Tag: Accounting

B6021 Module 3 Assignment 2 LASA 1 Cost and Decision-Making Analysis

Cheryl Montoya picked up the phone and called her boss, Wes Chan, Vice President of Marketing at Piedmont Fasteners Corporation.

 Cheryl: “Wes, I’m not sure how to go about answering the questions that came up at the meeting with the President yesterday.” Wes: “What’s the problem?”. Cheryl: “The president wanted to know the break-even point for each of the company’s products, but I am having trouble figuring them out.” Wes: “I’m sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.”

Piedmont Fasteners Corporation makes three different clothing fasteners at its manufacturing facility in North Carolina. Data concerning these products appear below:

 Velcro Metal Nylon Normal annual sales volume 100,000 units 200,000 units 400,000 units Unit selling price \$1.65 \$1.50 \$0.85 Variable cost per unit \$1.25 \$0.70 \$0.25

Total fixed expenses are \$400,000 per year.

All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptably large numbers of customers. The company has a very effective lean production system, so there is no beginning or ending work in process or finished-goods inventories.

Using the module readings, the Argosy University online library resources, and the Internet, research break-even point and costing systems. Analyze the case based on your research and what you have learned so far in the course.

Respond to the following:

• Calculate the company’s overall break-even point in total sales dollars. Explain your methodology (approximately 2 pages).
• Of the total fixed costs of \$400,000: \$20,000 could be avoided if the Velcro product were dropped, \$80,000 if the Metal product were dropped, and \$60,000 if the Nylon product were dropped. The remaining fixed costs of \$240,000 consist of common fixed costs such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely (approximately 2 pages):
• Calculate the break-even point in units for each product. Explain your methodology.
• Determine the overall profit of the company if the company sells exactly the break-even quantity of each product. Present your results.
• Evaluate costing systems for this company. Explain if this company should be using a job-order or process-costing system to accumulate costs (1 page).

Be sure to include your calculations in Microsoft Excel format.

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Arthur Anderson: Questionable Accounting Practices Case Study Questions

Read the Arthur Anderson: Questionable Accounting Practices case. You are to write a four to six (4-6) page paper that answers the following questions:

1. Review the mandated requirements for legal compliance (from Chapter 4) and determine which requirements apply to the Arthur Anderson case. Explain your rationale.
2. Discuss how the issues with the Arthur Anderson case may have played out differently if the Sarbanes-Oxley Act had been enacted in 1999.
3. Determine and discuss which elements of the framework for ethical decision making in business (from Chapter 5) played the biggest role in the Anderson case. Explain your reasoning.
4. Discuss how the situations at Arthur Anderson may have played out differently if their senior management had displayed the habits of strong ethical leaders. Provide specific examples to support your response.
5. Include at least three (3) references, no more than three (3) years old, from material outside the course.

The format of the paper is to be as follows:

• Typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides (APA format).
• In addition to the four to six (4-6) pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.

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The Role of Accounting on Business and Our Society

Accounting increases a student’s preparedness to understand complex business concepts and the rationale managers use to make financing decisions. It is a business discipline that allows companies to analyze, record, and retrieve critical financial information that can be used to determine a company’s financial status, and provide reports and insights that are needed to make sound financial decisions.

Use the Internet or the Strayer Online database to research relevant accounting information to respond to the questions in the assignment.

Write a two to three (2-3) page paper in which you:

1. Describe the purpose of each financial statement. Determine which one (1) is the most effective in communicating the financial health of an organization. Defend your position.
2. Compare the major functions of an accountant to that of a certified public accountant. Make an argument for and against the importance of accounting and accountants in our society from a U.S. or global perspective.
3. Imagine that you have decided to create your own business venture. Determine whether the company will be a service or merchandising company. Describe the differences between the charts of accounts for both companies.
4. Based on the company that you selected in 3, make an argument for automating the accounting process, and implement at least three (3) types of internal controls to prevent or detect theft or fraud.

The specific course learning outcomes associated with this assignment are:

• Identify and explain the fundamental concepts and principles in accounting, the components of the accounting equation, the primary financial accounting equation, and financial statements and reports.
• Use technology and information resources to research issues in financial accounting.
• Write clearly and concisely about financial accounting using proper writing mechanics.

Question

If deferred taxes are an unfair loophole that must be closed provide a rationale for your response.  Imagine your boss has asked you to  “cook the books”., and increase earnings this quarter in order to compensate for lower revenues than expected.  Create a scenario where you would manipulate taxes in order to increase revenues.  Support your scenario with examples of such manipulation

Deferred taxes is created as a result of temporary differences between taxable and book income. This is created because of expense or revenue items which are acknowledged in one taxes period, but in a varying books period. In this case, the expense of total income tax acknowledged for books in a particular period of time can be paid over varying time period to the IRS. Alternatively the tax amount paid to the IRS in a particular period is acknowledged as expenses of book tax over varying periods. The deferred tax accounting is drive by the deferred tax liability and asset accounts. Deferred tax liabilities refers to taxes liabilities for taxes due in the prospect on income which has already been acknowledged for books. Although acknowledged in the book of income, the IRS allows the company to pay that tax later, mostly because of timing difference. Deferred tax assets refers to reductions in future payable taxes, since the taxes  already been paid on book income to be acknowledged in like a prepaid tax in the future (Accaglobal, 2012).

Deferred tax is actually a loophole that should be closed. Deferred taxes assist the company to create force situations for the investors of the company. For instance, tax liabilities makes the investors to see a higher income value though in the real sense the company net income should be far much less than the provided value as a result of tax which is not paid. Investors attracted by the company’s revenue with deferred tax liabilities are likely to receive less dividend than the anticipated value in the future, since the future income will be used to pay for the carried forward tax liability.  Alternatively, the company can reduce investors’ dividend earning by indicating non-existing deferred tax asset payment to reduce net income that determines the investors’ dividend earnings. The concept of deferred taxes creates loopholes for future losses for investors after investing with a company which in their perspective, they were sure of its financial position. In this regard, I believe that deferred tax liabilities are loopholes that may need to be closed to prevent more deceptions to investors, looking for a company will dependable financial records.

Normally, companies tend to manipulate their accounts books to attract investors while in the real sense their financial situation is terrible. After recording low revenue, a company may consider manipulating its books account by creating deferred tax liabilities or deferred tax assets. For instance, to reduce the divided to be earned by the company shareholders, the company can manipulate its accounting to demonstrated deferred tax assets which will demonstrate why the net income to determine divided earnings are low. The company will make investors believe that the company has paid previous deferred tax liabilities or/and deferred tax assets and thus, the current divided earnings will be much low due to these expenses. However, in the IRS accounts, the company will demonstrate the actual revenue and actual taxations and thus the net income in this case will be much higher while the net income in the investors reporting books will be much lower.

For instance, a company making that registered a revenue of \$5000000 wishes to manipulate taxes to increase revenue. In this case, the actual taxation will reduce the revenue at a certain percentage. For instance 25% income taxation will result to net income of \$375000. However, to attract more investors, the company may decide to manipulate taxes by creating deferred tax liability of 55%. In this regard, the company will mage to retain \$68750 of the taxes needed to be paid during that period and use the tax to magnify its net revenue to \$443750. This will attract more investors as compared to \$375.

Acquisition and Payment Activities – Accounting Quiz And Sample Answers

Explain the normal business process in the acquisition and payment cycle.  As part of your explanation, state which documents firms would normally use to record activities in that

The procedure employed in this cycle includes the actual acquisition of all goods and services required, the disbursement of cash with the purchase allowances, discounts and returns following closely. During these processes, firms have to ensure they have the necessary documentation during each stage as this allows them to transition easily into all the required action (Whittington & Pany, 2016, p. 34). These might include an acquisition journal, accounts payable trial balance, master file, and a cash disbursement journal. All activities undertaken by the firm are recorded here for future reference or in case of any conflict.

Describe the control procedures that firms commonly use for acquisition and payment activities.  Explain which controls and tests of controls would be appropriate for each of the specific controls that you mentioned.

A firm puts internal control procedures place to avoid any errors or misinterpretation. It is therefore typical for companies to employ the services of an agent who would review the vendors regularly. The primary goal is to reduce the frequency of fraud. The cash disbursement and purchasing procedure have often included cases of kickbacks for these services, which in itself challenges the integrity of the whole process (Giove, 2003, p. 23). Separation of duties comes in handy in this situation to keep track on all approvals made. Moreover, relying on an automated system and cash disbursement are some of the control procedures that firms apply during acquisition and payment activities. An automated system would be responsible for the recalculation of the invoice while the cash disbursement control would also incuse confirmation of the good’s completeness.

Describe common substantive analytical procedures that would be used for account balances related to the acquisition and payment activities.

A comprehensive comparison of an acquisition expense account together with all its balance is vital in assessing any errors that might have been made. Another substantive analytical procedure entails the evaluation of all available acciunts for payables that might be unusual in the transaction. Misstatements are therefore classified with ease as they often target a firm’s non-trade liabilities. A comparison of the client’s payable account with records from the previous year which to trace non-existent accounts.  Furthermore, calculative ratios are essential here as dividing it with accounts payable reveals all the unrecorded accounts.

