. Though this does not mean there is necessarily a bias at work in the blog, and indeed certain differing opinions are allowed, the fact that the information on such blogs is so directly under the control of a single for-profit entity means it must be regarded as at least slightly suspect. As these resources are also free, however, there is no harm in regularly browsing them.
Accounting and Business esearch. Accessed via EBSCO 8 October 2009.
Accounting and Business Research. Accessed via EBSCO 8 October 2009.
Accounting Historian's Journal. Accessed via EBSCO 8 October 2009.
Accounting and the Public Interest. Accessed via EBSCO 8 October 2009.
Accounting Today. Daily print periodical. 2009 issues reviewed.
Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial period ending subsequent to December 15, 1984 with respect to postretirement health care and life insurance benefits that are provided not only in the United States but also international nations. Nonetheless, for financial periods prior to June 15, 1985 that lack data and information regarding benefits provided in foreign nations, it is not mandatory to include them (FASB, 2017).
Moreover, the net pension liability or net pension assets have to be included in the financial statements as an asset or…
An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of atio Analysis)
As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when…
Accounting and decision making - Ratio analysis. Retrieved from http://www.learn.co.uk/cima-mc/lesson4/page4.htm Accessed on 22 April, 2005
Basic Financial Statement Analysis: Objective 3: Explain the limitations of ratio analysis. Retrieved from http://www.wu-wien.ac.at/usr/h93/h9352467/Limitations%20on%20Ratio%20Analysis/limitationonra.html Accessed on 22 April, 2005
Cars, Andreas. 2002. The Dynamic Current Ratio. 3 September. Retrieved from http://www.investopedia.com/articles/02/090302.asp Accessed on 22 April, 2005
Covers Information from Accounting 200 and 201. Retrieved from http://www.everettcc.edu/emplibrary/Financial%20Ratios.pdf Accessed on 22 April, 2005
However, when a shock happens that changes that pattern, the information is no longer relevant. In periods of turmoil, only the most up-to-date information is relevant. The usefulness of the information wanes quickly as the behavior of the company becomes more erratic. After a period of erratic behavior and change, the company may be forced to make internal changes that affect the way they do business. They may make changes that affect their inventory management, sales cycle, stock levels, supply chain, distribution network or other fundamental business functions. New patterns may emerge and the old information no longer applies.
The term "relevancy" can have many different meanings depending on what is happening with the company. A new accounting regime may need to be instituted when a change takes place. Looking at the most recent historical information is one way to determine the relevancy of the accounting information. The analyst needs…
Cadwalader, Wickersham, & Tact LLP. 1999. Application of the Safe Harbor for Forward-
Looking Statements. Findlaw. Accessed April 23, 2009
Giroux, G. (n.d.). American Big Business and Cost Accounting. In a Short History of Accounting and Business. Accessed April 23, 2009
Accounting for Decision Making
Shelter Partnership's Case Study
Purposes of Cost Information
The intended purpose of cost information is to provide a basis for determining the expenses and revenues associated with a particular activity (or cost object). Generally, cost and income is measured in order to determine net income or profit margins. However, as Shelter Partnerships is a non-profit, the cost information forms a basis for the allocation of resources and to assist with decisions about scaling. The cost information of Shelter Partnerships can also be used to address any cycles in the stream of donations and contributions that can impact the overall ability of the non-profit to meet its mission. In addition, since Shelter Partnership regularly applies for grant funding, it is essential that their accounting system be readily interpretable to grant reviewing bodies. Fund development cannot be sustained for long in an environment that is only loosely accountable…
Prestige Telephone Company (2004) [Course Notes ] AIM 4343 Retrieved
ACCOUNTING FOR DECISION MAKING
Accounting has been nothing if not a dynamic, global discipline over the last two decades. The role of the accountant has changed dramatically during that time and will continue to do so -- as will the nature of the challenges that the accounting profession faces"
Over the past twenty years, the modern business community has been faced with the challenges of globalization, the new predominance of technology in business affairs, and the creation of a service-based 'knowledge economy' versus a manufacturing-based one. The profession of accounting has had to adapt to this new environment. "Business internationalization and globalization has facilitated the transfer of capital and information across national borders, with economic power residing in holders of particular knowledge sets. Business and management location is becoming increasingly irrelevant and management and accounting work is becoming multidisciplinary" (Parker 2002).
Globalization has lead to more uniform regulations in accounting. Until recently, U.S. accountants…
GAAP'S Last Stand IFRS is no rumor -- welcome to the next phase of financial reporting.
2011. Periso. Accessed:
http://perisho.com/keeping-current/gaaps-last-stand-ifrs-is-no-rumor-welcome-to-the-next-phase-of-financial-reporting / [June 23, 2011]
Parker, Lee D. 2002. Reinventing the managerial accountant. Glasgow University.
ystems of income and financial position would superimpose standards of normalization upon everyone within the firm. Accounting, thereby, had achieved Foucault's definition of knowledge as power over people per excellence. By the 1950s, however, person as decision-maker replaced this vision of person as machine, and accounting still has power in our society, but a different sort of power. Likewise, accounting still possesses its constructivism (i.e. manner of perceiving a certain stranglehold on reality by emphasizing certain construct and demoting others), although its constructivist paradigm may have differed from that of, say, a century ago. Individuals are viewed, measured, and criticized within programmatic frameworks, and Miller and O'Leary (1987) suggest that accounting today can still be viewed as part of the heritage and structure (albeit slightly changed) of the traditional mode of power that it was in the early decades of this century. In other words, the slanted domination of accounting…
Armstrong, P. 2002, "Management, Image and Management Accounting. Critical Perspectives on Accounting, 13, pp. 281-295
Bryer, R. 2006, "Accounting and control of the labour process" Critical Perspectives on Accounting, 17, pp 551-598.
Chwastiak, M. & Young, J.J. 2005, "Silences in Annual Reports, Critical Perspectives on Accounting, 14, 533- 552
Ezzamel, M., Lilley, S. & Willmott, H. 2004, "Accounting representation and the road to commercial salvation." Accounting, Organizations and Society, 29, pp. 783- 813.
This will of course change the methods in which companies in the U.S. do their accounting and report financial information, but a change in accounting methods should not lead to a major change in the way these companies actually perform their business.
If the transition to IFRS rather than GAAP is expected to change a company's business practices, it is only a sign that the transition needs to be made that much sooner. If a company makes business decisions based on the way it will be able to report that decision's financial effects, rather than on the real value of that decision, there is clearly something wrong with the accounting methods the company is using. The recent financial meltdown largely caused by questionable accounting practices (and tangentially exacerbated by a lack of international standardization in these practices) is definitely evidence that such practices need to be changed, and with an…
"AmEx profit triples, beating expectations." http://money.cnn.com/2010/01/21/news/companies/American_Express_earnings/
This article describes the unexpected profit gains that New York-based credit card company American Express made in the fourth quarter of 2009. Though revenue remained flat when compared to the same quarter in 2008, near the height of the global recession, the six-and-a-half billion dollars that the company saw was nearly half-a-billion more than expected. This led to a profit of seven hundred and sixteen million, or sixty cents per share, in the three-month period. Much of this is due to a rise in consumer spending with the use of their AmEx cards, which rose for the first time in over a year during the fourth quarter of 2009. The percentage of credit card payments defaulting or failing to be made also dropped significantly in the quarter, boosting the company's earnings.
