Operations Management

1. Dollar index is used in measuring U.S dollar and comparing it with other currencies from trading partners. In this case, General Electric should use dollar index in measuring its operations. It is important to focus on exchange rate indexes in order to understand the dollar appreciation and depreciation (Jabara, 1). The dollar index will help to track how the dollar moves in foreign currencies and estimate the level of financial markets. Thus, it is important to note that this is the only way of understanding the Europe as the trading partner and implement the necessary changes on exchange rates. GE should calculate the dollar index on annual trade data in order to determine whether the indexes will bring developments in international market.  It is also advisable that the GE should use geometrical indexes relative to bilateral exchange rates (Jabara, 3).  Geometric index are important in that the company will analyze the level in which the index will be affected by appreciation and depreciation. For example, a high inflation domestically may result to an index which will increase the currency. In addition, where there is a difference between foreign and domestic inflation, GE may use nominal exchange rate to evaluate the real index of exchange rates. Other important point is that using dollar index in measuring operations; GE should use various methods which will help in measuring the currency and selecting other currencies which will be used in the index (Jabara, 3). Note that the main reason of measuring the dollar index is to view the level of competitiveness in international trade, and so   the indexes of exchange rates measured should relate with international trade economies.  In this case, it is important to use dollar index given that GE want to trade internationally with Europe and in this case, GE will compete with Europe business with import and export goods (Jabara, 8).  Note that the importance of using dollar index is that the exchange rate will have an impact on foreign goods and the weight of domestic and foreign currency will play a significant role in trade competition.

DXY relate to the Euro in that it has marked a higher economic growth in U.S. Since the creation of monetary affairs, dollar and euro have competed for a long time  and the important thing to note in exchange rates is that  there are possible changes with the both currencies given that euro  has failed in economic areas (Balk, 18). Other relation is that Euro and dollar creates the currency market   and both supports each other in gaining geopolitical power. The currency in domestic and foreign markets contributes to comparative advantage such as reducing exchange rate uncertainty   and using international monetary in creating payment deficits. Europe monetary union play a significant role in international finance and it circulates in the international markets to gain monetary convergence (Balk, 28). Euro and dollar works in international markets and Europe concentrates much on understanding how U.S dollar will affect Euro in international portfolio. In undersigning the reason as to why GE should use dollar index in measuring its operations, it is important to note that dollar is strong and it creates paths for Euro (Balk, 32). There is unstable dollar exchange rate which it is predicted that it will result in interest-rate differentials in Europe. In order to clearly solve the GE case, it is important to understand that dollar is related with euro in that dollar is a currency which is used in international transaction. It also has a higher share in both local and world trade than other currencies in the world (Balk, 48). In international exchange, Europe uses U.S dollar in exporting its goods and it fixing its prices. Thus, the important point in using dollar index is to assess the transaction cost and adequacy. This is because, if the currency is bought and sold in a lower price, and if it is accepted, then it means that the currency will meet its convertibility and stability (Balk, 48).  

Genc & Artar (1) asserts that despite the fact the euro and dollar are involved in international trade, there is a puzzling relationship between the two countries.  Note that euro was introduced with strong hopes one of them was the aim of gaining a higher competition with U.S dollar and take the monetary functions in the world (Genc & Artar, 29).  In GE’s case, it is important to note that euro has a high exchange rate and it destabilizes the competitiveness of the price.  GE should note that if there is a weak value with the euro, the operating cost in U.S firm will decrease the dollar revenue and both exporters and importers will be negatively affected by the transaction risk (Genc & Artar, 32). Other important point is that in measuring operations in international trade, GE may focus on long terms or short term financing as a strategic way of creating an international bond. In exchange rate, a company may also consider the government financing   so that it can be in a position to comply with international policies in the foreign country.  Note that the European market was initially created by Eurodollar and this indicates that U.S dollar can have a higher earning and increase the bond market (Genc & Artar, 37).

In assessing international market, GE should also use the trade statistics tool in order to understand the European markets and be in a position to implement development strategies.  In order to use the available resources in international market, it is advisable that GE should look for statistical information (Apte, 102). When using this tool, trade map will help to access the market information and the important factors required in developing and sustaining export trade.  Through trade map, GE will access information based on export performance, level of competition as well as the international demand.  In foreign market, the important thing to consider is the international demand for foreign currency exchange. In this case, GE should use trade statistics to assess the exchange rate as well as currency and demand (Apte, 108).  In international market, it is important to understand the factors which affects supply and demand and then causes for currency change.  For GE to create a currency value in Europe, it should consider the free markets and understand that the demand for currency in that particular market will be determined by the level of export. Other point is that the exchange rate occurs when   there is a difference between demand and supply of currency in two different markets (Apte, 105). For GE to understand how all these cases will occur, trade statistics and with the help of trade maps will assess the market in term of foreign demand as well as the alternative markets.

1. 1.Since the Euro is weak, it means that European market will be able to import products but it will not export products-which mean that European market will get an opportunity to get raw materials. It is important to understand that in international macroeconomics, higher exchange rates cause’s higher imports to get lower exports in turn and both export and import affects their marginal costs (Jabara, 13). What happens is that with the depreciation of euro, the export will increase and the import will decrease. Depreciation will increase the euro cost in export volume and decrease the import costs of goods and services as a result of cost of purchase in foreign country.  Or else, one can understand the effect of euro depreciation by viewing that when a country is having a higher demand of goods from foreign country, supply and demand will change with the change of prices of the product (Jabara, 13). The change will cause a change in foreign currency and this may affect the value of currency. Thus, the depreciation of euro means that Europe market will export more products and get less import (Jabara, 24).

2. In euro currency, GE‘s sales will be fewer following the fall in euro. This is because; the low currency has a lower growth which will have a long term effect on the GE growth. The weak demand of goods and services will affect its productivity as a result of weak nature of monetary fund. GE should understand that weak euro will not affect export but it wills also increase the cost of U.S products (Genc & Artar, 52). In other words, it means that the currency fluctuation will have a negative effect on GE real exchange rates and more important, it will affect the net exports through switching the foreign and domestic products. In addition, GE will decrease its export to Europe given that it will be more expensive to export products. This clearly shows that GE will have less revenue and will suffer from low profitability. However, this issue can be solved by adding value to the euro currency. Value will eliminate the adverse effect on GE sales and create a balance between exports and imports (Genc & Artar, 55). First, value can be added through reducing inflation. Low inflation will results in high demand and high currency value.  In other words, low inflation will increase the purchasing power and   interest rates.  Second, the solution to the problem is that since GE has a higher currency, it should increase the interest rates so that it can have a higher foreign capital and increase the exchange rate. Third, there should be terms of trade between GE and Europe. This means that there should be balance of payment between exports and imports and this will increase the GE revenue as a result of higher exports (Genc & Artar, 81).