Describe common substantive tests of transactions and account details that would be used for the acquisition and payments cycle balances.

The Out-of-Period and Cut off liability tests are common in substantiating the balances in the acquisition and payment cycle. The details under scrutiny would essentially be cash disbursements under a firm’s watch. All documents pertaining to the bills paid are also analyzed in search of any noticeable correlation. Reports related to specific vendors are compared with statements on their payable balance.

HA2042 – Accounting Information Systems

You are to prepare a submission to satisfy your client’s requirements as outlined below. You are required to investigate the issues at SkiZone and provide a feasibility study into the improvement to their current business processes. You will need to conduct an investigation into the client’s problems and evaluate a solution to meet their business needs.

Overview – SkiZone

Andrew West started SurfZone in Bondi with the goal of providing good quality surfing equipment to his customers. To ensure year round business, Andrew sells both Surfing and Snow Ski products and he also has a lucrative snow ski hire department that is strongly patronised by school groups and families. Business has been brisk and he has established a sizeable client base over the last five years.

As the business has grown, two new stores have been opened in Coffs Harbour and Port Macquarie. Each store has a manager and five staff members in the winter months to manage the sales, stock and hiring of snow ski equipment. In the winter months this is reduced by one staff member. Andrew now finds his time is taken up with monitoring the overall direction of the three stores, negotiating better deals with suppliers and networking with other local businesses and potential customers such as local high schools.

Each store has 2 point of sale cash machines. Andrew has an office next to the Bondi store which he shares with an assistant. There is a computer for the assistant and Andrew has a laptop computer that he uses to prepare details for the accountant to complete the Business Activity Statement. He also carries out some analysis on spreadsheets for sales forecasting.

The Existing System

Each of the three stores operate a similar system, sales are captured at the point of purchase by the cash register machine. There are two machines in each store operated by sales counter staff. The business supports the use of credit card and EFTPOS cards. Details of each sale are recorded on cash register dockets which are reconciled at the end of the day with any credit card and EFTPOS dockets and cash in the till. No details are captured about the customer only details about the goods purchased, the method of payment, staff member, product, quantity purchased, price and totals.

Stock levels, are recorded using Stock Cards. Details of new stock are entered onto the cards when the new stock is received and details of units sold are updated at the end of trading each day. Unfortunately when things become hectic (and this happens often), marking off stock sheets can be forgotten and therefore they are not very accurate. To know the level of any stock item, a physical check is required. Stock take is conducted at random times when Andrew thinks it would be good to know what is in each of his stores.

The hiring department operates by providing ski equipment hire for boots, ski’s and ski suits for usually a couple of days but can be for longer periods. When a customer hires equipment they are assisted in their selection by one of two staff members working in the hire department. If things become busy, then one of the two staff members on the sales counter will come and assist.
When a customer makes a selection, their details are written on a duplicate docket along with the details of the selection they have made. A copy of customers credit card details are taken from a standard manual credit card imprint machine. The details of the credit card along with the docket are placed in alphabetical order in a file. When the customer collects their hired items, the duplicate of the docket is placed on the plastic bag which contains the customers rented goods. This is the customers copy.

When the customer returns the hired items, the staff member retrieves the duplicate docket from the file containing both the docket details and the credit card information. This can be a time consuming process as sometimes dockets are misfiled and customers become annoyed with the delay. There have been complaints made on a number of occasions because of this problem. Once the docket has been retrieved, the goods are checked and a final cost for payment calculated on a calculator. The total is then entered into the cash register and the customer completes the payment. The credit card docket is then torn up and the hire docket is returned to the file.

The managers of each store control the opening and closing of the store, the arranging of stock, staff rosters, organise the banking and they inform Andrew what stock they need. Andrew then negotiates the best deals he can from his suppliers. The office assistant reconciles the banking from each store with the sales records and enters this in a spreadsheet that is then checked off against the banking details. If there are any issues, the office assistant informs Andrew who then resolves it with the relevant store manager. At the end of each week, the spreadsheet is sent to Andrew who uses it for sales forecasting and also provides the information to the accountant to complete the Business Activity Statement.

The assistant also prepares the wages for each staff member again using a spreadsheet and writes up cheques for each payment. The assistant then hands the cheques to Andrew who delivers them to the Boni store and arranges for a courier to take them to the Coffs Harbour and Port Macquarie stores. Andrew likes to make sure he has a record of paying his staff and he believes that cheques provide this record. He has recently received some requests for payments to be made directly into bank accounts to make it easier for staff members.

Changes Required

Andrew believes it will be possible to streamline some of these business processes to reduce the amount of time it is taking to process the data. He would also like to have information about his business more readily available. He believes that it could be time to invest in computers to record details about the sales, process the payroll and provide details about the stock. He would like you to investigate what options would be available to:

• Provide computers in each of the three stores to capture sales information and manage the hiring details.
• Capturing the customer details would greatly assist in developing a targeted marketing campaign in the future.
• Capturing details about the stock sold so that accurate stock levels could be known
• Provide a way to calculate the wages and to electronically pay staff. Good records of this process are essential.
• Provide useful data to Andrew for forecasting sales.

Andrew intends to open up to six further stores during the next three years and any systems implemented must be capable of supporting these developments. After an initial investigation, Andrew has asked your group to develop a feasibility report on providing a suitable solution for the accounting and payroll problems.

You are required to submit a feasibility report. At a minimum level, your feasibility report should contain the following generic sections:

• Executive Summary
• Description of the problem
• Solution objectives
• Constraints
• Development plans
•  Potential solutions
• Recommendations
• Your appendix should also contain Any brochures (scans), websites, photographs and prices you have researched to complete your assignment.

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ACCT 2105 Introductory Accounting – Semester 3 Assignment

This assignment is designed to get you to locate the Annual Reports for a company and become familiar with the contents of an Annual Report, particularly the financial statements and the notes to the financial statements. While we have looked at very basic formats of the financial statements, the financial statements for a company contain a little more detail and information on some items you may not have been introduced to yet. Pay particular attention to the information provided in the notes to the financial statements as you will find a lot of useful information in them that may help with some of the questions.

Required

You are required to obtain the 2010 Annual Report for BAO VIET HOLDINGS and then answer the questions that follow in Part A and Part B.

PART A – THE COMPANY (10 marks)

1. Describe the company’s operating activities.
2. Describe the significant event that affected contributed capital during 2010.
3. With reference to consolidated financial reports, identify the number of the note that deals with Significant Accounting Policies and identify the method of depreciation the company uses to depreciate their tangible fixed assets.
4. Why does the Annual Report of Bao Viet Holdings contain Supplementary Financial Information?
5. What is the difference in the treatment of tangible fixed assets using VAS and IFRS?
6. The annual report contains a number of reports with only some of these being ‘financial reports’. Name all of the consolidated financial reports in the 2010 annual report that had to be disclosed by the company
7. Who is responsible for the internal audit and external audit of Bao Viet Holdings?
8. Describe the purpose of the external auditor’s report.

American Accounting Association Vs Mary Guy Decision Making Model

Using  American Accounting Association decision making model and Mary Guy Decision Making  Model to analyze the Luke and Zane Case.

Luke and Zane are two audit seniors working for the same Big Four accounting firm. Both started employment with the firm around the same time. They have mutual respect for each other; however, they have been highly competitive since they commenced work together.
Luke has recently married and he and his wife are paying off their mortgage. Zane is single with a reputation in the firm for playing hard but working hard too. They have both been seniors for almost 18 months and are looking for promotion to audit supervisor. They are both aware that there is only one supervisor position available.
Luke recently replaced Zane on a particular job, and the reason given to both Luke and Zane was that another assignment had arisen with a long-time client of Zane’s. Once Luke had replaced Zane on that particular job, he realised that the client had called the audit manager to say that they were not impressed with Zane, as he had missed a number of issues within the audit and was arriving at work late. The audit manager had not discussed these comments with either Luke or Zane. After going through the work that Zane had completed, Luke realised that Zane had performed an excellent job, identifying a number of issues that he thought he might possibly have missed. Furthermore, Luke suspects that Zane and the client had a personality conflict, and that the client has misled the audit manager.
Luke realises that he can finish off the audit, resolve the issues and obtain a good review from this assignment, which would help him in the promotion stakes. He also knows that the audit manager is unlikely to bring the client’s unsupported allegations to Zane’s attention.

Required
(a) Work through this scenario using the American Accounting Association decision making model, and decide what action Luke should take.
(b) Would your decision be any different if you used the Mary Guy decision making
model?