Though this is considered a significant improvement in the company's situation, analysts warn that the company could still see hard times as record unemployment levels continue to hurt many consumers, in both their willingness to spend and their ability to make their credit card payments. Although American Express is showing greater profits and revenue, it actually posted a larger revenue in the fourth quarter of 2008, with significantly higher earnings per share than the profits of the past quarter brought to investors.
Accounting Profession: New Scrutiny and esponsibilities
While many people treat the accounting profession as something which lacks glamour and prestige, ordinary civilians often don't realize how crucial the accounting profession is to the world at large. The accounting departments in major firms are often what provides a foundation for most companies to be able to do what they do and accomplish tasks as needed. Accountants are the ones who are able to keep track of all the finances that are going out vs. what is coming in. Given the "new normal" in the world of corporate finance in light of the more recent corporate scandals, the work that accountants do have a greater level of importance. Accountants are now under greater scrutiny and have greater levels of responsibility: the accounting departments in major firms are now seen as ethical watch-dogs.
The skills and knowledge required in being an accountant are…
Balassone, J. (2014). Ethical Meltdown: Red Flags for Directors. Retrieved from scu.edu:
Einhorn, W.M. (2003). Ethical Accounting Practices and the Pressures on CPAs.
Retrieved from nysscpa.com:
Technology in Accounting
The author of this report is going to offer a fairly lengthy report about how technology has played an integral role in the changing of accounting. Indeed, technology and the internet have changed many things in demonstrable and perhaps immeasurable ways over the years. The author of this report will cover a number of different ways in which technology has emerged and changed things. Topics covered will include, but will not be limited to, pivot tables, API feeds from banks, credit card processing, vendor communication and enterprise resource planning (EP) systems. The four main dimensions that these technological updates have addressed include speed, accuracy, timeliness and applicability. While these rapid advances in technology have created some logistical, training and security headaches for many accounting and other professionals, the good of technology and how it has changed accounting far outweighs the bad.
Of course, the gold standard…
Girsch-Bock, M. (2011). Construction Vendors Turn to Mobile Communications & Tools. CPA Practice Advisor, 21(3), 30.
This is an article about how vendors in the construction realm is making heavier use of mobile communications. It is credible because it appears in a reputable CPA-involved publication and it's about the relevant topic.
Gullkvist, B.M. (2013). Drivers of change in management accounting practices in an ERP environment. International Journal of Economic Sciences & Applied
Research, 6(2), 149-174.
accounting systems, their tradeoffs, and discusses the differences between countries in their approaches.
Each of the cost accounting systems discussed in the articles accomplishes some management goals better than other systems, but there are tradeoffs involved with each. Different nations approach their cost accounting systems differently due at least in part to differences within cultures. For instance, GP is more suited to countries where the culture is one of uncertainty avoidance, one of the five dimensions of Hofstede's taxonomy. GP offers the most uncertainty avoidance because there is relatively little ambiguity in the assignment of costs; GP is characterized by narrowly defined cost centers and strict cost center criteria. Cultures such as Germany's are characterized by a management environment that includes highly skilled workers and technical expertise among managers. This is in contrast to the U.S. where workers tend to have more generalist skill sets and managers have been educated…
Krumwiede, Kip & Suessmair, Augustin, (2008). A closer look at German cost accounting methods: a survey of the cost management systems used by companies in Germany, Switzerland, and Austria. Management Accounting Quarterly. Retrieved July 26, 2010, from http://findarticles.com/p/articles/mi_m0OOL/is_1_10/ai_n31370936/?tag=r bxcra.2.a.55
Lockhart, Julie & Taylor, Audrey, (2007). Environmental considerations in product mix decisions using ABC and TOC. Management Accounting Quarterly. http://proquest.umi.com/pqdweb?index=0&did=1411673321&SrchMode=1&sid=9&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1301590287&clientId=29440
Portz, K. & Lere, J.C. 2010. Cost Center Practices in Germany and the United States: Impact of Country Differences on Managerial Accounting Practices. American Journal of Business. Muncie: Spring, 2010. Vol. 25, Iss. 1; pg. 45. http://proquest.umi.com/pqdweb?index=25&did=1992507361&SrchMode=1&sid=6&Fmt=2&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1315214891&clientId=29440
Target 10-K Analysis
The author of this report has been charged with the task of analyzing the most recent 10-K report for Target Corporation. As part of that analysis, the author will be assessing several data points in particular including the management discussion and analysis (MD&A) portion as well as the financial statements issued. The relevant period in question is the Target Corporation fiscal year that ended on January 31st, 2015. Target emanates from Minneapolis, Minnesota and the filing in question is the annual report, rather than the transition report, pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (Target, 2015).
As it was specifically requested for this assignment, the author of this report shall start with the management discussion and analysis section of the report. It starts off by stating that generally accepted accounting practices (GAAP) standard earnings per share was a loss of $2.56…
Target Corporation. (2015). Investor Contacts, News, Stocks & Events | Target
Corporate. Investors.target.com. Retrieved 7 July 2015, from http://investors.target.com/phoenix.zhtml?c=65828&p=irol-sec
Accounting System Implemented at Chic Paints Limited
eport submitted in order to fulfil the requirements of AAT Accounting Qualification
Internal Controls and Fraud
Accounting System eview
Weaknesses in the Existing System and ecommendations
Cost and Benefit Analysis
Mapping of report to outcomes and criteria
The purpose of this report is to present the findings of the evaluation of existing accounting system implemented at Chic Paints Limited. Chic Paints Limited hired me as an Accounting Technician of the Company to review the accounting systems of the company and report on the operating effectiveness of the internal controls, and this report explains it.
The report also discusses the results of the evaluation of existing accounting systems implemented at Chic Paints Limited on the basis of the AAT code of Ethics and Sustainability requirements. The report also identifies and presents the weaknesses in the existing accounting system along with the effects of the…
Aat.org.uk (2013). AAT and sustainability | AAT. [Retrieved from: http://www.aat.org.uk/about-aat/aat-sustainability [Accessed: 16 Dec 2013].
AAT London (2011). AAT code of Professional Ethics. Code of Ethics. London: AAT.
Fraudiscovery.com (2013). 20 Question to Detect Fraud. Retrieved from: http://www.fraudiscovery.com/detect.html [Accessed: 16 Dec 2013].
Griffin, D. (2013). What Are Internal Accounting Controls? Retrieved from: http://smallbusiness.chron.com/internal-accounting-controls-3809.html [Accessed: 15 Dec 2013].
Thanks to a crash in the value of telecom assets, 90% of that net loss (or $45 billion) was due to a charge for the reduction of the value of goodwill carried on its books" (Galarza 2001).
hen investors see companies such as JDS Uniphase declare a $51 billion dollar loss, its perception of such losses can lead to a state of no-confidence in the financial markets overall. Many savvy investors knew enough to not use goodwill as any part of the analysis when considering whether to invest in certain companies (or not), but there are plenty of investors that are not savvy. These individuals may see the resulting changes in net income for companies such as AOL as signals to buy, instead of what the signs really are, which are signals to sell.