3. GE should issue euro denominated bonds so that it can reduce the risks of exchange rate and enjoy low rates of interests on Eurobonds (Geis, Mehl & Wredenborg, 1). The latter will allow GE to improve the investor base through providing liquidity to the European market. Euro denominated bond will impact the cost of interest rate and in this case, GE will get a low interest rates as a result of portfolio diversity. Other point is that euro bonds will impact supply and demand in that potential investors will be interesting in borrowing the currency thereby creating visibility and strategic incentive. On supply chain, GE will meet the financial needs in both local and foreign markets and this will create a big investor base (Geis, Mehl & Wredenborg, 6). Generally, Eurobond will play a great role in GE business operations and particularly in securing debt. This is best strategy in that Eurobond is a marketable currency and the GE will not fear the devaluation of its currency or inflation.  I believe that in this case, there is no other better currency than Eurobond in issuing debt (Geis, Mehl & Wredenborg, 8). This is because, the currency plays an international role in the global markets and it has debt securities in international arena.  GE will also gain advantage in financial market and help it to stay competitive in the international market.
4. Given that the price of oil had declined precipitously, GE should not develop other oil equipment and services since this is not a good business strategy. This is because, the cheap oil prices is reducing the price index which then leads to deflation. Spending and investment are also affected particularly to customers with higher income (Husain, 8). In Euro zone markets; there will be a higher level of debt since the markets will be unable to eliminate GDP debt ratios. Therefore, I recommend that rather than expanding oil fields, GE should develop energy business internationally as it has already decided in order to increase productivity, profit and maintain its competitive edge in the global market (Husain, 9)

GE purchased Alstom’s energy businesses for various reasons. First, the purpose was to expand power generators and increase the company’s stock (Passeri, 1). It also wanted to develop industrial segments which would increase the total revenue. The energy grid businesses were developed and the CEO predicted that they would raise $6 billion revenue in annual basis. The main objective was to increase the competitive edge and become the leading provider of infrastructure products in the globe. For future growth, GE should expand on strategic business which means that it should focus on long term growth, create additional growth and reach the untapped market (Passeri, 1).

Work cited

Jabara L. Cathy. HOW DO EXCHANGE RATES AFFECT IMPORT PRICES? RECENT ECONOMIC

LITERATURE AND DATA ANALYSIS. May 2009.Office of Industries U.S International Trade

Commission 500 E Street SW Washngton, DC 20436

Apte, D P. Statistical Tools for Managers: Using Ms Excel. New Delhi, India: Excel Books, 2009. Print.

 Husain M.,Arezki R,.Breuer P,.Haksar V,. Helbling T,. Medas M S., & an IMF Staff Team.

Global Implications of Lower Oil Prices. 2005

Genc Guneren Elif & Artar Kibritci Oksan. THE EFFECT OF EXCHANGE RATES ON

EXPORTS AND IMPPORTS OF EMERGING COUNTRIES. European Scientfic Journal

May 2014 edition vol.10, No.13 ISSN:1857-7881 (print) ISSN 1857-7431

 Passeri James. Why GE's $10 Billion Alstom Purchase Is its Best Deal in a Century. The  Street

2015.

 Geis  Andre, Mehl Arnaud & Wredenborg Stefan. THE INTERNATIONAL ROLE OF THE EURO

EVIDENCE FROM BONDS ISSUED BY NON-EURO AREA RESIDENTS. © European Central

Bank,  2004

Balk, B M. Price and Quantity Index Numbers: Models for Measuring Aggregate Change and

Difference. Cambridge: Cambridge University Press, 2012. Print.

Earnings per share

 This paper aims at providing an analysis of the disclosures in financial statements required for Earning per share while providing information on financial reports.  It offers the various principles applied while presenting earning per share on the basis of provided reporting standards. Earnings per share refers to the part of a firm’s profit that is normally allocated every share of the common stock which and is usually an indicator of the firm’s profitability (Epstein, Bragg & Nach, 2009).

My research mostly utilized an online approach which involved trying to cobble links together on this topic. Such links guided me through the research so that I was able to draw upon unlimited authoritative sites with unlimited resources. This methodology allowed for singling out the specific sources with relevant information.

A reporting entity is required by the ASC 260-10-50-1to disclose various information on EPS for every period that a presentation of income statement is made. A numerators’ and denominators’ reconciliation for the income that has been obtained from operations that are continuing. The share amount impacts of all the securities that normally affect EPS and the individual income should be included in this reconciliation.  There should also be a description given by the reporting entity of the subsequent occurrences that take place after the closure of the most previous balance sheet, but before the financial records are issued (Walhen, Jones & Pagach,2012). Such events should have a material alteration on the quantity of common shares outstanding or the outstanding quantity of potential common shares .Such occurrences include the acquisition or issuance of common shares   , a split of stock or related stock dividend or a contingency decision under an agreement of a contingent stock. The FASB statement no. 128 mandates all companies that are publically owned to disclose the basic EPS if their capital structures are simple and have no potential common shares relating to stock options, convertible securities or warrants (Epstein et. al 2009). A firm that has potential common shares possesses a capital structure that is complex and should disclose both the diluted EPS and its basic EPS. A firm that has a capital structure which is simple but has no potential common shares should ensure Earning Per Share for the net income and its continuing operations are reported on the income statement’s face (Epstein et. al 2009). The disclosure for EPS related to the halted operations and items that are extra-ordinary should be done in financial statements notes or income statement.  

The accounting standards on reporting exclude the disclosure of individual transactions of an entity which fail to match the definition of an item considered extraordinary as displayed in the income statement. This means that the presentation of earning per share effect of restructurings, asset impairment, charges done on the basis of ASC 420, obligations of cost disposal or exit should not be presented on a firm’s income statement. The reporting company’s may choose to use footnotes for the disclosure of earning per share effects (Epstein et. al 2009).  ASC 230-10-45-3 does not allow the disclosure of cash flow for each share. In the same manner, SEC FRP 202.04 points out that the reporting entity should avoid per share information other than that which connects to net assets, net income and dividend on financial statements (Epstein et. al 2009). If such an entity has to report on certain amounts of per-share which ASC 260 does not require, it should follow the provided guidelines when computing those amounts and should disclose it in the notes but not on financial statement’s face. They should also be labeled as net-of –tax or pretax.  