Ethics, Corporate Social Responsibility and Sustainability – BUACC5934 Financial Accounting

BUACC5934 : Financial Accounting Semester 3 – ASSIGNMENT

Assignment  Instructions– Ethics, corporate responsibility and sustainability

Acknowledging the conceptual differences between the three concepts – ethics, CSR and sustainability and their complementariness:

1. Review the 2016 or 2017 annual report for two ASX companies from the following list: BHP, Fortescue Metals Group, Rio Tinto Group with a view to understanding how each company integrates the three concepts into their business environment. One of the companies must be BHP. (500 words)
2. Has there been any significant environmental disasters reported in the recent annual reports for either company? (500 words)
3. Describe the impact of the accident on the natural environment, communities, and global sustainability. (500 words)
4. Review the literature on corporate social responsibility with a view to understanding how companies can become more genuine in their operations abroad, especially in remote communities. (500 words)

Rio Tinto Group Vs BHP Billiton – Ethics, Corporate Social Responsibility And Sustainability

Company Overviews

Rio Tinto is amongst the leading international mining groups and combines Rio Tinto plc, which is a London-based and listed public company, and Rio Tinto Limited that is also listed on the ASX (Australian Stock Exchange). The two firms have been combined in an organization with a dual listed structure as one economic enterprise known as Rio Tinto Group. The company has diverse interests in products and geography with most of its assets being in North America and Australia. Moreover, Rio Tinto also operates in Africa, Europe and Asia. The company’s core businesses include underground and open pit mines, refineries, smelters and mills, in addition to service facilities, exploration and technology.  On the other hand, BHP Billiton was founded in 2001 as a result of a merger between BHP, which is a natural resource-based firm, and Billiton, which is a mining company. At present, the company operates in a total of 25 nations, and employs roughly 41,000 individuals and its current market value stands at over \$250 billion (bhp.com, 2017, pp. 1-48). Rio Tinto Group and BHP are involved in a number of corporate social responsibility activities, and also incorporates sustainability and ethics in its operations. These are as discussed below

Sustainability

According to Rio Tinto Group annual report, the company’s products assists in satisfying the needs of consumers and improving their living standards, and this is mainly realized through safe operations and closure of operations, sustainability and responsibility. Rio Tinto’s long term approach to business has ensured sustainability given that the development of first rate ore-bodies into big, long-life and effectual operations, as well as the development and application of technology at the mines, smelters and refineries are performed with sustainability in considerations. This has enabled Rio Tinto to sustain a competitive edge through the use of business cycle.

Through its business cycle, Rio Tinto group has been able to ascertain that its values underpin the manner it manages social, environmental and economic effects of its operations. The company carries out rigorous review processes and evaluations that are targeted at ascertaining that only approved investments offering attractive returns in the long-term, while simultaneously ensuring minimal adverse effects linked to its activities on the environment, individuals and communities (riotinto.com, 2016, pp. 1-99).  Further, in closing all its assets’ life cycles, Rio Tinto begins the planning for its operations closure during the initial development stages so as to minimize the risks while maximizing outcomes. The closure planning is mainly targeted at minimizing the social, environmental and fiscal liabilities and the associated costs through discovery of sustainable and beneficial prospective land use. The company also rehabilitate its mining sites whenever probable.

On the other hand, with regards to BHP, it can be observed that to ensure sustainability in its operation, the company ensures protection of the environment by demanding that its suppliers’ operations must be in a manner that is protective of the environment and also compliant to the various applicable environmental laws, standards and regulations, environmental reporting and permitting.

Corporate Social Responsibility

With regards to CSR, Rio Tinto is determined to leave a lasting legacy in areas of its operations. Thus, recognizing that any major production operations tend to have key impacts on the communities where it operates, Rio Tinto has not only created jobs and business opportunities for the locals and local organizations but has also developed infrastructure. Moreover, the company makes efforts towards ensuring that the communities in which it operates are not left devoid of economic engines to drive them. For instance, In the Saguenay, Rio Tinto has extended the life of its investments and also promoted broader investment in the community before closing down its operations. The company has also engaged the community in securing the communities future in Vaudreuil through its aluminium refinery facility which is a significant employer in the community.

Consequently, concerning its CSR activities, BHP defines its CSR policies as requirements for tackling risks, and overtly asserts that it does not tolerate misconducts that are linked to forced, compulsory and child labor. To comply with its various CSR policies, BHP tends to make use of several methodologies. This takes in but is not restricted to carrying out progress evaluations in relation to its performance in comparison to the United Nations’ Global reporting Initiative and the Global Compact Principle that have been developed with the objective of aligning the companies’ operations. BHP also holds a yearly forum on CSR, and this is intended to bring together the various representatives of the company’s senior administrators, the communities’ opinion leaders and major non-governmental organizations with the objective of debating and discussing environmental issues that are pertinent to the organization. Investing in various community projects and also documenting its contributions to the community and spending to facilitate the achievement of the UN MDG goals. This also offers the organization with a consistent framework for assessing tangible progress.

Ethics

With regards to ethics, Rio Tinto seeks to develop sturdy, lasting and trusting relations with its host communities, and acknowledges and respects the individual’s human rights and cultures, as these are some of the principles that are found in the company’s values, standards and policies and makes up its ethics. The company undertakes economic and social impact assessments with the objective of comprehending the various implications of its activities to enable the reduction of the negative effects.  To attain this, the company works together with the local communities to develop vivid and transparent contracts that are vital to the provision of access to land that is required and for the direction of benefits individuals affected by the activities of the firm.

On the other hand, with regards to ethical practices at BHP, the company has instituted a number of measures to stem out incidences of corruption, extortion and bribery. For instance, Boiral and Henri (2017, pp. 283-317) asserts that the discussion regarding the actual extent of the responsibility and accountability has persisted on. In this regard, BHP maintains that all contracts pertaining to payments and transactions and inclusive of those that are in connection with hospitality and gifts, as well as other notable expenses have to be precisely documented in logical and comprehensible details in the records and books of the suppliers working on behalf of BHP. In its ethics policies, BHP also calls for the fair treatment of all its workers, payment of reasonable living wages, workplace safety and health, as well as freedom of association amongst the workers and managers.  BHP also makes attempts geared towards the safeguarding of various protected areas and heritage sites through the use of environmentally friendly fuels including bio-fuels in its operations, compliance with the various laws, as well as the protection of the environment and the indigenous rights and freedoms.

Significant Environmental Disaster

One of the significant environmental disasters that Rio Tinto has faced [in recent times regards its Panguna Mine in Bougainville, Papua New Guinea. According to Lin, Li and Bu (2015, pp. 28-39), the residents of Bougainville for a ten year war against the company and won leading to the mine’s closure. The company was accused of having used a number of bulldozers and chemical defoliant during the construction of the copper mine, and this destroyed the rain forest which was a major source of subsistence to the local populations.  Rio Tinto was also accused of dumping billions of tons of various harmful mine wastes that were generated from its mining activities into the pristine waters and on land, filling up key rivers with numerous tailings and polluting key bays and the Pacific Ocean, several miles away. The pollution from the mines was extensive leading to the exposure of the island residents to harmful chemicals and probable death and disease.

Regarding significant environment disasters caused by BHP, it can be noted that in the year 1996, BHP Billington was sued by Gordon and Slater for having cause one of the globe’s most destructive environmental disasters as a result of it discharging more than one billion metric tones of waste materials along with tailings into one of the key sources of OK Tedi River that is found in Papua, New Guinea. The pollution resulted in deforestation that covered close to 3000 square kilometers, in addition to turning the tropical rain forests into savannahs, and also causing an acute decline in the area’s fish population (95 percent decline).

Impact of the Disaster

The impact of the environmental degradation that occurred on Bougainville Island as a result of Rio Tinto’s operations include the observation that the water and air pollution resulted in serious health challenges amongst the locals, and this included asthma, upper respiratory conditions and TB amongst others. Moreover, the disaster led to loss of livelihoods by the locals given that they were no longer able to carry out farming activities, fishing and hunting. The traditional diets of the locals were replaced by processed foods and this also increased obesity incidences. Moreover, the environmental degradation disaster also led to international condemnation by various human rights groups given that it did not only affect the local residents but the oceans also got polluted. As a result, the company was forced to close the copper mine and this resulted in huge losses being suffered by Rio Tinto.

Similar to the case of Rio Tinto, the pollution of OK Tedi River that is found in Papua, New Guinea by BHP resulted in the loss of livelihoods by the locals are residents of Papua New Guinea are highly dependent on the rain forests for food and business products. The deforestation, therefore, implied that they were unable to access their traditional foods and also business commodities including medicinal plants and timber.  Moreover, the reduction of the fish population and the subsequent destruction of forests implied that the local residents were nolonger able to fish and hunt animals for food. As a result, they opted for processed and imported food stuff that are considered as unhealthy and this resulted in increase in cases of diseases and conditions such as obesity. The pollution additionally resulted in the contraction of diseases by the local including Asthma, TB, various skin conditions and upper respiratory diseases. At the global level, the pollution caused by BHP activities led to global outcry especially from various environmental rights groups. As a result, the outcries led to the portrayal of a negative image of BHP owing to its actions, and given the observation that it was perceived as failing to take into account the rights of the local residents.