Many analysts believe the same way and have been attempting for years to get the FASB…
FASB 142, (2001), http://www.fasb.org/st/summary/stsum142.shtml , Accessed May 31, 2006
Galarza, Pablo (2001) The Goodwill Games, Money, Vol. 30, Issue 13, pg. 61
Goodwill Impairment, (2006), http://www.appraisaleconomics.com/goodwill_imp.html, Accessed May 31, 2006
Krantz, Matt, (2003) Accounting Rule Targets Goodwill, USA Today, 02/06/2003
One of the most important disciplines in the corporate world is accounting since it is applicable to nearly all job specialties. Accounting is important in the business world because of the significance of effective record keeping in enabling a business organization to survive efficiently and achieve productivity. Therefore, accounting is a discipline or field that needs to be understood by various stakeholders in the business world. The main function of accounting in business is to ensure various transactions are recorded i.e. incoming and outgoing transactions that are related with the company's operations.
Generally, accounting is the most foundational framework of a business organization because of its link to the daily operations of the organization ("The Importance of Accounting in Today's World," n.d.). Accounting is important for three major reasons including the fact that it acts as the language of business since it is related to the interpretation of a…
"Financial Ratio Analysis." (n.d.). Demonstrating Value. Retrieved March 27, 2015, from http://www.demonstratingvalue.org/resources/financial-ratio-analysis
"The Importance of Accounting in Today's World." (n.d.). Fisher College of Business. Retrieved from The Ohio State University website:
Sarbanes-Oxley stipulates criminal and civil penalties for securities violations. Also, it mandates auditor independence from the interests of the firm, meaning that accountants cannot have a financial interest in the success or failure of the firm. Additionally, it mandates the certification of internal audit work by external auditors and mandates increased disclosure regarding executive compensation, insider trading and financial statements, in the interest of making more information public to investors. ("Sarbanes-Oxley Compliance," Technet 2005) Although the act is not a panacea, increased objectivity on the part of auditors and greater insistence on free and fair disclosure on the part of firms will hopefully ameliorate the some of the hiding of vital information that created the climate of secrecy within the firms of Enron and orldCom that helped give rise to the 2002 scandals.
Sarbanes-Oxley Compliance." (2005) Technet. Retrieved on 23 Oct 2005 at http://www.techlistings.net/xlist/tech/bizsoft/compliance/sox?id=1
Sarbanes-Oxley. (2002) Law retrieved…
Sarbanes-Oxley Compliance." (2005) Technet. Retrieved on 23 Oct 2005 at http://www.techlistings.net/xlist/tech/bizsoft/compliance/sox?id=1
Sarbanes-Oxley. (2002) Law retrieved by findlaw on 23 Oct 2005 at http://news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf
Accounting and Intrusion Detection
In a report issued by Paladin Technologies, Inc., entitled: "Security Metrics: Providing Cost Justification for Security Projects," 273 organizations were surveyed on the topic of security. The report illustrates in quantifiable terms the depth and reach of intrusion detection on the financial viability of the organization. The combined reported losses from the firms surveyed totaled $265.6 million in 1999. The highest loss categories were reported as follows:
Type of Loss
Estimated Dollar Value
Number of espondents
Theft of intellectual capital
The average annual financial loss of firms surveyed was estimated at $40 million. Forty three percent of respondents were able to quantify financial losses, and seventy four percent were able to acknowledge financial loss. Ninety percent detected cyber attacks within the most recent twelve-month period and seventy percent reported serious breaches other than viruses, laptop theft, and employee abuse of…
Risk Assessment risk assessment involves estimating the likelihood and severity of an occurrence, the relative impact of risk on the facility, information handler, processing, support, and the mission of the organization. Assessing the likelihood means determining the probability that existing controls will be skirted. Pfleeger has identified a series of steps for examining the likelihood of adverse occurrences:
Calculate the probability that the risk may happen, found in the observed data for the specific system.
Estimate the likely number occurrences in a given time period. The analyst gives a rating based on several different risk analysis methodologies, and then creates a table to hold and compare the ratings.
The Delphi approach: several raters individually estimate the probable likelihood of an event, combine their estimates, and choose the best one.
This would immediately flag the loans going outside their own bank and also provide greater insights into how customers were using funds over time. Another approach is to incent auditors to find fraud and embezzlement and make it widely known in the bank that anyone finding illegal practices would receive a reward up to 20% of the error found. Auditors, who are traditionally not paid that much, would work overtime looking for fraud, hoping to earn 20% of the fraud found, thereby drastically reducing the threat. While this may appear expensive, without this strategy a bank could go for years, losing millions of dollars, if no action was taken.
In the case study, it is apparent that Greater Providence Deposit and Trust auditors were not organized or incented in their job design and rewards to actively seek out embezzlement and fraud. This is a major limitation in the design and…
Kristy Holtfreter, Kevin M. Beaver, Michael D. Reisig, & Travis C. Pratt. (2010). Low self-control and fraud offending. Journal of Financial Crime, 17(3), 295-307.
Eelco R. Van Wijk, & Timothy R. Holmes. (2007). Fraud in the Audit Department. The Internal Auditor, 64(2), 83-85,8.
Joseph T. Wells. (1998). An unholy trinity. The Internal Auditor, 55(2), 28-33.
The proper authorization to complete an inventory also needs to include training on how to manage the exceptions that often occur when physical counting is taking place (Corman, 1988).
The third principle to have adequate documents and records in place that can be quickly be used by the teams completing the audits. This also needs to be preceded with a training session focused on how to also manage exceptions to the paperwork as well, as each company's physical inventory processes are unique to their specific business models (andall, 1984).
The fourth and fifth principles are physical controls and independent checks on performance. These two principles need to anchor all training activity and also be continually audited to ensure performance to standards set over decades are attained. Physical controls and independent checks are also indispensable to the audit and final approval of physical inventory levels, which is the first step in…
Corman, T.R. (1988). Inventory management. Hospital Materiel Management Quarterly, 10(2), 5-5.
Giannoccaro, I., & Pontrandolfo, P. (2002). Inventory management in supply chains: A reinforcement learning approach. International Journal of Production Economics, 78(2), 153-161.
Howard, K. (1984). Inventory management in practice. International Journal of Physical Distribution & Logistics Management, 14(2), 3-3.
Randall, a.M. (1984). Computerized inventory management: A return to basics. Hospital Materiel Management Quarterly, 5(3), 12-12.
(5) Auditors and CPAs should consider several ways that the Sarbanes-Oxley Act and SEC implementation rules as a whole impact accountants and work closely with regulators to address these effects. (6) Public accounting firms need to reconsider external auditors' participation with their client's internal audit function and control structure. This reporting on the internal controls can be very useful and add value to the integrity and quality of the financial reporting process. However, management accepts full responsibility for the design and maintenance of the adequate and effective internal control system. (7) Auditors should advise their clients and make recommendations for the appropriate disclosures of financial information. A more timely, relevant, objective, and transparent financial reporting process should improve the quality, integrity, and reliability. (8) it is necessary to use more effective and objective audit procedures and related standards to improve audit efficiency. The role of independent auditors on financial statements…
Journal of Accountancy. 199(2) p. 74-75.