References

Epstein, B. J., Bragg, S. M., & Nach, R. (2009). Wiley Gaap 2010: Interpretation and application of generally accepted accounting principles. [Includes new codification]. Hoboken, NJ: Wiley. 1101

Literature review

The fiscal conditions of the states have shown an improvement after the end of the Great Recession, but these recoveries are varied and incomplete.  Over 20 states continue collecting less revenue in form of tax than during the time of recession after inflation is has been considered and many of these states not yet built their financial cushions similar to the levels before the recession (Wall, 2016). The ratio of own source revenue of the state government that includes fess, charges and revenues shows that many of the states have recovered   , with this ratio exceeding one (Gordon ,2012).  Various factors can be considered to have influenced the recovery or failure to recover. The most factual reason why some states have not recovered is that the economies of these states have not fully recovered. The composition and policy of taxation for these states influences the growth of revenue since the taxes vary in terms of elasticity of the income, both individual and corporate. Those states that have been relying on the sales taxes to a great extent have had smaller recoveries on their revenues , while a share of tax on personal income on the aforementioned ratio seems to have  little correlation with recovery of revenue(Wall, 2016).  

It is a fact that tax policy can have a great on economic choices even though strategies such as tax rates cut can ultimately lead to economic growth thus more revenue in the long run (Carbaugh, 2015).   Policy makers in various states such as Maine, North Carolina and Alabama have been promoting big cuts in taxes for personal income so as to drive increased economic growth. Various academic studies have not supported the hypothesis that such cuts can attain positive effects can lead to a higher economic growth (Wall, 2016).  In fact, states have employed the cuts in income tax to attain income growth have not realized such growths.  Many of these studies that assessed the broad economic impact of personal income taxes at state levels did not find any noteworthy effects. However, tax policies that are designed well can bring about increased economic growth among the various states which in turn can lead to more revenues. The cuts on personal income tax cannot be said to have led to the growth or lack of growth for the state revenues since they are usually a zero sum game (Johnson et. al 2010). What this means is that, where states had to apply such cuts, they had to pay for them through a reduction of state services, increasing other taxes or combining both strategies. States that have experienced slow growth in revenue can attribute it to slow economy which eventually means that economic benefits are offset.  Taxes on both state and local authorities normally pay for services required by both the businesses and households (Johnson, Catherine & Singham, 2010). Such taxes are usually more in some areas as compared to others since public services that are of high quality are being financed and may have no impact on where businesses are going to be located. This implies that there was little impact of policy changes on personal income tax on the amount revenue collected by the state governments. Any increase in revenue that may have arisen from such policy changes appears to have been offset by the payments made through reduction of services provided by the businesses or various households (Johnson et. al 2010).

The effects of corporate tax changes on the economy of a state are hard to measure, given that the changes in tax policy may not be random and are themselves under the influence of the existing economic conditions. The states were able to raise higher sales tax revenue due to the changes in corporate taxes they introduced in the 2008-2009 period. Some of the states – around seventeen- increased their tax rates on sales to the extent that revenues increase by $8.2 billion. Some states resulted to reduction on their sales taxes which were mostly done inform of minor cuts which totaled less than $ 250 million each year.  Some of the states that had much increases were Indiana, Massachusetts and California. The tax increases were majorly temporary in some states but permanent in Massachusetts and Indiana (Wall, 2016).  This shows that some states were able to experience a recovery or increase in revenue fund informed by such changes.  The changes included an extension of tax bases on sales, may be by including the tax of products that had previously been subjected to excise tax only such as tobacco in Colorado, alcoholic drinks in Kentucky. Other states also included tax on internet digital downloads like movies (Wall, 2016).  Most such sales tax increments were aimed at various goods or services for manufacturing with the Louisiana enacting employing the largest such reductions.  A major concern   about the increases in sales tax is that they can be regressive. This is because families with low or moderate incomes pay a bigger share of their income as taxes than families with high incomes.  Many of the states that raised sales and business taxes have had to contend with large budget shortfalls given that such increases were just for a short while(Wall, 2016). The difference in revenue recovery over various states can be attributed to the various tax policy changes introduced by the states.  

Political factors relate closely with policy matters since actions that are adopted by a given state for the purpose of revenue recovery might have differed. The basis of such differences include political course taken by the state government and specifically the ruling political party. The problem is whether the direction taken by such governments in terms of policy can have impact on the recovery of revenue for the state or that of the local governments (Carbaugh, 2015). The tax policy of the state may be deemed relevant and a higher recovery on revenue may be experienced if the adopted changes on tax are discretionary. However, there is no significant evidence to show that a discretionary increase in tax had a tangible effect on the recovery ratio of the related states. An introduction of tax limitation, as stated above had insignificant impact on the recovery of revenue fund.  The demographic factors may also influence the amount of revenue fund or the revenue recovery of a given state (Chen, Weikart & Williams, 2014). These factors consist of demographic characteristics of a state’s population such as age, education and white. Age can relate to the percentage of people considered under the age of adulthood, education relates to the level attained, while trace relates to the distribution of opportunities among different colors. An analysis done previously to show the relationship between demographic factors indicates that there was a very insignificant correlation between the revenue recovery reports after the great depression and these factors (Wall, 2016).  However, unavailability of sufficient revenues can be affected by the general demographic patterns (Carbaugh, 2015). An increase in a number of individuals in the old age bracket can add a lot of pressure on services provided by the states’ governments like Medicaid and extended services and support while in the meantime, revenue collected is decreasing (Gordon, 2012). This is because such individuals in old age bracket will no longer be working.  

Economic growth is another factor whose impact can be felt on the amount of revenue collected, revenue recovery rate or the anticipated revenue fund collection. A small increase in the growth of state economy can lead to a noticeable increase in the revenue realized by the state or revenue recovery (Carbaugh, 2015).  The revenues of a state government are to a great extent at the mercy of the generally trends of the economy which can be beyond the immediate influence of these governments. This, however, does not imply that various discretionary changes on policy taken by the governments do not have an impact on the budgets. Changes on education reforms, strategies for economic reforms, limitations on tax and expenditure   and so forth can have   an effect on the revenue especially if such changes alter the states’ economic structure. Certain policy initiatives such as contingency funds can also have effects given that they are put in place to ensure mitigation of negative effects of fiscal imbalances (Gordon, 2012). It suffices to say that tax revenue has slowly but unevenly recovered after a reduction in all states during the 2007-2009 Great Recession influenced by the factors highlighted above.