How Companies Can Become More Genuine In Their Operations Abroad

Having observed the various ways through which Rio Tinto Group and BHP Billiton have conducted their CSR activities and also faced challenges due to environmental disasters resulting from their mining activities, it can be concluded that there is a need for the two organizations to become genuine and enhance their CSR activities abroad. To attain such enhancements, Bice (2014 pp. 62-80) observes that one way an organization can become increasingly genuine in its foreign operations and in remote areas is by strengthening the support for CSR initiative so as to consistently attain higher degrees of CSR associated services to the organization’s operations in their foreign operations, as well as developing networks and local partnerships with various communities as well as strengthening the organization’s leadership, best practices and excellence in the company and the industry. Consequently, Ross (2017, pp. 187-201) asserts that additional training and increased support for the organization’s workers so as to ascertain that they are adequately equipped to detect various issues in time and actively contribute to their solution prior to their escalation.

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Political Process For Establishing Accounting Standards- Accounting Essay

This paper explains how the political sector has its role in the establishment of accounting standards. There have been incidences the past showing how political lobbying had influenced the accounting standard setting, and to avoid raising problems with the regulatory boards, companies or interested parties can actually create ways of lobbying their political principles instead directly tying to take part in accounting standard setting, which explains the meaning of the political process of establishing accounting standards (Bertomeu & Magee, 2011).Political influence over standard setting is a deliberate involvement in the standard setting process by an economic body with the main aim of influencing the outcome of that particular process in order to increase that entity’s economic value (Allen & Ramana, 2013).

The accounting standard setting hierarchy in the United States stars from the U.S congress, the legislator has endorsed powers to the Security and Exchange Commission to disseminate and enforce financial reporting standards in the securities Acts of 1933 and 1934.The SEC has in turn delegated the powers to organizations of the private sector, Financial Accounting Standards Board. The accounting regulation is therefore made of two principal relationships, between the U.S Congress and SEC and between the SEC and FASB. It is therefore evident that both the legislator and SEC have veto powers over standards promulgated by FASB. From the FASB, promulgated standards are disseminated to the users like investors, managers and auditors (Allen, 2013).The main mission of financial accounting setting board is to establish and improve standards of financial accounting and reporting that foster financial reporting by non governmental entities that provides decisions and useful information to investors and other users of financial reports.

A Recent Accounting Fraud/Scandal Involving an Audit Failure – Assignment Instructions

A discussion and analysis of a recent accounting fraud/scandal (within past ten years) involving an audit failure.  Your paper should

• describe the nature of the fraud perpetrated by the corporation, how it was carried out, and by whom it was carried out (ie., top management).
• Did the fraud involve fraudulent financial reporting or misappropriation of assets, or both?
• Were there violations of GAAP or international accounting standards?
• Discuss the role of the auditors in the fraud.  Were internal auditors aware of the fraud or complicit in the fraud?
• Did external auditors discover or fail to discover the fraud?  Were external auditors implicated in the fraud
• Discuss the stakeholders affected by the fraud and how they were affected.  Finally, your paper should discuss whether any of the stakeholders were criminally or civilly prosecuted or otherwise punished for their involvement in the fraud.

Your paper should include an introductory paragraph, a comprehensive but concise analysis of the topic, and a conclusion paragraph.There should be at least four (4) references, all of which should be taken from the Internet. The references should be from authoritative sources, such as from business and accounting periodicals – not merely statements from an individual’s Web page. It is best to make a hard copy or disk copy of the Internet reference to retain it. Often, the reference disappears after a period of time. Textbooks, Wikipedia or other online encyclopedias, and technical manuals may not be used as references.

Accounting for State and Local Government

Prompt : The statement of net assets and the statement of activities under GASB Statement No. 34 are prepared on a government-wide basis. These statements are prepared on the accrual basis using the flow of economic resources concept. Explain this rationale.

Accounting for State and Local Government

GASB Statement No. 34 has been issued by the Governmental Accounting Standards Board to change the financial reporting requirements for both state and local governments within the United States. According to GASB Statement No. 34, government-wide financial statements consist of a statement of activities and net assets statement (Governmental Accounting Standards Board). These two statements are measured on accrual basis of accounting using the economic resources measurement focus. From net assets statement and statement of activities, one can obtain financial reports on all revenues, assets, gains, losses, revenues, liabilities, and revenue generated by the government. When giving these reports, each statement is expected to distinguish between business-type and governmental-type activities of the primary government by discretely presenting the units in separate columns. It is important to remember that fiduciary activities that cannot finance government programs are not included in the government-wide statements (Governmental Accounting Standards Board).

Statement of net assets uses a net assets format where the value of net assets is obtained by subtracting liabilities from assets, (assets-liabilities= net assets), but not the traditional balance sheet format. The column for governmental-type activities contains report for all liabilities and assets that finance government’s programs. Statement of activities is an accrual financial statement that uses a net cost format (Governmental Accounting Standards Board). It first gives a report of total cost for all government functions and a portion of those costs that can be financed by other grants and contributions. The net cost is therefore reported as the difference between the two types of costs and it represents those costs that must be financed through government resources. Examples of government’s own resources are non-program related revenue and taxes. Therefore, the statement of net assets and the statement of activities are prepared on a government-wide basis because they provide financial reports on government-type activities. In addition, statement of activities is prepared on the accrual basis using the flow of economic resources concept because it provides reports on net costs which are financed by a government’s own resources (Governmental Accounting Standards Board).

Statement of activities and statement of net assets provide a comprehensive overview for government finances. Governments experience a big problem in implementing these statements which can be met by tackling the implementation task bit by bit. For instance, when giving reports for government activities, one must first convert existing fund information to the government-wide format by applying accrual basis of accounting. Another important task that governments must perform when implementing the two statements described in GASB Statement No. 34 is to capture cost information about infrastructure assets such as roads and bridges (Chase and Triggs, 2001).

GASB Statement No. 34 has several implications for budgeting at both local and state governments (Governmental Accounting Standards Board). Statement of activities and statement of net assets emphasize the long –term perspective in budgeting at the state and local level. In addition, the two statements reveal how important a budget is in demonstrating accountability at state and local governments. Furthermore, statement of activities and statement of net assets activate the debate about accrual budgeting and raise the need to the financial position of government projects. State and local governments must be able to establish the types of adjustments that must be done in order to convert fund-based information to the accrual basis in government-wide statements (Chase and Triggs, 2001).

Current Exposure Draft / Proposal For a New Accounting Standard Review

The Senior Partner of the firm you work for has appointed you to a new role. It is now your responsibility to review upcoming accounting standards and provide a report to the partners on the proposed standard and the opinions of other industry players on the changes.

Firstly, you are required to find a current exposure draft or proposal for a new accounting standard which has been opened for public comments. (These can be found on the websites of most standard-setting organisations, such as the IASB, AASB and FASB. Hint: These websites can be quite difficult to navigate, so as a first step try typing “IASB exposure draft and comment letters”/”FASB exposure draft and comment letters” into Google or other search engine of your choice). Read a sample of the comments from a range of respondents. Select four respondents, ideally from different types of organisations for example, from accounting bodies, industry, companies or corporate bodies. If you are having a problem finding suitable comments letters then contact your subject coordinator.

In your own words, supporting your evaluation with appropriate citations, appropriately referenced in APA 6 style, you are required to include the following information in the report.

• An outline of the major issues covered in the exposure draft (what is the exposure draft introducing or changing?).
• An assessment as to whether (or not) the behaviour of the regulator in introducing the exposure draft can be explained by public interest theory.
• An outline of the views presented in the comments letters which highlights the areas of agreement and disagreement with the exposure draft.
• An assessment as to whether the comments letters can be interpreted as being ‘for’ or ‘against’ regulation which provides relevant examples.
• An application of each of the theories of regulation (public interest, private interest and capture) to the comments letters and a justification as to which theory best explains the comments.

View current exposure drafts or proposals for a new accounting standard here:

1. FASB Exposure Draft and Comment Letters

http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176157086783

2.  IASB exposure draft and comment letters

https://isca.org.sg/tkc/fr/exposure-drafts-comment-letters/iasb-exposure-drafts-comment-letters/

Fund Accounting Under GASB Vs Under GAAP

Despite the fact that both the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB) operate in a similar manner, they have certain accounting and reporting differences. The major purpose of the FASB is to assist investors and creditors make informed decisions on the financial health of a company. FASB establishes standards and guidelines that non-governmental organizations and companies should adhere to when making their financial reports. On the other hand, the major aim of the GASB is to improve accountability. GASB sets the financial reporting and accounting standards for local and state governmental bodies. Since government agencies operate in a different manner from profit-making organizations, their financial and accounting reporting standards are also different.

FASB and GASB also differ in their recognition of restricted cash contributions. FASB recognizes cash contributions as being temporary or permanently restricted. On the other hand, GASB necessitate governmental agencies to ensure that recognize restricted cash contributions as deferred revenue of the use of the resources if restricted for the future. As such, the recognition affects the liabilities, revenue, and deferred assets of the governmental agency.