Rezaee, Z. (2004) Restoring public trust in the accounting profession by developing anti- fraud education, programs, and auditing Managerial Auditing Journal. 19(1): 134-148
Walker, D.M. (2005) Reclaiming public trust in the wake of recent corporate accountability failures International Journal of Disclosure and Governance 2(3):.. 264-271-279
By re-characterizing the epo 105 dealing as a sale, Lehman detached the account from its balance sheet (Durden, 2010).
Lehman frequently augmented its utilization of epo 105 transactions in the time previous to reporting interludes to decrease its openly reported net leverage and balance sheet. Lehman's intermittent reports did not reveal the money borrowing from the epo 105 transaction, even though Lehman had in reality borrowed tens of billions of dollars in these dealings, Lehman did not reveal the acknowledged responsibility to pay back the liabilities. Lehman utilized the money from the epo 105 dealings to pay off other dangers, thus dropping both the entire debts and the entire assets accounted for on its balance sheet and decreasing its power percentages. Therefore, Lehman's epo 105 dealing was made up of a two-fold procedure: performing epo 105 dealings followed by the utilization of epo 105 cash borrowings to pay down debts,…
Durden, Tyler. (2010). The "Repo 105" Scam: How Lehman Fooled Everyone (Including
Allegedly Dick Fuld) and How Other Banks Are Likely Doing This Right Now. Retreived
April 10, 2011, from Web site: http://www.zerohedge.com/article/repo-105-scam-how-lehman-fooled-everyone-including-allegedly-dick-fuld-and-how-other-banks-a
Goldstein, Jacob. (2011). Repo 105: Lehman's 'Accounting Gimmick' Explained. Retreived April
Accounting Theories and usiness Decisions: The usiness World
Application of theories
Other cases of stakeholder theory application
Accounting theories and business decisions: The business world
There are many theories that explain the complexity of relationship between different groups of people directly and indirectly related to an organization. Two of the most comprehensive and most discussed theories are stakeholder theory and agency theory. oth the theories describe what the main purpose of each group is and how these groups ought to manage these relationships. In agency theory, it identified that agency relationship takes place when one or more than one principal, acting as owners, delegate their power to make decisions, to a person acting as their agent or steward. Thus, agency theory principally revolves around the relationship of principal and agent. While the principal delegates the authority or decision making power to agent (managers) to act in the best…
Alessi, Chirstopher. 2013. "Understanding the LIBOR Scandal." Council on Foreign Relations, Feb 6. Accessed August 23, 2013. http://www.cfr.org/united-kingdom/understanding-libor-scandal/p28729
Dean, Cornelia. 2007. "Executive on a mission: saving the planet." New York Times, May 22. Accessed August 23, 2013. http://www.nytimes.com/2007/05/22/science/earth/22ander.html?pagewanted=all&_r=0
Jensen, Michael C. 2010. "Value maximization, stakeholder theory, and the corporate objective function." Journal of applied corporate finance 22: 32-42.
Kanter, Rosabeth Moss. 2011. How great companies think differently. Harvard Business Review, November. Accessed August 24, 2013. http://hbr.org/2011/11/how-great-companies-think-differently/ar/2
Accounting and Audit Enforcement
1. The Sarbanes-Oxley Act applies to publicly-traded companies. Thus, it does not apply to non-profit entities. Nor does it apply to for-profit entities that are not publicly-traded. This is because SOX was passed specifically to address instances of accounting fraud in publicly traded companies that were undermining consumer trust in the capital markets (101.com, 2018). A publicly traded companies has a variety of different obligations under SOX that will help to reduce the opportunities and incentives for accounting fraud. Both opportunity and incentive are components of the fraud triangle – one needs to have a perceived need to commit the fraud and the circumstances with which to do so (ACFE, 2018).
Non-profit organizations have no obligations under SOX. However, there is a school of thought that holds that non-profit entities can benefit from some of the recommendations and mandates that SOX contains. Fritz (2016) writes that…
The Impact of Distance Learning in Accounting Higher Education
This paper is intended as an Introduction to a research study in to the impact of distance learning on the teaching of accounting in higher education. The context of the research will first be introduced i.e., the background to the research. The research to be undertaken will then be introduced, as will the specific questions and sub-questions to be addressed. The significance of this study will then be analyzed, and the people who are expected to benefit from this research will also be outlined. The research methodology and the practical design of this research methodology will be discussed, and the primary and secondary sources to be used will be introduced, and a list of preliminary resources will be given in the ibliography.
Distance learning has grown in popularity amongst students over recent years, for many reasons, one of which has…
Anne Nicholls, Flexible study opens doors., Independent on Sunday, 01-14-1996, pp 12.
Serwatka, Judy A, Improving student performance in distance learning courses., THE Journal (Technological Horizons In Education), 04-01-2002, pp 46.
Mariola, Eleni; Manley, John, Teaching finance concepts in a distance learning environment -- a personal note., Journal of Education for Business, 01-01-2002, pp 177
Accounting Information for Decision Making
Corporate Confirming on Water isk (Feb 2010) indicates that the Global Confirming Initiative (GI) G3 Guidelines' five water-related indications (total withdrawal volume by source, ponds considerably impacted by distributions, percentage and total amount of water recycled and used again, total water discharge by quality and destination, and identification water physiques and related habitats impacted by discharges) make the perfect beginning point for assessing and confirming water risks. Within this section, we'll briefly discuss the relevance of all these standards (Power, 2010).
Total water withdrawal by source
Confirming the entire amount of water withdrawn by source adds for knowledge of the general scale of possible influences and threats connected using the company's water use. The entire volume withdrawn offers an indication from the organization's proper size and significance as a user of water and offers to set up a baseline figure for other information relevant to…
GRI, (Global Reporting Initiative). (2006) Sustainability Reporting Guidelines. Version 3.0, Accessed on September 27, 2012 from: www.globalreporting.org/NR/rdonlyres/ED9E9B36-AB54-4DE1-BFF2-5F735235CA44/0/G3_GuidelinesENU.pdf
Power, G. Paddling Upstream - Approaches to Corporate Water Reporting. Business and the Environment, 21. 6 (Jun 2010): 1-3.
Kaplan and Anderson (2005) notes that activity-based costing (ABC) systems are not as effective in practice as they are on paper. Among the grievances that Kaplan notes with respect to ABC, the system is not very scalable, losing power as the company gets larger. The textbook version is usually a very simple company with a handful of activities, but in the real world companies can have hundreds of products, thousands of activities and tens of thousands of customers. This presents a challenge, because activity-based costing requires a substantial amount of information in order to be effective. Past a certain scale of organization, activity-based costing does not deliver a good return on investment because of the costs associated with gathering and analyzing this information. Kaplan wrote this in 2005, mind you, when perhaps information gathering and processing capabilities were somewhat worse than they are today. Certainly doing ABC manually is…
Gilbert, S. (2007). Adding time to activity-based costing. Working Knowledge. Retrieved March 15, 2014 from http://hbswk.hbs.edu/item/5657.html
Kaplan, R. & Anderson, S. (2005). Rethinking activity-based costing. Working Knowledge. Retrieved March 15, 2014 from http://hbswk.hbs.edu/item/4587.html
So for the 70,000 units completed in July: (70,000)(15 + 10.65) = $1,795,500
2. The ending works in progress is 20,000. The total cost should be (20,000)(25.65) = 513,000
Note: These figures represent the total cost of the goods, not the total cost in July of the goods. The question is worded a little bit funny so I wasn't sure which one it was intended to be.