References

There's no Future Here!

The company’s career developing plant seems to be oriented towards its own needs while ignoring the employees’ career aspirations. There is a loose end in the development plan as indicated by the failure to communicate to the employees on the available vacancies, and they only get note of such from the company paper. There also lacks a proper recruitment method which will provide equal chances for all the employees to be fairly evaluated and the best allocated the position. The development plan does not consider aligning organizational goals with the employees need fir career advancement. This can be explained by the feeling by Bob Wilson that the company does not hold the capacity to offer personal career growth. In addition, the fact that Terry, the plant supervisor is leaving vindicates Bobs feeling of stagnation in career development. A good plan is one that retains best performing employees by matching them with open positions within the organization (Connell& Philips, 2003).

Bob’s resignation would have been prevented if the company communication mechanism in place. He would have been aware of the upcoming promotion opportunity and this would have prevented the feeling of being trapped in a place with no prospects for growth. Communication is necessary since it keeps employees engaged and informed of what they are likely to obtain from being loyal to an organization. The feeling of being excluded from available growth opportunities in other plants informed the resignation decision made by Bob. Promoting employees from within provides employees with clear advancement path. Where employees fail to see a clear future in an organization, they become frustrated and consider leaving for better opportunities (Connell& Philips, 2003).

Reference

Connell, A., Philips, J. (2003).Managing Employee Retention: A Strategic Accountability Approach. Routledge.177-178.

Reflective Analysis and Development Plan

Industry outlook

My development plan is founded on where I am now, where I want to be and how I am going o get there. It is a reflection of my short-term and long-term goal, ambitions and consideration. Accounting is an important and integral part of public, private and the non-profit making organizations. It is a field that provides a wide range of careers and skills that focuses analyzing financial position of organizations while predicting and laying down strategies for growth (Crosson & Needles, 2008).  The accounting work involves the preparation of financial reports and analysis of financial information in order to assess whether they are accurate, complete and comply with the procedural and reporting standards (Bendrey, Hussey & West, 2004). The accounting skills also involve the development, implementation, modification and documenting the various accounting and recordkeeping systems while utilizing the modern computer technology. It is also the function of accountant to report to the management about the financial position of the organization in which they are working (Occupational Information Network, n.d).

Accounting field requires a wide knowledge of accounting practices and principles, the economy, the financial, markets and banking. Knowledge on reporting and analyzing financial information is also a basic requirement in accounting. One has to be knowledgeable about the clerical work and be able to adopt the computer technology which is a necessary aspect in this filed.  One must possess the active listening, mathematics, writing and critical thinking skills which are essential for appropriate questioning, problem solving, understanding documents, effective communication and identifying strength or weaknesses of various alternative solutions to problems. The field also requires one to have personal abilities which include mathematical reasoning, oral and written comprehension, deductive reasoning and number facility (Occupational Information Network, n.d).  The work environment involves working full time with overtime hours being typical at various times of the year especially during the tax season or budget year end. Majority of the employers need a candidate to possess a bachelor’s degree in accounting or any related filed while a certification within a particular accounting filed enhances job prospects (Occupational Information Network, n.d). It is therefore important for one to become Certified Public Accountant.  As per May 2015, the accountants’ annual median salary was about $67,190. There is a forecasted 11 percent growth in accountants’ employment in 2014-2024 periods which is faster than average of other occupations. The skills and services are needed across all industries and continued globalization of such businesses increase the demand for expertise in accounting.  Individuals who have earned professional recognition – CPAs – have the best employment prospects or those who masters degree (United States Department of Labor, 2016).   

SMART GOALS

Regardless of the industry, this professional development plan will be of great help to me in the achievement of accounting goals, advancing my career and attaining a high level of personal success and related satisfaction. I hope to be a professional in combining what I have learnt from the accounting theory and apply the skills to the real work environment. This will involve collaboration with various teams, finding solution to problems, cultivating and maintaining clients and developing leadership skills as the final agenda.

My major long-term goal involves becoming a director in a large organization within five years after completing my undergraduate education. The journey will involve undergoing at least four informational interviews in order to get a job that is related to the accounting filed. With my internship experience while working as an assistant Project Manager and as a clerk assistant, I aim to get an entry-level job as an accounting assistant or clerk and this will provide me with real-work experience in this filed. I will consider working for large local, international and government organizations so that I can obtain wide range of experience in accounting skills since such firms deal with large and different accounting information. In order position myself for fulltime position recruitment, I will start applying for interviews towards the final year of my final year. This will enable me to obtain a start date in the soonest time after graduation and thus take advantage of full-time vacancies in the fall. However, networking will be an important aspect of this process which will initially involve attending as many interviews or recruitments as possible. The aim is to learn more about, learn more about employers and the career opportunities they are offering, and through this, I will manage to network and be noticed. I will carry business cards so that such employers can remember who I am and may contact me from my card. Networking will also involve having real conversation with fellow students and employers and paying attention so as to showcase my interaction skills and then collect employer’s information so that I can stay in touch. For this objective to be achievable I intend to realistic by asking for information and not a job. For such an activity to beneficial, I intend to find a common ground while sharing ideas and information and ensure that I follow up the link a website or conferences that are relevant to discussion we have had.

After obtaining the entry-level job, I intend to advance on my technical skills so that to keep pace with a constantly changing industry. The plan involves taking further post-graduate courses which I can do as part-time. This will involve taking the CPA exams so that I can obtain the designation for Certified Public Accountant. I also intend to obtain an advanced degree which will assist in focusing the direction of where my accounting professional career to go. The plan will involve looking for recommendation for the various advanced degrees available. The admission strategy will involve taking part-time lessons especially during the weekends and evenings. As Chinese students I will have to consult the various agencies within the Washington D.C are who will assist in the identification of the various programs available for advanced degrees, the application process and the different recommended Universities offering the programs.  The learning programs are intended to take a maximum of three and a half years after which I intend to concentrate fully on my work. This will help to keep focus on my long-term goal.