There are also significant differences between FASB and GASB with respect to endowment pledges. According to the FASB, endowment pledges should be treated as permanently restricted net assets. On the other hand, GASB forbids the recognition of endowment pledges since it is impossible to satisfy the primary restriction of the endowment pledges prior to the receipt of the funds. The difference in the recognition of the endowment pledges according to FASB and GASB affects the net assets and gift revenues of governmental agencies and non-governmental organizations and companies (Gibson, 2012).

According to the GASB, a governmental agency must report the net investment and realized gains or losses as a single amount. On the other hand, FASB allows companies to report the net investment and realized gains or losses separately. According to the GASB, investment income may be the operating revenue is the source of the funds is from a student loan program (Weil, Schipper & Francis, 2012).

FASB and GASB also treat Pell grants differently. FASB treat Pell Grants as balance sheet pass through only entries. On the other hand, GASB treats the Pell grants as activity statement transactions. Use of GASB makes governmental agencies, such as universities, to have higher grant revenue, lower net tuition. It also leads to significant alterations in the liabilities and net assets of the public institutions (Gibson, 2012).

There are also several differences in how GASB and FASB treat funds held in trust by others. According to FASB, funds held in trust by others should be treated as an asset. On the other hand, GASB does not have provisions that would facilitate the recording and recognition of funds held in trust by others. However, public institutions may report assets held by foundations that are affiliated foundations under GASB 14 and GASB 15 (Weil, Schipper & Francis, 2012).

FASB and GASB have different provisions on the reporting of use of restricted funds. According to FASB, a company should reduce its restricted assets – even if it uses its unrestricted assets – if both the restricted and unrestricted assets are available for use in settling a certain expense. This is referred to as ‘first dollar release.’ On the other hand, GASB acknowledges that institutions may use different approaches to release their restricted funds. Therefore, it requires governmental agencies to ensure that they provide a disclosure explanation of how funds were released from restricted (Weil, Schipper & Francis, 2012).

What You Learned About Accounting And Finance: Enron’s Bankruptcy

Enron Company was formed in 1985 as an interstate pipeline company, it merged with other Energy companies and in 1999, it instigated Enron Online Company which became the company’s website for trading merchandise; it became the leading online site in the world. Enron Company grew rapidly, and in 2000, its revenue had reached a hundred billion dollar. It was categorized as the seventh largest company, and the sixth largest energy company in the world. Nonetheless, in 2001started to experience some changes (Hamilton, 2006).  The power behind Enron Company Jeffery Skilling, proclaimed his exit, and Lay recommenced as the CEO of the company. Henceforth, the company started reporting loss this resulted in bankruptcy.

What specific actions (or lack of) led to Enron’s bankruptcy?

In ethics, explanations of Enron’s bankruptcy fall into three groups: organizational, personal, and universal. Organizational reasons occurred because of group influence; how things are done in a group, and the shared beliefs of the group (Hamilton, 2006). The personal reasons, describe declare that, Enron company became bankrupt, because of greed, and leaders being vicious. Enron Company sustained remarkable financial losses as result of pride, greed, and foolishness from its leaders. The collapse of the company began with the financial losses that could have been avoided, if someone had the bravery and the prudence to a put a stop to it. People will always remember Enron as a typical paradigm of ravenousness gone wrong and of the feat that was taken to assist prevent it from.

What types of fundamental accounting and auditing practices eventually contributed to the fraud performed by Enron?

The statements we learn in accounting are the fundamental tools through which we converse a corporation’s financial position. Enron was the 7th largest company in the world at the time, but could not supply investors with basic financial statements (Imhoff, 2003).The company implemented a new structure of accounting known as mark to market; it was urbanized by traders in 1980. The new structure of accounting permitted for a fair value of an asset to be based on an existing price, on the flip side, the figures were not acquired through any other accounting process. Consequently, accountants valued assets and liabilities at any value they would think of, since the accounting system was a new and popular idea and so was the idea of trading natural gas as a commodity.  Enron’s accounting firm and the Securities and Exchange Commission signed off on approval for the company to implement Mark to Market Accounting. Despite the consequences of how much revenue Enron was earning, it hypothesized natural gas futures and documented them on their books as earned revenues.  The Enron administration paid themselves bonuses based on unwarranted revenue, this event was both the beginning, and the end of Enron.

Briefly describe the ethical environment that led to the fraud.

Enron’s customs and beliefs added much to the ethic scandal. It was insensitive and patronizing company, that only accentuated competition and financial goals (Finn, Chonko, & Hunt, 1988). For instance, it had a rating system that rated 20 percent of its employees, as below average, for employees to sustain their jobs they adopted a lifestyle of deception. In addition, the aggressive environments added to the covering of the errors and deceitful as employees were disobliging and rarely conversed with each other. Finally, this environment highlighted too much on the financial goals.  The employees, who could attain the budget numbers, became the idol of the company.  Mutually the administration and most of employees focused on making profits for themselves through making good financial numbers instead of a real increase of the company’s economic value.

How did Enron’s bankruptcy impact the financial markets for Enron’s competitors?

Other energy companies suffered losses in the hundreds of millions of dollars because of their associations to Enron, through contracts or loans. Major Banks has recognized losses in the hundreds of millions and the potential for billions of dollars more. Enron’s downfall added to the cost of capital for the energy industry, and its competitors (Imhoff, 2003). It has also hindered other energy companies to diversify as the high costs affects manufactures of natural gas. For example, Entergy Corp, which is based in New Orleans that supplies electricity throughout the central United States and to Latin America, Europe and Australia, postponed its power plant ventures in Ohio and Illinois.

Briefly describe what you learned about the importance of the auditing process.

Auditing is an official assessment of accounting books, documents and vouchers of a business concern in order to authenticate the profit and loss and the financial position of a business; in addition, auditing ensures the accurateness of records, and recognition and prevention of errors. Therefore, audit, is a valuable tool for a Business Management, as internal audit is carried out so as to ensure the guidelines are being followed. It facilitates in making important suggestions to improve, and to devise future policies of a business (Strathern,1997).Consequently, auditing involves a detailed verification of accounting records, as it helps discover errors, faults, and fraud. On the flip side, it promotes an ethical check on workers during which their competence is checked, and determined; embezzlement of commodities and mishandling of records can be recognized.

Intermediate Accounting – Financial Reporting And Generally Accepted Accounting Principles

Financial Reporting

Financial reporting is defined as the process of producing statements which disclose the financial status of an organization to investors, management, government and the public (if the company is publicly traded). Gibson (20120) argues that these disclosed financial information about a particular company shows how it performs over a specific period of time. The financial reports are generally issued on a yearly or quarterly basis. The financial reports are found in the annual report of a public company.

The four basic financial reports are income statements (profit and loss statements), balance sheets, statements of shareholders’ equity, and cash flow statements.

Purpose of financial reporting

There are two primary purposes served by financial reporting. First, it enables the management to make effective decisions in relation to the company’s overall strategies and objectives. The information disclosed in the financial reports assist the management in discerning the weaknesses and strengths of the organization as well as its general financial health (Wahlen, Jones & Pagach, 2013). Secondly, the financial reporting presents important information on the activities and financial health of the organization to its stakeholders which includes its potential investors, shareholders, government regulators and consumers. It’s to ascertain that the company is being managed appropriately. Furthermore, it should be noted that if a company is publicly traded, it becomes subjected to stringent reporting regulations imposed by the Securities and Exchange Commission (SEC).

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP) are common set of accounting procedures, standards and principles that companies use while compiling their financial statements. The GAAP constitute a collection of authoritative standards (outlined by policy boards), for instance, Financial Accounting Standards Board (FASB) and Accounting Principles Board and the commonly agreeable ways of recording and reporting financial statements.

When a company is distributing to the public its financial statements it must adhere to GAAP benchmark. If the stock of the corporation is publicly traded, its financial statements must adhere to the rules that the U.S. Securities and Exchange Commission (SEC) has established (Williams & Carcello, 2008). This would encompass ensuring that the corporation’s financial statements are audited by an independent Certified Public Accounting (CPA) firm.

Examples of the basic Accounting Principles and guidelines are matching principle, cost principle and full disclosure.

Full disclosure principle

The principle means that all the information that is in relation to the business of the corporation be reported either in the notes to the financial statements or in the content of the financial statements.

Cost principle

This denotes the historical cost of the itembeing reported in the financial statements. Historical cost refers to the amount of money that was paid on an item at the time it was bought and it isn’t changed to account for the inflation (Bragg, 2013).

Matching principle

This principle relates to the way a business reports is accounting information on expenses and incomes. The principle requires that companies use the accrual form of accounting and then match the business expenses to business income for a particular time period.

Materiality principle

This is the measure of importance of a misstatement in the company’s accounting records. For instance, this principle creates a gray area in the accounting standards which would be best sorted by professional judgment. An example is the effect on the financial statements of understating the price of an asset with a particular value (Georgiades, 2008).