DM Inv, 2010
DM Inv, 2011
2. The WIP inventory at the end of the month would reflect the following:
Beginning WIP 12,000 + 50 + 25 + 55 = 142
Less completed orders (72,000) + (56,000) = 128
So Ending WIP inventory…
Education should come from non-profit international scientific, health and environmental organizations. They would be most widely respected and would have more access to both the TNCs and the host and origin country governmental bodies. They can educate the corporations on the practicality of policing their own people and actions. They can educate government bodies on how to include these considerations in political decisions. They can be resources for The United Nations and the TO to help them decide on their programs. Finally they can help the educate the global populace via global media, especially independent educational media.
The last suggestion is one way to approach using public relations. Another is to incite the press and various other media to report the good and the bad actions of TNCs. His makes for interesting news for their audiences, and good public service for the media. In essence, Fowler has said much of…
Fowler, Robert J. "International Environmental Standards for Transnational Corporations." Environmental Law 25.1 (1995): 1-30. Questia. 14 Dec. 2006 http://www.questia.com/PM.qst?a=o&d=5000274495 .
Ietto-Gillies, Grazia. Transnational Corporations: Fragmentation Amidst Integration. London: Routledge, 2002. Questia. 14 Dec. 2006 http://www.questia.com/PM.qst?a=o&d=108115153 .
Thomas Donaldson, The Ethics of International Business 31 (1992).
America was not founded as a Democracy or as a Monarchy, for the educated and landed founding fathers felt assured that neither would provide the nation with rights for all and privilege for the few. America was founded as a Republic, and one might add as an ogliarchic republic at that. Those with the right gender, race, and wealth were represented through their while others were represented through the votes of their betters. Today, nearly-universal sufferage (age and past misbehavior are both barriers) assures that these factors do not determine whether a person can vote -- but an argument can still be made that the majority of the political process is determined by wealth. "The creators of America's constitution and government were among the wealthy aristocrats of their day. When they created their new government, the founders excluded democracy to the extent politically possible at the time. ..The great…
Bernstein, A. (1998) "Republican and Democratic -- The Identical Party? The Two Major Parties Are Becoming Dangerously Alike -- in Their Opposition to Individual Rights." Capitalism Magazine, Nov. 6. http://www.capmag.com/article.asp?ID=2020
Gitlin, T. (2000) "The Renaissance of anti-intellectualism." The Chronicle of Higher Education, Dec. 8. Archived at: http://chronicle.com/free/v47/i15/15b00701.htm
Grinning Planet. (2004) "INJECTING A SHOT OF REBEL YELL INTO OLD GLORY" http://www.grinningplanet.com/2004/11-11/direct-democracy-plutocracy-article.htm
Morgan, D. (2000) "Mercenaries For Big Business: Corporate Funding of Think Tanks Raises Question of Credibility" San Francisco Chronicle, Feb 16. Archived at: http://www.commondreams.org/views/021600-102.htm
International Accounting Undergraduate degree Accounting & Finance 1. The Assignment "Several organisations involved efforts harmonise accounting practices rregionally internationally. The important players effort European Union (regionally) International Accounting Standards Committee (IASC) ( IASB) (internationally).
There have been a series of efforts during recent years with the aim of developing a common agenda of accounting standards. The fact that there are several alternatives of accounting practices, for example, contributes to making it difficult for influential bodies to reach common ground concerning the matter. Institutions such as the European Union and the International Accounting Standards Committee (IASC) (currently called the International Accounting Standards Boards -- IASB) have played significant roles with the purpose of emphasizing the importance of international accounting standards.
ith society being composed out of distinct national economies, there has been little need for common accounting practices in the past. However, as the global economy has come to dominate international…
1. Alexander, D., & EBERHARTINGER, E. 2009. 'The True and Fair View in the European Union'. European Accounting Review Vol. 18, No. 3, 571 -- 594
2. Alexander, D. & Nobes, C. 2007. Financial Accounting: An International Introduction. Pearson Education.
3. Cool, K., & Goddard, G.J. 2006. International Business: Theory and Practice. M.E. Sharpe.
4. Fischer, P., Tayler, W., & Cheng, R. 2011. Advanced Accounting. Cengage Learning.
Arthur Anderson: Questionable Accounting Parctices
Arthur Anderson: Questionable Accounting Practices
Arthur Andersen LLP was founded in 1913, and for over 90 years, the company would have become one of the "Big Five" largest accounting and auditing firms in the United States with the same standard comparable to PricewaterhouseCoopers, Deloitte & Touche, KPMG and Ernst & Young. In the 80s, Arthur Anderson name was synonymous with integrity, trust, and ethics. Such values are critical to the success of firms charged with auditing and firms confirming a company's financial statement, whose accuracy of a company's financial statements generally influence investor's investment decision. (Ferrell, Linda, 2012).
In the 1990s, Arthur Anderson became one of the fastest growing accounting and auditing firms in the United States with huge financial success during the period. However, starting from 2001, the company faced several lawsuits for accounting irregularities. In May 2001, "the company paid $110 million to…
Ferrell, O.C. Linda, J.F. (2012). Business Ethics: Ethical Decision Making and Cases: 2009 Update. Cengage Learning
Fraedrich, J. Ferrell, O.C. Ferrell, L.(2011). Ethical Decision Making for Business. Cengage Learning.
McGlynn, M (2010). Arthur Andersen Case Studies in Business Ethics. Carnegie Mellon Temper School of Business.
That was the year that significant changes were made in the Securities Act and the rules for bringing class action lawsuits were adjusted and modified. Because of those changes, it became more important from a litigation standpoint to ensure that conservatism was used in accounting valuation. Because there are empirical differences between the contracting and litigation perspectives, there have been many discussions regarding them in the past and that will likely continue well into the future. Each accounting firm must do what it feels is in the best interest of both itself and its clients, but the avoidance of lawsuits is a highly significant issue to consider when a company is planning to focus on a particular accountancy option.
C. Income Tax Perspective
Because income taxes are so closely tied to earnings, it only stands to reason that there would be an accounting valuation issue as it relates to conservatism…
Ahmed, A.S., B. Billings, M.S. Harris and R.M. Morton. 2001. Accounting conservatism and cost of debt: An empirical test of efficient contracting. Working paper, Syracuse University.
Ahmed, A.S., R.M. Morton and T.F. Schaefer. 2000. Accounting conservatism and the valuation of accounting numbers: Evidence on the Feltham-Ohlson (1996) model. Journal of Accounting, Auditing & Finance 15 (Summer): 271-292.