After completion of additional education, the plan will involve developing of my leadership kills in finance and development. This will involve working in team work and try to align team members, the accounting processes and resources that drive the results of the organization.  The aim is to be an effective leader who will stand out which is achievable after considering why some leaders fail and how to avoid any potential pitfall that can lead to the failure. Familiarizing with the crucial purpose of team development can help in the development of an effective and high performance teams in any organization. Finance leadership skills involve ensuring that my fellow professionals are responding to the constantly changing organizational expectations, the financial markets and the clients who are part f the society being offered the services. Being continually engaged in communication with fellow accountants and stakeholders will be a major boost in imparting leadership skills since such a process involves providing solutions to the various financial accounting problems facing the organizations. Therefore, engaging with colleagues from all level of management will assist in learning the various leadership methods and styles applicable especially in financial matters.

The final part of the development plan will involve a monitoring or evaluation process. After identifying the goals and outlining the requirements for getting there, it is very important that I hold myself accountable. Tracking the progress will involve actual implementing the plan so that each day, a step is taken towards the end.  My resume will be an important tool of reflecting what I have accomplished. My objective should align to the requirement of the higher positions that I want, and the philosophy of the organization.  I intend to have scheduled conversations with my seniors about my goals and their views on my progress. To re-ignite progress, I will assess my progress by asking feedback from colleagues and supervisor especially on my performance. Through this, I will found what other think about my strengths and weaknesses and their suggestions on steps that could increase my value. Readjustment in terms of time and resources will be necessary to correct a situation where stray from the course of personal development.  

References

United States Department of Labor,(2016). Bureau of Labor Statistics: Occupational Outlook Handbook, 2016-17 Edition, Accountants and Auditors. Available at: http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm

Occupational Information Network (n.d).O-NET Online,Summary Report for:13-2011.01 – Accountants. Available at: http://www.onetonline.org/link/summary/13-2011.01

Crosson, S. V., & Needles, B. E. (2008). Managerial accounting. Boston, MA: Houghton Mifflin Co. 2-6

Bendrey, M., Hussey, R., & West, C. (2004). Essentials of financial accounting in business. London: Thomson Learning. 284

Conch Republic Electronics

Question 1

Payback period can be delineated as the time required to recover the amount of capital invested on a product (Ross, Westerfield & Jordan, 2008).  Precisely, the payback period of a project determines the effectiveness of the project by estimating its lasting period. It is factual that long payback periods tend to be undesirable for investment on projects (Ross, Westerfield & Jordan, 2008). Unlike other techniques of budgeting, payback period tends to overlook the time value of capital. Citing from the fact that corporate finance is dominated by capital budgeting, it is factual that corporate financial analyst should have skills to value the project to be invested in. this means that it is the obligation of the analyst to figure out the most cost-effective project for the organization to invest in.

Therefore, payback period is calculated by dividing initial invest by annual payback. In this case, Conch Republic Electronics’ payback period for the project is as follows;

Operation cost for the project = 4.7 million

Fixed cost of PDA = 1.8 million

Payback period = 4,700,000/1,800,000

                        = 2.6 Years      

Question 2

Profitability index refers to the ratio of costs and benefits of the investment in the proposed project (Ross, Westerfield & Jordan, 2008). Also known as value investment ration, profitability index helps the analyst quantify the amount generated by the invested project. It is factual that as the ratio in the profitability index increases, it indicates the attractiveness of the project with regard to the amount obtained from the investment. Thus, profitability index is calculated by dividing present value of future cash flows with initial investment. The profitability index of Conch Republic Electronics’ project is as follows;

PV of future cash flows = 4.7 million

Net present value = 4.7 – 4.1 = 0.6 million

Profitability index = 1 + (net present value/initial investment)

                           = 1 + (0.6/4.7)

   = 1.13

Question 3    

Internal rate of return is the discounted rate that quantifies the returns per dollar invested in the project (Ross, Westerfield & Jordan, 2008). Precisely, IRR determines the interest rate required to lower NPV to zero. This means that the required interest rate should balance the cash outflow with the cash inflow over a specific time.   

IRR of the project = (PV inflow/1 + IRR) in five years – NPV

0 = -$32,500,000 + (4,371,738/1+IRR) + (13,481,238/1+IRR^2) + (16,601,488/1+IRR^3) + (17,439,238/1+IRR^4) + (12,480 ,038/1+IRR^5) = 0.291

% IRR = 29.1

Question 4

NPV of the project = PV inflow in five years - PV outflow 

      = (4.7 x 5) – 4.1

     = 19.4 million

Reference

Top of Form

Ross, S. A., Westerfield, R., & Jordan, B. D. (2008). Fundamentals of corporate finance. New Delhi: McGraw-Hill Publishing Company Ltd.

Bottom of Form

Accounting

            Before preparing financial statements, adjusting entries are usually made to ensure that the financial records of the company put into consideration the matching principle of accounting. This principle of accounting states that expenses are to be recorded in the same reporting period as the related revenues are reported no matter when cash is earned. Tamira would take into consideration this principle of accounting so as to prepare appropriate financial statements. Prior to applying matching principle, expenses must have been charged in the accounting period irrespective of revenues earned in that particular period (Riahi-Belkaoui, 2005). This resulted into non recognition of expenses incurred. Application of this principle of accounting results into deferment of prepaid expenses such that they match them with the future earned revenue. Similarly, accrued expenses are to be charged such that they match them with the revenues of the current period. Matching principle of accounting is important in this case so as to ensure consistency in the company’s financial statements (Riahi-Belkaoui, 2005). Therefore recognition of expenses at a wrong time with wrong values leads to a great distortion of the financial statements and in turn putting at risk the quality of the statements and providing an unjust representation of the financial position of the company.

            Therefore, if I were Tamira, I would not use the low estimates of the expenses as she used, keeping in mind the principle of reliability. This principle ensures the accounting information must be reliable, meaning it should not have any false information either over estimations or under estimations (Riahi-Belkaoui, 2005). Therefore, it means that Tamira has not been hones in the her accounting process, hence the accounting principles have not been applied fully.

References

Riahi-Belkaoui, A. (2005). Accounting theory. London: Thomson.