Going concern principle

This concerns the intent of a business to continue its operations into the foreseeable future and never to liquidate the business.

Sources of GAAP

The sources of GAAP can be categorized as:

• First, is the officially established accounting principles which consist of the FASAB Statements of Federal Financial Accounting Standards and Interpretations. The FASAB Standards and Interpretations is periodically incorporated in the publications by the FASAB (Bragg, 2013).
• Technical Bulletins of FASAB and, if specifically declared applicable to the federal reporting entities by the AICPA and should be cleared by AICPA Industry Audit and Accounting Guides and FASAB.
• The Technical Releases of the FASAB’s Accounting and Auditing Policy Committee.
• The implementation guides which are published by the FASAB staff, and also the practices which are broadly recognized and are prevalent in the federal government.

Accounting – Data Flow Diagrams Basic Symbols

Flowcharting is a tool used for analyzing a process that helps you present the process in terms of individual events and activities using symbols to display the logical relationship between the processes to help in easier and better understanding of the processes.

DFD’s are used to show the flow of data in an organization from the internal source through the processes required until the data goes to the storage. While flowcharts show a clear and concise presentation of a system by breaking it into all stages, DFD’s give the overall picture of the organization or process. Data Flow Diagrams are used for documenting existing systems and designing new ones.

Data flow diagrams (DFD)

A DFD will use for symbols to show the flow of data:

1. Entity.

This element of a data flow diagram uses a Rectangle symbol to denote the source or destination of data. When an entity provides data into a system it is called the source but when it denotes the destination it is called the sink. Entities are considered external forces in an organization.In some cases they are called terminators. Their use in a Data Flow Diagram is to show where a process begins or where it ends.

1. Data flows.

Are symbols in a DFD that show flow of data from one point to another i.e. from the entity to the process etc. They indicate where data moves or the direction for a process from one event to another. It portrays the interface between one component to another. The symbol used  to show data flow is an arrow.

• Process.

This is the manipulation or transformation work whereby computations, transformations, decisions and directions are made. Here, the symbol will show where data conversion takes place so that input can be changed into output.The symbol used to show process is a square with rounded corners or (sometimes a complete circle).

1. Data store.

This is where data is stored between or after processes for later retrieval for another process or to another one. These data stores will use a symbol drawn like a rectangle that has the right hand side missing (Open on the right).

The importance of the Data flow symbols is that they help identify and determine the external sources in an organization. They help know who brings in the data, where it comes in and the type of data that a process deals with. Further than that it will indicate who the recipients are and what type of data they receive. The type of processing that happens is also indicated therefore it easily describes what a department does and how it does it processes the data.

Conclusion

Basically, the importance of the symbols is to indicate what happens where. Which means that by just a look at a DFD a person will be able to tell what goes on in an organization.

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Impacts of the Information Age on Accounting

1. Introduction

Over the years, diverse information technology (IT) applications have markedly reduced the amount of paperwork associated with financial accounting (United States, 1988). Presently, most of the information related to the accounting is documented, or recorded, through WANs (Wide Area Networks) and computers. The information age, which is defined by the usage of contemporary IT applications, has considerably transformed the accounting and the related professions both adversely and positively.

• Computer-Integrated Manufacturing (CIM)

CIM has markedly transformed cost accounting over the years. Organizations having CIM IT tools like computers gather and report accounting information concurrently, improving the speed with which the information is processed. The concurrent gathering and reporting of the information give rise to operational information systems integrating accounting information and marketing data with manufacturing data (Gelinas & Dull, 2010). That increases the information’s timeliness and quantity, assisting cost accountants put together costing systems that are based on particular activities.

• Accounting Data Transfer

IT tools are used in promoting efficacy in how accounting data is transferred between organizations or departments. Such tools are of marked significance in large firms dealing with accounting. The firms enjoy increased communication abilities, which help them to expand into new markets and enhance their global competitiveness. One of the tools is the internet. Internet-based accounting computations are timelier and more accurate than paper-based accounting computations.

• Image Processing

Image processing, a recent IT creation, helps accounting firms eliminate as much paperwork as is practical. That helps the firms hasten transaction time as well as reduce own maintenance requirements. The accounting documents resulting from image processing procedures are easily transferable, externally as well as internally (Gelinas & Dull, 2010). Their increased transferability gives rise to timelier and more efficient accounting information.

• Accounting Software and Expert Systems

Various accounting software, which include the Intuit’s Quicken 4, help accountants get help with multimedia tutorials, internet-based documentation, and expert advice in real time. The Manufactures’ Inventory software registers transactions in suitable accounts when particular inventories are moving through given manufacturing processes. Some software helps in the development of financial statements via the presentation of series of particular questions. Expert systems, which are essentially intelligence IT tools, help accountants in the formulation of decisions, especially those relating to taxes and auditing.

• Relationship Accounting Systems Based On Data

Over time, IT has given rise to tools that allow accountants operate effectively outside the accounting systems deemed traditional to the emerging ones that are more collaborative. The traditional ones come off as funnels with transaction moving through them and losing considerable, assistive information (United States, 1988). In the relationship accounting systems hinged on data such as CIBE (Completely-Integrated Business Environment) all foundational transaction data sets are retained within databases accessible by accountants from diverse sites concurrently.

1. Diminished Accountability Plus Confidentiality

IT presents accountants and the systems they use with heightened risks of losing own accountability plus confidentiality. The reduction of paperwork and paper-trail by diverse IT tools may allow for increased fraudulent accounting activities. Notably, electronic auditing trails are rather intricate to tag on especially with the utilization of collaborative computing and networking. Various technologies add to the heightened risk of losing accounting-related confidentiality. They include group work software and the internet (United States, 1988).

1. Conclusion

The information age has significantly transformed accounting and the connected professions both adversely and positively. It has improved the speed with which accounting information is processed. It has increased the information’s timeliness, efficacy, and quantity. Even then, the age presents accountants and the systems they use with increased risks of losing own accountability in addition to confidentiality.

Introduction

Variance is disparity between standard and real cost

Variance affect performance

Variances relate to revenues and cost

Types of variances : Favorable , Unfavorable, Materials, Labor, Overheads (Church, 1995)

In management accounting, variance refers to the differences between standard (planned or budgeted) costs and the real (actual) costs that are sold or incurred. The differences affect organizations’ or businesses’ performances. Variances calculated for revenues as well as costs. When the real results outweigh the expected ones, the variance is said to be favorable. When the expected results outweigh the actual, the variance is said to be unfavorable. Variances are also categorized according to user needs:  variable or invariable. Variable cost variables relate to materials and labor while fixed cost variables relate to overheads.

What is meant by budget variance?

Budget variances are the differences between baseline (budgeted) revenues or expenses and their real (actual) amounts.

Favorable budget variance is when real revenue outweigh budgeted revenue or budgeted expense outweigh real expense.

At times, budget variances are the differences between  budgeted and real liabilities as well as assets.

Budget variance stem from poor assumptions or inappropriate budgeting.

Some budget variances are controllable while others are uncontrollable.

Strictly controllable budget variances are those relating to discertionary expenses.

What is an effective way to incorporate variance analysis into the budget process?

Variance analysis refers to the examination of the differences between budgeted amounts and the real amounts.

The best avenue of incorporating variance analysis into the process of budgeting is connecting cost management to the process strategically.

Variance analysis is used in identifying weaknesses by managers to make out areas and processes that require adjustments or improvements.

Managers should zero in on variances whose impacts on performance are significant.

Focusing on variances with insignificant impacts bogs budgeting down in inconsequential detail.

What are the differences between labor and material variances?

• Both are price variances
• Direct labor rate variance means the disparity between what a business actually pays for labor and the amount it has budgeted for labor
• Direct material price rate variance means the disparity between what a business actually pays for raw materials and the amount it has budgeted for labor
• Both variances are either unfavorable or favorable

Both are calculated in the same way.

variance = (actual price – standard price) * real input quantity

With regard to direct material variance, the real input quantity is the real quantity of bought materials while in the case of direct labor variance the real input quantity is the real amount of procured labor.

Direct Materials Price Variance = (Actual Price – Standard Price) * Quantity Purchased

Direct Labor Price Variance = (Actual Price – Standard Price) * (Actual Hours Used)

How is a quantity variance different from a rate variance?

Businesses should use materials and time efficiently.

Quantity and rate variances are analyzed and compared over time.

Quantity variances relate to either direct materials’ utilization or direct labor’s efficiencies.

Quantity variances are the products of the differences between the input amounts used and ones budgeted for as regards given manufacturing durations prices and actual input amounts.

Rate variances are the products of the differences between the prices actually paid for given items or acts or efforts and the budgeted prices and actual amounts of items or acts or efforts (Church, 1995).

What are the subcomponents of fixed overhead?

Fixed Overhead Volume Variance (FOVV) has various subcomponents: fixed overhead (FOH) volume efficiency variance along with FOH volume capacity variance.

FOVV refers to the disparity between fixed expenses relating to good units made in a given duration and the total set expenses budgeted for the same duration.