American Institute of Certified Public Accountants, Committee on Accounting Procedures (AICPA). 1939. Accounting Research Bulletin 2.
Antle, R. And R. Lambert. 1988. Accountants' loss functions and induced incentives for conservatism. In Economic Analysis of Information and Contracts: Essays in Honor of John Butterworth, edited by G. Feltham, A. Amershi, and W. Ziemba. Boston, MA: Kluwer Academic Publishers.
This quotation shows how arbitrary MTM can be. Simply by terming Enron's cash shortage a sa minority interest as opposed to the proper term for it, debt, Enron was able to manipulate MTM to prevent such a sizeable loss from appearing on its balance sheet. Moreover, MTM's role in this transaction allowed Enron to repair its problem of a cash flow shortage since it credited $500 million via its sale of Treasury securities. The relative short duration in which Enron was able to take out a loan and repay it indicates how effective MTM was in providing Enron a favorable balance sheet, and in singled-handedly dancing around the reality of its shortages. Additionally, it also kept others (shareholders, stakeholders, not to mention its hard working employees) to know how tenuous an economic position the company was actually in.
In discussing Enron's MTM approach to accounting and the considerable role…
Batson, N. (2003). "Second interim report of Neal Batson, court appointed examiner." Enron Corp et al., v. Debtors.
Monks, R.G., Minnow, N. (2008). Corporate Governance. New Jersey: Blackwell Publishers. Retrieved from http://www.ragm.com/enron/accounting.html
Valdmanis, T. (2008). "Senate report blasts SEC's Enron oversight." USA Today. Retrieved from http://usatoday30.usatoday.com/money/industries/banking/2002-10-06-sec_x.htm
In theory, of course, this means that values would end up fluctuating more in response to market fluctuations, which would lead to further market fluctuations and thus more value changes, etc., etc. etc. In reality it is doubtful that this state of affairs would lest into perpetuity, as eventually investors would become used to the new schema and reactions would grow more measured. And even the initial volatility that has been observed might not indicate a problem.
Moyer (2008) claims that in discounting existing capital and management, fair value accounting practices replace objectivity in financial analysis with fear. What this claim in essence boils down to us that fair value accounting practices demand values to be assessed solely on the current state of affairs rather than on potentials. Clearly, management and capital are only as valuable as what they are able to produce; an assessment of value based on their…
AICPA. (2009). "FAQs about fair value accounting." The American institute of certified public accountants. Accessed 2 October 2009. http://www.aicpa.org/MediaCenter/fva_faq.htm
Moyer, L. (2008). "How fair is fair value accounting?" Forbes. Accessed online 2 October 2009. http://www.forbes.com/2008/06/24/accounting-banking-sec-biz-cx_lm_0625sec.html
Assets in the investment portfolio were overvalued. Financial transactions were structured to report smaller amounts of debt and create the appearance of greater cash flow. Financial results were represented in a false and misleading manner.
Forensic accountants also played an important role in the Enron case by doing audits and investigating accounting practices to gather evidence of how the fraud was performed. They played vital roles in the court room in presenting the evidence against cross examination and scrutiny. The forensic accountants were highly valued for their objectivity in the way evidence was presented.
Accounting, auditing, investigation, business, and understanding human behavior enabled forensic accountants to gather evidence for prosecution of fraud in court cases involving fraudulent accounting practices. These are vital skills forensic accountants are required to maintain. Forensic accountants must maintain competency, due care, objectivity, integrity, confidentiality, and proper conduct at all times, whether working with a client…
Code of Professional Ethics. (2012). Retrieved from Institute of Certified Forensic Accountants: http://www.forensicglobal.org/ethics.html
Homan, P. (2006, Mar - Apr). Fraud Buster. Retrieved from CPA Magazine: http://www.utoronto.ca.difa/PDF/Articles/FraudBuster.pdf
Jury Finds Former Master Graphics, Inc. CEO Liable for Securityies Fraud Arising From Accounting Scheme. (2008, Sep 8). Retrieved from SEC: http://www.sec.gov/litigation/litreleases/2008/li20705.htm
Shields, a. (2010, Mar 29). The role of forensic accountants. Retrieved from dolmanbatemen.com: http://www.dolmanbateman.com.au/1323/the-role-of-forensic-accountants
Managerial Accounting: Organizations and Expectations
The profession and practice of accounting has become increasingly prominent and increasingly scrutinized over the past decade or so, in the wake of major scandals and upsets in the business world that can be traced in part to nebulous and unethical accounting practices or outright frauds. Because of this increased prominence, accountants today need to be more concerned than ever with not only the standards to which they hold themselves and their work, but also the appearance of these high standards and performance capabilities. This is one of the major benefits, along with many others, of belonging to a professional organization. The authority and austerity that the right professional organization carries provides these abstract as well as concrete benefits to member accountants, from increasing confidence and camaraderie to detailing the actual expectations and requirements of the task of accounting.
The Institute of Management Accountants is…
IMA. (2012). Institute of Management Accountants. Accessed 10 January 2011.
Ethics and Accounting - Financial Decision-Making
Ethics in Accounting and Financial Decision Making
The article Ethical guidance and constraints under the Sarbanes-Oxley Act of 2002 by .M. Orin (2008), espouses the belief that the Sarbanes-Oxley Act did not go far enough in its desire to stop unethical financial practices by businesses. The article addresses what the Act actually does, which is to help companies practice more due diligence and lessen the chances of getting involved in unethical financial practices. The Sarbanes-Oxley Act involves important legal issues. The due diligence is one of those issues, but another is the need for accountants and lawyers to report the corporations they work with for wrongdoing if they see or suspect a serious financial issue (Coffee, 2002). This has been a concern for some because it technically compromises the attorney-client privilege. This was necessary, though, in the face of all of the corporate scandals…
Coffee, J.C. Jr. (2002, September). Leading issues under Sarbanes-Oxley, Part 1, New York Law Journal: 5.
Koehn, J.L. & Del Vecchio, S.C. (2004, February). Ripple effects of the Sarbanes-Oxley Act. The CPA Journal: 36-40.
Orin, R.M. (2008). Ethical guidance and constraints under the Sarbanes-Oxley Act of 2002. Journal of Accounting Auditing and Finance: 141-171.
studied appeared a business accounting publications. A partial list publications article selected: The Accounting eview, Barrons, Wall Street Journal, Business Week, Fortune, Barrons, and Wall Street Journal.