Internal audit questionnaire

1. Is internal audit function necessary?
2. How is the relationship between management and internal control function?
3. Describe the expectations of management on the independent audit
4. Does the management engage in continuous dialogue with internal auditors?
5. What role does internal audit play in ensuring effectiveness of governance process?
6. Please describe how your unit interacts with other units in the organization
7. What are the major risks that your organization is exposed to?
8. Please explain the ways in which internal audit help in risk management
9. How much is audit committee recognized in your organization?
10. How does audit committee ensure the processes of internal control address risk management?
11. Please explain how the audit committee participates in the training and development of internal auditors.
12. How is the information technology integrated in the internal audit function?
13. Please explain how the internal audit activities align to the organization goals and vision?
14. How much assurance is given by the audit committee on the independence of internal audit function?
15. Please explain how the audit committee addresses the organization’s expectation
16. How do management and audit committee address the recommendations of internal audit?
17. How does the management evaluate the effectiveness of internal audit?
18. Please explain how other departments depend on internal audit control
19. Are you satisfied with the performance of internal audit function?
20. Please give a summary description of the values your organization receives from internal audit.

The auditor will make a difference

Audit Committee strategies to activate the Internal Audit Activity

Abstract

This paper aims proposing a research on how the internal audit can impact on the performance of an organization. It discusses the strategies that Internal Audit Committee can adopt to ensure that the internal auditors perform their roles in internal controls, risk management and governance.  The research will involve both qualitative and quantitative research methodologies. The research design will involve both primary and secondary data sources, with a stratified sampling technique. The research instrument to be used in the research is questionnaires.

Introduction

Major financial scandals that have occurred in organizations, both private and public can be attributed to failure on the part of internal audit to carry its roles adequately to ensure that there are minimal cases of fraud and thus mitigate such risks. The internal audit should be an independent activity that is objectively and confirmatory determined to improve the operations of the organization and add value it.  The internal auditors should help the organization achieve their objectives by way of a disciplined and systematic method that evaluates and enhances the risk management effectiveness, internal control processes and general governance. However, the auditors’ functions are performed best under the supervision of internal audit committee whose major role involves overseeing the function of internal audit in the organization. The role of the internal committee involves the ensuring that the internal audit activities are carried out strategically to attain objectivity and a common direction towards achieve the set goals. The committee should have a road map that lays out the various strategies to be applied in ensuring that the internal auditors do not neglect their responsibilities which can have great ramifications on the shareholders and stakeholders’ confidence and trust issues.  The strategies to be adopted by the internal audit committee should cover the role of internal audit governance processes and risk management, responsiveness to change and flexibility so as to deal with possible risks and use of technology to facilitate monitoring and audit activities. The strategies should also focus on the overall strategic plan and vision of the audit department which encompasses the value the firm receives from the department, strong communications and relationship between the committee and the internal audit department. The audit committee also needs to have in place strategies that ensure that there is enough training and talent development for the internal auditors so that the audit activities conform to the shareholders’ and regulatory expectations.  Thus the issue at hand is which strategies the audit committee should adopt to ensure that internal audit in the organization makes a noticeable difference in the achievement of the laid out goals and objectives.  The role of such strategies in promoting adequate internal audit activities is a vital aspect that should take much consideration in the management plans and objectives.

Literature review

Having an effective committee audit committee is very beneficial to management and the organization at large since it improves on the contact between the external auditors, management and internal auditors (Moeller, 2013). The committee plays an important role of imposing risk management and control, strengthening the credibility and objectivity of financial reporting and thus reducing errors and fraudulence and thus enhancing the overall process of governance.  Corporate governance is a main foundation of the organization that comprises of the executive management, board of directors, internal and external auditors. The audit department works with the other three parties in achieving the objectives of the organization while ensuring that good principles on governance are exercised (Leblanc, 2007). There has been an increasing need for the internal auditors to focus on the governance processes and risk management as part of assessment and auditing activities. There is also an increased need for the audit committee to tailor their efforts so that they can embrace the management of risks and participation in the process of corporate governance. This can be attributed to the heightened necessity for oversight in these areas on the part of both the supervisory and regulatory bodies in the private and public sectors. Due to the importance of these areas, the audit committee can assess the current and expected scope of internal audit activities in the coverage of governance and risk management. This is a strategy that augurs well with firms that are in their initial stages of implementing risk management. The role to be played by the internal audit is to act as the catalyst to assist in the development of the various processes that can be applied in management of the said risks. The knowledge the auditors have concerning the organization can be of great assistance since they are capable of assessing the best internal control measures that can act as good techniques for mitigating and managing any possible risks. The audit committee can prevail upon the internal audit to act as the assurance capacity through the provision of audit coverage for any risk practices that may have been adopted (Moeller, 2013). The internal audit can thus offer assurance and advice over the governance’s processes that are aimed at ensuring that the risks that the firm is exposed to are brought under control. The internal audit under the guidance of the audit of audit committee can carry out an audit plan on risks by use of various approaches which can include an annual assessment on risks. In a world whose global markets are faced with dynamic and complex risks, the internal audit departments can update their audit plans and risk assessment strategies more frequently and timely than just doing it on a yearly basis. Therefore, the internal audit groups can roll out their audit plans that will cover periods of six months or even quarterly ones. By adopting a more timely strategy to the audit planning, firms can ensure that the plan focuses at the issues that are most critical in a certain period. The work of audit committee is to ensure that internal auditors give a rundown on the different changes to the emerging risks driving the alterations in the audit plans.  The audit committee can then review the audit plans and be satisfied that the changes will make a difference in addressing the current and projected risks (Moeller, 2013).

The internal audit committee can adopt technology as strategy of facilitating the auditing and monitoring activities in the organization. The technology tools are important in enhancing the effectiveness and efficiency of the internal auditing committees. For instances, adopting powerful tools for data mining makes it possible for the auditors to carry out audit tests on the whole data populations rather than just testing the data samples . The tools for data mining also makes it possible for the auditors to check on the fraud and risk indicators , internal controls and  the overall performance metrics. The scope of the above capabilities makes it easy for the internal auditors since the tools provide great opportunities for enhancing the audit efforts (Leblanc, 2007). The audit committee can determine the manner in which the technology is being applied by the auditors, the plans that can further leverage technology and the support that is needed for the functions of internal audit to be successful(Chorafas, 2008)l. This is possible if the audit committee is aware of the budgetary support and skills necessary for auditors to achieve these technology objectives. In addition, for the internal audit to contribute to performance of the organization, it has to focus on new strategic planning in the midst of rapid changes in current markets and commerce. The internal audit committee has to develop a strategic plan and vision that will enable the organization to keep pace with the new developments in business and technology especially in the field of auditing. The committee can evaluate the strategic orientation for the functions of internal audit through the determination of the mid-term and near future audit visions together with the long-term vision.   The committee has to determine the strategic plan of the audit that ensures that it keeps pace with processes and risks in the organization, by assessing the gaps that exist between the internal audit’s activities and processes are currently and where they are intended to be in the future. The committee also has to ensure that the strategies for the internal audit are in line with the major strategic plans of the organization.