FOVV  happens when real production volume is dissimilar to the budgeted production.

FOVV is either unfavorable or favorable.

FOVV = (Actual Activity – Normal Activity) × Fixed Overhead Application Rate

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Strategy , Accounting, Financial And Valuation Analysis – Boston Chicken Case Study

Boston Chicken developed a new segment of the fast food restaurant business, home-cooked food. To take advantage of this innovation the company sought to grow rapidly by signing franchise agreements with large area developers. However, it also provided sizable loans to the developers to help them finance new restaurants. These loans have, in turn, been financed through public stock and convertible debt issues made by Boston Chicken. The case is used as a comprehensive security analysis case, covering strategy analysis, accounting analysis, financial analysis and valuation.

1. Assess Boston Chicken’s business strategy. What are its critical success factors and risks?
2. How is the company reporting on its performance and risks? What are the key assumptions behind these policies? Do you think that its accounting policies reflect the risks?
3. What adjustments, if any, would you make to the firm’s accounting policies?
5. How is Boston Chicken performing?
6. What assumptions is the market making about the company’s future performance and risks? Do you agree with those assessments

Financial Accounting Position Of DHL Express Company

Introduction

This paper gives an overview of the financial accounting of the DHL Express Company. The German based logistics multinational within the division of the Deutsche Post DHL provides international mail services being the world leader in air and sea mail. The company was founded in 1969 and by 1970’s it had expanded its services across the world.

The DHL Express becomes the publically held multinational company of interest for this research paper. This is due to its vast information in its filings to the Securities Exchange Commission (SEC) with respect to 10-Qs and the 10-K as shown in the study of the Musiolik (2012), besides its rich financial accounting information as obtained through its online annual report as depicted in the context of this paper.

The Assumptions of the Financial Reporting Model

The financial reporting model used by the DHL Company is based upon several assumptions as highlighted in this research paper:

Business entity assumption; the notion of discrete entity assumed shows that the company entity for which the fiscal statements were generated was discrete and separate from the entity owners.

Time period- The Company relied on the use of calendar year and therefore concluded the accounting period on 31st December. Certain companies as usual would prefer a natural business year even though the period being accounted for may have appeared shorter than a year. Numerous inaccuracies together with incomplete transactions may have been made at some particular stages in the reporting (Rutherford, 2000).

Monetary Unit, Inflation and Exchange Rates– being a holding company that have got branches world over, a decision had to be made on what rates of exchange were to be deployed to convert local currency from foreign currencies. According to Wahlen (2010), this must have been based on the fact that financial statements are built from local currencies as monetary units. Most multinational companies have been known not to disclose additional information regarding the influence of prices changes (inflation) in their annual reports.

Going Concern assumption-which assumes that the company will continue in business over an indefinite period. It   going-concern assumption means that the entity will remain in business for an indefinite period. It assumes the probability that the company will run bankrupt or become liquidated.

Realization of revenue– revenue should have been recognized at the point in time when the revenue was objectively and realistically determined using cost recovery, during production, end of production, sales and receipt of cash approaches. Revenue recognized at the point of sale would mean that if a client did not pay the bill, no cash inflow will be registered. Paid taxes and court outcomes that influences supplementary cost also weakens liquidity (Musiolik, 2012).

Accrual basis of accounting– recognizes expenses when incurred (matching concept) and returns when realized (recognition concept). From this assumption, numerous modifications that include invoice adjustments must be done for the accountant to determine the most appropriate amount to the present period.

The principles of Financial Reporting Model

The major objective upon which the standards of financial reporting model lean is to give a prescription of the minimum content of a financial report and to outline the principles for the recognition and measurement in a condensed and complete financial statements for a particular period. The benchmark on which this relates to is that reliable and timely financial reporting improves the capability of the creditors, investors, among other stakeholders to have an understanding on the business capacity to generate cash flows and earnings, its financial condition and liquidity.

This paper outlines the principles of financial reporting as:

Consistency

The financial report should be consistently released within the stipulated time without any failure. The consistent reporting enables comparison from period to period, for instance, year to year. Again the consistency in financial reporting allows for the comparisons carried towards the evaluation of the performance standards of the different companies.

Purpose

The purpose of the financial reporting should be outlined explicitly. That is, there should be a clearly stated objective which is relative to the purpose of the report making it meaningful to every stakeholder (Gibson, 2011).

Full disclosure of meaningful information

The financial report should give a full disclosure of every meaningful information about the organization or the aspect of the organization it was set to present. There should be no concealing of any form of information relevant to the scope of the intended report to any  party whatsoever.

Understandability

The financial report should exhibit the ability for all users to easily understand it. This would create an effective interpretation of the reports and elimination of the financial report for the most appropriate decision formulation (Wahlen et al., 2010).

Relevance

The financial report should have the ability to give assistance to the users to make, correct or confirm predictions about the present, past or the future events. Additionally, this relevance brings about the usefulness of the financial information for the present decision making.

Reliability

This principle stipulates that, the financial report information should be free from material error (completeness) and bias and thus can be depended upon by the various users to faithfully represent economic reality.

Comparability

The financial report must be able to offer a comparable basis from a number of aspect for the user. These would include making comparison of the financial reports over time, across countries, firms, and institutions (Rutherford, 2000). This enables creation of improvement action plan for the underperforming entities when gauged against organization within the same industry.

Information within an entity’s financial statements gets to be more useful if it can be compared against similar information of the entity for a past period or point in time to ensure identification of the trends in financial position and financial performance.

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Principles of Financial Accounting – Atlantis Company Scenario

Consider the following scenario:

Atlantis Company sells computer components and plans on borrowing some money to expand. After reading a lot about earnings management, Andy, the owner of Atlantis, has decided that he should try to accelerate some sales to improve his financial statement ratios. He has called his best customers and asked them to make their usual January purchases by December 31. He told them he would allow them until the end of February to pay for the purchases, just as if they had made their purchases in January.

Respond to the following questions:

• What do you think are the ethical implications of Andy’s actions? (1 to 2 paragraphs)
• Which ratios will be improved by accelerating these sales? (1 paragraph)
• Would you advise Andy to proceed with this plan? Why or why not? (1 to 2 paragraphs)

1. What do you think are the ethical implications of Andy’s actions?

The ethical implications of Andy’s actions are evaluated based on the method and purpose of sales acceleration.  From the given scenario, it is clear that Atlantis Company is not in a strong financial position to be able to borrow money for expansion. The chosen method of sales acceleration is completely unethical because it might make the firm to wind up in a worse off financial position immediately after sales acceleration. The main objective of Atlantis Company is to improve its financial statement ratios. This is unethical because it intended to deceive lenders that will go through the financial statement before offering the Company some money for expansion (Valentzas and Broni, 2010).

The method of sales acceleration that Andy wants to use is unethical because it will automatically hurt future sales, and eventually hurt the company financially. In addition, Andy’s method of accelerating sales will create a false expectation of the future financial performance of the Atlantis Company. Suppose the company manages to improve its financial statement ratios and get money for expansion, the now expanded business may flop due to financial constraints (Valentzas and Broni, 2010).

2. Which ratios will be improved by accelerating these sales?

The ratios that will be improved by accelerating the sales include; Sales to Assets Ratio, Returns on Assets Ratio, and Return On Equity Ratio (Hossan, 2010). These three ratios are always improved by increasing sales and are therefore expected to improve when Andy accelerates sales. Sales to Assets Ratio is always used to demonstrate how well a company is effectively deploying its assets to generate sales. Return on Assets Ratio is usually used to demonstrate how effectively a company utilizes and deploys its assets to generate profits. Return On Equity Ratio demonstrates how well a company utilizes and deploys equity to generate profits (Hossan, 2010). If these three financial ratios are improved, the funding company will be cheated that Atlantis Company effectively deploys its assets and equity to generate sales and profits. Atlantis Company will therefore succeed in getting funds to expand its business.

3. Would you advise Andy to proceed with this plan? Why or why not?

I would not advise Andy to proceed with this plan. In case Atlantis Company will need a substantial amount of money to expand the business, the funding committee will have to review the company’s financial statement and compare it with those of the previous years. Any large discrepancy in sales between the past and current years will put the company into trouble because the funding committee will request Atlantis to justify the change. If they realize that Atlantis is forging its books in order to get money for expanding its business, the company’s expansion plans may flop completely because it may not get the money it intends to borrow.

The method of sales acceleration that Andy intends to use is not worth the risk because if Atlantis gets the money that it wants to borrow, it may not be able to cover debt service in the long run. I would therefore advise Atlantis Company to consider other long term methods of improving its financial ratios such as; proper allocation of assets, keeping all assets constant, selling underperforming assets, and reducing all expenses to their bare minimum (Hossan, 2010).

Triple Bottom Line Accounting

The Triple Bottom Line Accounting (TBL) is an accounting framework which has been used to measure the businesses sustainability standards by getting beyond the return on investment, the shareholders’ value, the traditional assessments of profits to incorporate social and environmental dimensions. The Triple Bottom Line reporting is an important tool in supporting sustainability goals by focusing on the comprehensive investment results –for instance, with consideration to performance along the interrelated dimensions of people, profits and the planet (Henriques &Richardson, 2014).