GAAP article review:
Crovitz, Gordon L. (2008, September 8).Closing the information GAAP. The Wall Street
Journal. etrieved November 22, 2010 at http://online.wsj.com/article/SB122083366235408621.html
GAAP article review:
Crovitz, Gordon L. (2008, September 8).Closing the information GAAP. The Wall Street
Journal. etrieved November 22, 2010 at http://online.wsj.com/article/SB122083366235408621.html
The Wall Street Journal is famous for its pro-business, conservative editorials. So perhaps it is no surprise that in 2008, Journal editorial writer Gordon L. Crovitz praised the Securities and Exchange Commission (SEC)'s decision to mandate a shift to international accounting standards, in a phasing out of GAAP (Generally Accepted Accounting Principles) by 2016 for all U.S. firms. The Journal writer said that this was reflective of the "remarkably quickening pace of acceptance of a true lingua franca for…
Crovitz, Gordon L. (2008, September 8).Closing the information GAAP. The Wall Street
Journal. Retrieved November 22, 2010 at http://online.wsj.com/article/SB122083366235408621.html
Gibson, Scott. (2008, October). LIFO vs. FIFO: A return to the basics. RMA Journal. Retrieved November 22, 2010 at http://findarticles.com/p/articles/mi_m0ITW/is_2_85/ai_n14897182/
MICOSOFT: No terrorist is going to try to blow up Microsoft; no oil products are needed to run computer hardware and software; computers run the world of commerce; and Bill Gates owns a huge percentage of all things computer software-related, so the Microsoft steamroller is a great investment and not as vulnerable to world conditions as are the first two companies reviewed in this section.
One final conclusion: for EXXONMOBIL, albeit their fortunes can change because of the war and oil's vulnerability to war, their earnings for the 4th quarter of 2004 were their highest ever ($8,420 million), and they have friends in the White House in Bush and Cheney, so their financial picture remains very bright; for FOD, they experienced a $5 billion pre-tax profit from their "financial services" (auto loans) division, which is very impressive; moreover, car sales are booming and Ford will, in the near future, realize…
AllBusiness (2005). What Are Generally Accepted Accounting Principles? Retrieved February 8, 2005, at http://www.allbusiness.com/articles/content/17954.asp .
Anderson, Curt. (2005). Microsoft Reports Record Revenue and Earnings. Retrieved February 9, 2005 from Microsoft Investor Relations Web site: http://www.microsoft.com/msft .
Bruebaker, Gary H. (1999). A Question of Value. Government Finance Review, 15(3),
Ensman, Richard G. (1999). Accrual Basis vs. Cash Basis Accounting. Doors and Hardware, 63(10), 20-22.
consensus as to whether accounting is more 'bean counting' or more shady dealing, most will agree that accounting is extremely important to the operations of an organization." Address that statement, what is your opinion of accounting with regards to bean counting vs. shady dealing? Also without using a book definition, why do you feel accounting is important to the operations of an organization?
In my experience, accounting would be similar to the "been counting" perception. Most of the companies I have worked for have taken accounting very serious and I wasn't aware of any attempts to try to fudge numbers or be shady in anyway. In my jobs there was an emphasis placed on accounting for everything and keeping accurate records. However, in most cases I wasn't involved in any of the official preparation of the actual reporting of the financial statements. It is reasonable to suspect that if any…
Another challenge facing the industry today is the important legal issues that surround the Sarbanes-Oxley Act (Koehn & Del Vecchio, 2004). One of these is the fact that the process of due diligence practiced by many companies is now taking much longer (Koehn & Del Vecchio, 2004). There is a higher degree of caution than was previously utilized and because of this many companies are discovering information that would have gone unnoticed before the Act was passed. This is, however, not the only legal issue that the Sarbanes-Oxley Act has caused (Koehn & Del Vecchio, 2004). Another concern is that accountants and attorneys could now be required to report the known wrongdoings of corporations that they have business with to authorities.
Since lawyers are now required to disclose these types of issues, the attorney-client privilege has been compromised by this Act (Koehn & Del Vecchio, 2004). However, the Act was…
Bradley, C.F. (1994). An empirical investigation of factors affecting corporate tax compliance behavior. Ph.D. dissertation, the University of Alabama.
Koehn, J.L. & Del Vecchio, S.C. (2004). Ripple effects of the Sarbanes-Oxley Act. The CPA Journal: 36-40.
Roper, J.C. (2006). Expert backs Enron's accounting practices. Houston Chronicle. Retrieved from http://www.chron.com/disp/story.mpl/front/3839212.html .
unbeam Corporation's fraudulent accounting for its financial years 1996, 1997 and early 1998. The essay also reviews the historic audit failure that occurred, and discusses factors that contributed to the scandal and ways in which it might have been prevented.
unbeam, the consumer brand name that was to become well-known among generations of Americans, had its beginnings in 1893 when founders John K. tewart and Thomas J. Clark began manufacturing and selling a commercial horse clipping machine in Chicago. In 1897 the company was incorporated as the Chicago Flexible haft Company. When the company began manufacturing an electric iron named "The Princess," its first electric appliance, the product's introduction marked the beginning of the Electrical Appliance Division of today's Jarden Corporation (Jarden, 2011).
In the early years, the company's products, ranging from toasters to irons to mixers, were so successful that the company changed its name to the unbeam Corporation…
Securities and Exchange Commission. (1999). SEC Staff Accounting Bulletin: No. 99 -- Materiality. [online] Available at: [Accessed 23 December 2011].
Stanwick, S. And Stanwick, P. (2003). Sunbeam Corporation: "Chainsaw Al" and the Quest for a Turnaround. Auburn University. [online] Available at: [Accessed 23 December 2011].
Zabel, R.B. And Benjamin, J.J. (2002). Reviewing Materiality in Accounting Fraud. New York Law Journal. [online] Available at: [Accessed 23 December 2011].
The balance sheet includes two main categories, assets and liabilities and shareholders' equity. oth of these are in turn split into current assets and other assets. In terms of current assets, all three companies include inventory, cash and cash equivalents and receivables, while the liabilities cover short- and long-term debt, as well as the shareholders' equity.
The cash flow statement includes the three different categories, cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.
In order to be able to properly evaluate, we need to mention that the net income "measures business revenues vs. expenses." In this sense, the income statement provides the best expression and explanations on how the business is actually performing, what could or should be improved.
On the other hand, the net cash from operating activities simply records how much money is received from customers, other firms, etc. In…
1. Financial Statements - an introduction. College of Business and Economics. Western Washington University. On the Internet at http://www.cbe.wwu.edu/SBDC/resources/articledetail.asp?RecordID=10
2. What are Generally Accepted Accounting Principles?. On the Internet at http://www.allbusiness.com/articles/content/17954.asp
3. Trading Glossary. On the Internet at http://www.trading-glossary.com/h0056.asp
4. Klinefelter, Danny; McCorkle, Dean (2003). Financial Management: Cash vs. Accrual Accounting. Agricultural Communications, the Texas a&M University System. On the Internet at http://trmep.tamu.edu/cg/factsheets/rm5-16.html
.....mission of the Emerging Issues Task Force (EITF) exerts upon the Financial Accounting Standards Board (FASB)
The Emerging Issues Task Force (EITF) was established with the main purpose of addressing and coming up with resolve for current issues being faced by professionals in the accounting field, which were not addressed by announcements of the Financial Accounting Standards Board (FASB). Prior to the establishment of ETIF in 1984, the FASB constantly faced challenges of not being able to offer well-timed and sensible solutions to developing practice problems. The EITF was therefore designed to disseminate and propagate carrying out guidance within the structure of the Accounting Standards Codification to decrease multiplicity when it comes down to it on a well-timed basis. In their field of profession, accountants experience a wide range of issues that are not comprehensively addressed in accounting pronouncements, and, which necessitate prompt resolve. In addition, such professionals insist that…
Referring to the attached file, provide four examples of accounting policy choices that ANZ Limited may have made in determining profit that may have increased this year's profit
In delineation, an accounting policy is a decision undertaken in advance regarding the manner in which, when and also a decision whether to record and acknowledge an accounting item (Trotman and Gibbins, 2009). It takes into account a specific principle, rule, and approach executed by a firm's management team and is employed in the preparation of financial statements. These accounting policies are employed to copeexplicitly with intricate accounting practices for instance depreciation approaches, recognition of goodwill, grounding of research and development expenses, inventory value and the consolidation of financial accounts (Investopedia, 2016). In particular, these accounting policy choices can be employed to alter the earnings reported by a firm in its financial statements.