For organizations to experience the impact of the internal audit, the internal audit committee has to make sure that the firm derives value from the activities of internal auditing. The adoption of strategies that align the audit activities to the general operations in the organization will enable the internal auditors to give value to those operations through control measures and assessments (Moeller, 2013). Ensuring that the stakeholder’s expectations are considered in any such strategies will ensure that the impact of the audit activities is felt across board. Proper definition of what adding value means enable the tailoring of internal audit processes to meet the stakeholder’s expectations. The driver in the expected value to be offered by the function of internal audit is the assurance given by the audit committee. The internal audit has to be aware of the value expected from them (Moeller, 2013). For instance, the stakeholders may desire the audit committee to provide talent of high quality to their firms, help the management through provision of data mining and monitoring capabilities that will have a general effect of  enhancing the performance of the a business unit or facilitating the management of risk and processes of governance.  The audit committee should ensure that there is clarity and agreement between itself, the internal auditors and the management in regard to what is expected of the audit activities whose values are ascribed to by the stakeholders. The internal audit has to address the expectations, value drivers and monitor how well it’s delivering on them. Such a strategy will shape the perception of the stakeholders so that they become real and substantial and enhance the possibility of the internal audit activities delivering on the value expected. Moreover, strong communications build good relationships between the internal audit committee and the internal auditors. To achieve and sustain such a relationship means that the activities of internal audit will be more transparent and open. The issue that the internal committee should address is how to enhance both the formal and informal communications. The informal communication will ensure that this relationship is not only established but maintained in for the overall good in the organization (Chorafas, 2008).  The relationship will thus ensure that issues such as succession planning are achieved without disrupting the audit activities.

For internal audit activities to provide value to the organization there should be full compliance with the regulatory authorities and supervisory bodies that sets standards (Rezaee, 2007). The role of the committee is to come up with strategies that ensure that internal audit activities are conducted as per the provisions of internal audit function charters.  The audit committee should expect that internal auditors are fully compliant with professional standards by requesting periodic confirmation which indicates that the auditors are actually complying with the standards such as IIA Standards that hold that external assessment must be carried out for every five years in the minimum. By receiving an external reviewer report the audit committee will ensure full compliance. Audit functions that match professional standards go a long way in preventing corporate scandals that cripples the performance of even the most stable organizations (Rezaee, 2007). Thus the adherence to the standards will act as control measures that offer buffer to fraudulent cases due to lack of transparency.  In addition, adequate training for internal audit will make it possible for the internal audit to achieve its mission. The internal committee has to ensure that internal auditors keep pace with current changes in the business, risks and technology through a thorough and continuous training. The adopted training program should surpass basic auditing or accounting skills in order to address critical aspects like risk management, data analysis and mining, marketing of new products and applications of new and current technology.  This should also extend to strategic decision making which will ensure that audit activities are conducted appropriately in line with the organization’s expectations. This also involves the internal audit assessing its skills and determining the existing gaps. Audit committee should consider holding a critical discussion with leadership of internal audit and address the question of the skills needed to address the control and risk management needs of the organization.

Proposed research Methodology

The research proposes a qualitative method of data collection based on the available literature and quantitative methods. This framework is expected to elaborate more on the extent of variance in performance of organizations that consider the role of internal audit in its operations.

Research design

The research paper will involve an assessment and evaluation of the role played by the internal audit committee in ensuring that internal audit has a significant impact in the performance of the organization. Therefore, the research design will involve the use of primary data in form of   research questions that will address the why and how the internal control can be make a difference in the fulfillment of stakeholder’s organizational expectation. The research questions will touch on the extent to which the internal audit covers the organization’s governance and the management of risks, flexibility and responsiveness to change, the use of technology to enhance auditing activities, role of plan and strategic vision in internal audit, the values the organization derives from the activities of internal audit and the effect of strong communication on the relationship between internal audit committee and the internal auditors. The questions will also touch on the development of internal audit skills and talent in organization. The research will also source data from secondary sources such as publications, journals and other internet sources.

Population

The collection of data will target the various management teams, internal audit departments’ staffs and heads and internal audit committees and chief directors. These participants will be sought from both the public and private sectors and will involve the large and medium sized organizations.  

Sampling and sampling technique

Due to the nature of the population described above, the research will have to adopt the use survey type of research with descriptive research questions that are aimed at eliciting adequate information from the participants. The researcher will select a sample of 200 elements from a population of about 350 which will be targeted. A stratified sampling method will be adopted in the selection of the desired elements. The population will be divided into various levels of management in the departments so as to capture the overall opinions of the participants.  This will include first dividing the population into large or small organizations and then the various departments and finally the various levels of management in the departments. The research will endeavor to involve majority of the departments since auditing activities touches on the entire operations of the various organizations whether public or private. This division will ensure there is a fair representation for every group of participants.

Data collection instruments

The collection of data will be done through a questionnaire that will involve structured questions of about 20 questions that will allow the participants to properly give a description.

Discussion and conclusion

The department of internal audit plays a major role in ensuring that internal control on accounting systems and risk management efforts are in place in any organization. The basic concern is the internal audit has the necessary capabilities for providing assurance and coverage over the organizations processes of risk mitigation and management and the various controls needed  to ensure the achievement of laid down objectives. The success of over any organization can depend on the function of internal edit in ensuring that the risks of scandals relating to fraud are managed. This issue can be specifically critical to small and medium sized organizations that lack an expansive budget to can ensure they can adopt wide range of skills required for addressing changing and unpredictable risk profiles (Leblanc, 2007). It’s there for necessary to determine how the audit committee can be entrusted by such firms with the responsibility of ensuring that any risks that may result to instability of the firms are checked. This will ensure that the contribution of internal audit to the performance of any public or private organizations is not undermined. The research will also aim at determining the strategies that can be adopted by the audit committee to ensure that internal audit add value to the firms, so that its operations are improved considerably.