Santos Company takes into the consideration the Triple Bottom Line Accounting framework first by giving lots of emphasis on the impact of their business activities to people. For instance, the company is committed to understanding the concerns of the local people living in the community the company undertakes its business activities. Secondly, it operates to build strong and enduring relationship with the local community.

Santos Performance

I consider the performance of Santos Company to be in an up-scale system. It strives to make its operations more efficient and effective with respect to the legal standards and both the social and environmental concerns. The performance of the company is pegged on the vibrant and skillful management team that the company has. Its leadership system is structured to meet the different departmental and sections of the company requirements in terms of both supervision and decision-making. Moreover, the company has a highly framed corporate governance statement which has provided a significant basis on which the operations of the company are driven.The independence of the different Directors of the company has created a smooth platform on which the various sections of the company make critical decisions in the most prompt manner.

The diversity policy of the company has also ensured that the Board or the People and Remuneration Committee sets measurable standards and objectives for gender diversity and for the Committee to yearly assess the stipulated objectives and the company’s progress towards delivering them.Lastly, the comprehensive assessment of the company’s performance has ensured that the company meets the standards it sets every financial year. Every metric is assessed against the agreed set percentage or target weighting of the total scorecard. The assessment is done by the Committee vis a vie the overall Company scorecard at the end of every financial year, thereby forming the grounds of recommendation to the Board.

Large Mart_Financial Accounting

Large Mart has previously attempted to develop a “study pillow” which would have allowed students to upload study material into their brain whilst sleeping. However, Large Mart has recently discovered that an American company called Bpple already holds a patent forthis type of device. As a result, Large Mart has given up on its development attempts and decided to sell the Bpple product,which is called iSLEEP. ln order to sell the iSLEEP, Large Mart has rented a second store in Armidale. Large Mart signs a two year renting contract on 1st May 201x. The rentforthe store will be \$5,000 per month and the renting contract requires Large Mart to prepay 18 month of rent through a banktransfer on the day the renting contract is signed. As soon as the renting contract for the new store is signed, Large Mart employs two UNE students (Chuck and Morgan) to manage a iSLEEP fan-site on Facebook. Chuck and Morgan are each employed for 2 hours every day ofthe week (7 days a week). Chuck and Morgan start theirjobs on 1st May 201x and will be paid \$30 per hour. Chuck and Morgan will receive their first pay on the 15th June 201 x.

The furniture in the new store is designed and manufactured in Hong Kong. An important part of the store design is a big bed on which customers can lie to test the iSLEEP before purchasing the product. The bed is delivered on 1st June 201x. On that day, Larq1e Mart also receives an invoice of \$40,000 from the Hong Kong designer/manufacturer ofthe bed. When the bed was produced in Hong Kong,t e director ofthe Large Mart sales department visited the design/manufacturing team to approve the final design ofthe bed before the start ofthe manufacturing process. The director decided to visit the design/manufacturing team because he was traveling to Beijing and his flight from Sydneyto Beijing stopped in Hong Kong. This allowed the directorto visit the design/manufacturing team without having to make a separate trip. lfthe directorwould not have travelled to Beijing, he would have approved the final design via email without a visit. The cost ofthe director’s trip to Beijing was \$10,000, and the stop in Hong Kong to visitthe design/manufacturing team created \$500 additional costs. All costs ofthe businesstrip will be paid on 3oth August 201x.

After the new store is completed, Large Mart orders 40 iSLEEPs from Bpple for a price of \$600 per iSLEEP, and these iSLEEPs arrive on 1 st June 201 x, and are paid via bank transfer 10 days later.

• On 3rd June 201x, UNE purchases 10 iSLEEPs forthe library for a price of \$2,000 per i_SLEEP on credit. UNE then paysthe iSLEEPs on 1oth June 201x, after deducting an early payment discount of5%from the invoice.
• On 5th June 201x, Large Mart purchases another60 iSLEEPs from Bpple for a special price of \$550. Normally the iSLEEP would cost \$800, but Large Mart was able to receive a volume discount of \$50 for each iSLEEP. The iSLEEPs arrive on the same day and Large Mart pays this new delivery of iSLEEPs on the next day after deducting an early payment discount of 10%.
• On 8th June 201x, Large Mart discoversthat2 ofthe iSLEEPsthat were purchased on 5th June 201x are damaged. Large Mart returns both iSLEEPsto Bpple and Bpple returns the moneythatwas spent on both iSLEEPsto the Large Mart bank account on the same ay.
• On 12th June 201 x, Large Mart sells 10 iSLEEPs to Wright College for \$1 ,800 per iSLEEP. Wright College pays via banktransfer on the same day WITHOUT deducting any early payment discounts.
• On 1 st July 201 x, Large Mart leases a company car forthe service department ofthe new store (called the “Nerd Herd”). The duration ofthe lease is5 years, and the car has an expected useful life of8 years. The lease contract requires Large Mart to pg?! \$2,000 at the time the lease is signed. This payment is made via a bank transfer. Afurther \$8 .000 must be paid (also via bank tran er) on 3oth June of each year during the lease period. The lease contract statesthat Large Mart can cancel the lease at any time during the lease period after paying a penalty of \$100. If Large Mart does not cancel the lease, Large Martwill return the car to the lessor at the end of the lease period. The interest rate in the lease is 12%. Large Mart decided to enter into the lease agreement instead of purchasing the car because the purchase price would have been \$47,000 and Large Mart did not have sufficient cash resourcesto make such a purchase atthat time.

1.  Provide all journal entriesthat are necessary in the books of Large Martto account for the renting contract,the prepayment of rent on 1st May 201 x,the rent expense for the month of May 201x (as well as any changesto the amount of prepaid rent) AND explain your journal entries (2.5 marks).
2. Provide all journal entriesthat are necessary in the books of Large Mart to account forthe wagesthat Chuck and Morgan have accrued between 1 st May 201x and 15 June 201x, as well asthe payment of wages to Chuck and Morgan on 15 June 201xAND explain yourjournal entries
3. Explain whether or not the expenditures associated with the director’s visit to the design/manufacturing team in Hong Kong are part ofthe cost ofthe bed (0.5 marks) and provide all journal entriesthat are necessary in the books of Large Mart to accokL)int forthe purchase and delivery ofthe bed, assuming that all costs associated with the bed will be paid at a later date (1.0 mar
4. Provide all journal entriesthat are necessary in the books of Large Mart to account for all inventory purchase and sales transactions (including the payment and receidat of funds) ofthe new store, assuming that Large Mart uses a perpetual inventory system and the weighted average costflow assumption (4. marks).
5. Calculate the total Cost of Goods Sold (COGS) forthe financial year ended 30 June 201x (1.0 mark),the value of all iSLEEPs that remain in the inventory account atthe end ofthe year (the 30 June 201x) (1.0 mark), and the total amount of revenue that Large Mark collected through the sale ofthe iSLEEP during the year ended 30 June 201x (0.5 marks) AND outline all necessary calculations.
6. Determine whetherthe lease ofthe company car is an operating lease or finance lease and provide a detailed explanation for your decision (2.5 marks).

Accounting Information System – Failure And Implementation Research Paper

Migrating to a new accounting information system is not an easy task. Many firms have struggled with this process, even though our textbook makes the process seem quite straightforward. Recently, IBM recapped some of the lessons learned in migrating to a new accounting information system within the federal government. These lessons can be applied to any accounting information system project. Others have developed their own recommendations for best practices and lessons learned involving implementing accounting information systems. However, in order to appreciate what IBM and others are proposing, we need to apply lessons learned to a real-life situation involving the failure to implement an accounting system properly.

For this assignment, research the Internet or Strayer databases for information related to a real-life accounting information system failure and best practices, as well as lessons learned from implementing the accounting system.

Write a ten to twelve (10-12) page paper in which you:

1. Identify three to five (3-5) factors that contributed to the accounting information system failure within the business that you have identified. Indicate the impact to the business. Provide support for your rationale.
2. Assess senior management responsibility for the failure in question. Specify what the senior management could have done differently to avoid the failure. Provide support for your rationale.
3. Evaluate whether the most significant failure occurred within the system design, implementation, or operational phase of the process. Indicate what the company could have done to avoid the failed outcome. Provide support for your rationale.
4. Evaluate how implementing best practices would have reduced the chances for failure. Provide support for your rationale.
5. Based on your research, develop a list of between four (4) and six (6) best practices that organizations should use today to reduce the chances for failure. Provide support for your rationale.
6. Using the information provided by IBM and others, indicate which of the principles designed to provide insight into effective and efficient strategies on how to best deploy financial management systems, which were outlined within the related article, should serve as an example of what not to do when establishing the foundation for a firm to follow. Your proposed foundation should consist of at least two (2) principles, but no more than six (6). Provide support for your rationale.
7. Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.