One example of an accounting policy choice that ANZ…
The mistake occurred when enthusiasts tried to use those data for other purposes such as 'strategic product decisions.' The average cost of production never could, and never will, be relevant for those classes of decisions where only the change in total costs and revenues are relevant. That is, the rough, average post calculations provided a guide for pricing unique one-off products or services, but were of no use for the other purposes (emphasis added) (Garner & Tsuji, 1995, p. 52).
The strategic product decision function of management accounting described above is based on the strategic management accounting method; this approach serves to cause change in the management framework through various accounting devices designed to adapt effectively to the constantly changing external business environment (Garner & Tsuji, 1995). Strategic management accounting, though, should be managed by production people (including sales and engineering), rather than by accounting staff (Garner & Tsuji, 1995).…
Anthony, R.N. (2003, January 1). Management accounting: a personal history. Journal of Management Accounting Research, 15, 249.
Black, T., & Gallagher, L. (1999). Are physical capacity constraints relevant?: Applying finance-economics theory to a management accounting misconception. Australian Journal of Management, 24(2), 143.
Cooper R., & Kaplan, R.S. (1990, February). Measure costs right: Make the right decision. CPA Journal, 25.
Cortada, J.W. (2004). The digital hand: How computers changed the work of American manufacturing, transportation, and retail industries. New York: Oxford University Press.
history of Management Accounting in a ten-page paper and review product costing, investment analysis and organizational performance evaluation over the past 150 years.
Read Relevance Lost: The Rise and Fall of Management Accounting and reference four other articles that describe the evolution of Management Accounting.
This paper examines the role of management accounting over the years as a system for determining an organization's performance and profitability. This paper further analyses the evolution of certain management accounting practices and their role in global competition and productivity.
Today's management accounting information, driven by procedures and the cycle of the organization's financial reporting system, is too late, too aggregated, and too distorted to be relevant for managers' planning and control decisions.
"In attempting to understand the genesis and scope of modern cost and management accounting systems, accounting historians adopting what has been labeled as a "Foucauldian" approach have been rewriting the history of…
www.acct.tamu.edu?, "A Short History of Accounting"
Dan R. Hansen & Maryanne M. Maven, Management Accounting, 5th Ed., Oklahoma State University
role of management accounting for Bravo plc and discusses its use as an effective management tool. Management accounting, also called managerial accounting, is concerned with providing information to managers inside Bravo, those who direct and control its operation.
For management accounting to have strategic value, it must accomplish the three strategic objectives of quality, cost and time. Management accounting achieves its objectives by providing information that links the daily actions of managers to Bravo strategic objectives; by enabling Bravo mangers to effectively involve the entire extended Bravo enterprise of customers and suppliers in achieving strategic objectives; and by taking a long-term view of Bravo's organizational strategies and actions. Once Bravo managers understand the benefits to their organization that management accounting provides, they can use the information that is generated to make better decisions and improve the company's performance (Bell, Ansari, Klammer and Lawrence, 2010).
The Institute of Management Accountants (IMA)…
Bell, J., Ansari, S., Klammer, T., and Lawrence, C. 2010. Strategy and management accounting. Retrieved May 2, 2011 from http://college.cengage.com/accounting/ansari/management/1e/students/modules/mod11.pdf
Caplan, D. (2009). Management Accounting Concepts and Techniques. Retrieved May 3, 2011, from http://www.denniscaplan.fatcow.com/Chapter01.htm
Financial and management accounts: the basics. (2010). Business Link. Retrieved May 3, 2011, from http://bgateway.com/bdotg/action/detail?itemId=1073791257&type=RESOURCES
Geense, I.M. (2005). Managerial Accounting. Retrieved May 3, 2011, from http://www.managerialaccounting.org/
EP systems for accounting
EP refers to enterprise resource planning which is a software package that supports all of a business's operations and day-to-day accounting processes. The EP system of accounting provides an integrated system for an entire business organization by relating and coordinating the basic organizational functions such as financial planning, marketing of goods and services and human resource management. Many business organizations in the world today, both for profit and non-profit adopt the use of EP due to its ability to integrate and coordinate information from all departments, operations and processes. EP is a sophisticated system that ensures accuracy and accountability in processing and organizing business functions within an organization. This system generally can manage a business by allowing inventory control, material purchasing, accounting, marketing and distribution.
The EP system consists of several enterprise software packages acquired based on specific needs, requirements and technical capabilities of a particular…
Monk, E.F., & Wagner, J.B. 2009.Enterprise Resource Planning. 3rd edition. New York: Cengage Learning.
Meer, K.H. 2005. Best Practices in ERP Software Applications: Accounting, Supply Chain Planning, Procurement and Inventory. Printed in the United States of America: iUniverse publications.
Grabski, S, Leech, S & Sangster, A. 2009. Management Accounting in Enterprise Resource Planning Systems. Printed in the United States of America: CIMA Publishing
Sawyers, R, Jenkins, J.G. & Jackson. S. 2009. Managerial Accounting: A Focus on Ethical Decision Making. Printed in Canada: Cengage Learning.
This leads to the inability to compare financial statements reliably with each other (Seay & Ford, 2010). A second concern is that the income statement will reflect increased volatility due to fair market writeups or writedowns. The third concern is the inconsistency in valuing some assets and liabilities at the current exit price. The fourth concern is whether price reflects the intrinsic value of the asset. It is suspected that price and value will differ, particularly in a downward trending market (Seay & Ford, 2010).
These concerns will affect the acceptance of fair value accounting and its ability to restore trust in the transparency and accuracy of accounting statements. According to Seay & Ford, many blamed fair value accounting for the collapse of the banking industry. However, they remind readers that the accountant only reports the information and that they were not to blame in the banking industry collapse.
Bedard, J. & Gendron, Y. (2010). Can audit committees deliver? CA Magazine; Sep 2010; 143 (7). 50-53.
Gates, S., Lowe, D. & Reckers, P. (2007). Restoring public confidence in capital markets through auditor rotation. Managerial Auditing Journal. 22 (1): 5-17.
Seay, S. & Ford, W. (2010). Fair Presentation -- an Ethical Perspective on Fair Value Accounting Pursuant to the SEC Study on Mark-to-Market Accounting. Journal of Legal, Ethical and Regulatory Issues, 13 (1): 53-66.
Thomason, M. (2009). Auditing the PCOAB: A Test to the Accountability of the Uniquely Structured Regulator of Accountants. Vanderbilt Law Review. 62 (6): 1954-1989.