In conclusion, it would be unnecessary to have an internal audit department if it does not bring about value addition in the operations of the firm. Therefore, the presence of internal auditors can have a very significant impact on the management processes that are aimed at ensuring the organizations are finically viable.

References

Rezaee, Z. (2007). Corporate governance post-Sarbanes-Oxley: Regulations, requirements, and integrated processes. Hoboken, N.J: John Wiley & Sons. 281-297

Chorafas, D. (2008). IT Auditing and Sarbanes-Oxley Compliance: Key Strategies for Business Improvement. CRC Press.73-80

Moeller, R. R. (2013). Brink's modern internal auditing: A common body of knowledge. Hoboken, N.J: Wiley.516-521

Leblanc, R. (2007).Ten ways to enhance the effectiveness of the audit committee. Ivy Business School. Retrieved from: http://iveybusinessjournal.com/publication/ten-ways-to-enhance-the-effectiveness-of-the-audit-committee/

Investment Selection

Bank of America

According to the financial statement of Bank of America the net income in 2013 was $11,431,000, the net income in 2014 was $4,833,000, and the net income in the year 2015 was $15,888,000 (Bank of America Corporation, 2016).

The stock price for Bank of America in the past five years has been ranging from 14. 31 as the lowest price to 14.55 as the highest price.

For Bank of America, to qualify for the index, securities must have a rating below investment grade. Each security must have a remaining maturity greater than one year, a minimum outstanding amount of $100 million and a coupon schedule (TOP 50 FASTEST-GROWING COMMUNITY BANKS, 2016).

An explanation of why I selected this particular investment

Bank of America is a large financial institution that serves individual customers, small market businesses, middle market and large corporations. The company has a full variety of asset management, banking, investment and other financial management products that may be important for any investor to research on (Brandeisky et al, 2015). It is cost effective and convenient to those investing in shares whether purchasing for the first time. It also offers a wide range of investment advisory, brokerage and other services that an investor may require. It has a wide range of offers to customers that an investor may need to know of thus the best investment to research on (Green, 2014). Due to the fact that the research is based on a highly marketable investment, Bank of America is one of the highly marketable investments that one can research on. In general, Bank of America has a wide range of a operations that an investor may prefer to learn (Green, 2014).

References

Bank of America Corporation. (2016). Bank of America Corporation SWOT Analysis, 1-8

TOP 50 FASTEST-GROWING COMMUNITY BANKS. (2016). Independent Banker, 66(6), 35-41.

Bank of America Corporation. (2016). Bank of America Corporation MarketLine Company Profile, 1-45

Brandeisky, K., Poppick, S., Gupta, S., & Dholakia, N. (2015). THE BEST BANKS IN AMERICA. Money, 44(10), 74-81.

Green, H. (2014). Banking on America: How TD Bank rose to the top and took on the U.S.A.

                                    KRONA’S FINANCIAL DEPARTMENT

FROM: MANAGER

TO: NEW EMPLOYEE

SUBJECT: COMPONENTS AND PROCESS OF CREATING ANNUAL REPORT

Annual reports are basically an enterprise’s formal financial statements which are usually published annually and later send to the shareholders of the business as well as other interested parties. Conversely, the main reason for doing so is because it is the report which assists in assessing not only the year’s operations of the company but also aids the stakeholders in discussing the views of the company for the upcoming year/s, place, and prospects (Friedlob & Welton, 2008). Despite that one, since both profit and non-profit organizations produces annual reports, there are various components of an annual report, what information they provide, and why they are important to understand when it comes to creating such a report. Three of them are discussed below;

1. a) Sale and marketing summary

Basically, what this will be suggesting is that, the importance of annual report for sales and marketing to senior executive or members of both the sales and marketing teams is that it will be informing them the extent in which the business performed as compared its targets or the set objectives (Mladjenovic, 2006). Consequently, this summary will be explaining all the various factors (internal and external) which might have affected its results as well as describing any actions the teams must have taken in dealing with opportunities or problems encountered. Other than providing detailed information to company’s internal decision-makers, this summary also has the ability of forming part of the annual report to investors.

1. b) Financial statements subsidiaries

Financial statements are basically the collection of data which deals with the financial results, condition, and cash flows of the company. This is to say that, such statements for instance balance sheet, check sales, profits, R&D spending, inventory and debt levels over time subsidiaries has the ability of providing various information regarding the inflow and the outflow of finances to both the creditors and potential investors. Usually, they use these statements for evaluating the financial performance of the company.

For instance, determining the capacity of the business in generating cash, sources or the use of that cash, its ability of paying back its debts, tracking the financial results on the trend line of the business so as to mark any threatening profitability issues and derive various financial ratios from these statements which indicates the general condition of the enterprise (Albrecht, 2007).

In addition to that, as a means of formulating the annual report, the managers use it in publishing financial reports, communicating with other interested external about their accomplishments in running the business. The reason for that is because to the annual report, it should be noted that different financial statements will be used in accessing the strengths and weaknesses areas of the company (Albrecht, 2007).

1. c) Financial and operating ratios (liquidity, solvency, and profitability)

In formulating annual reports, financial ratios act as indicators of the performance as well as the financial condition of the firm. On the other hand, operating ratios assists in showing the efficiency of the management of the firm through comparing its operating expense and net sales. For instance, liquidity ratios are regarded as a class of financial metrics which will be used in accessing the capacity of the firm in settling its short term debts. To the report, if the value of this ratio is higher, it means its margin safety it possesses in covering its short-term debts was higher and vice versa (Khan  & Jain, 2007).

Solvency ratio acts as an indicator of the efficiency of the cash flow of the firm in meeting its short and long term liabilities. To the annual report, the higher the solvency ratio, the lower the possibility of defaulting its debt obligations and vice versa. Similarly, profitability ratio will be measuring the capacity of the firm in generating earning as compared to sales, equity, and assets.

Reference

Friedlob, G. T., & Welton, R. E. (2008). Keys to reading an annual report. Hauppauge, NY: Barron's.

Mladjenovic, P. J. (2006). Stock investing for dummies. Hoboken, N.J: John Wiley.

Albrecht, W. S. (2007). Accounting, concepts & applications. Mason, Ohio: Thomson/South-Western.

Khan, M. Y., & Jain, P. K. (2007). Financial management. New Delhi: Tata McGraw-Hill.