Intellectual and Modern Property Essay Example | Topics and Well Written Essays - 4000 words

Intellectual and Modern Property - Essay Example The protection afforded to intellectual property has been deemed vital to protect innovation and creativity in society, because if this economic incentive is removed, then there will be an erosion of the spur that propels the ingenuity and desire to create new works. Moreover, it protects the inventor from unscrupulous individuals who are able to profit from the innovative elements in the work, while also protecting the moral rights of an author to his own creation. However, conflicts have also been generated through the evolution of the Internet which has facilitated digital copying and modification of previously created works. Moreover, the extension of the duration of protection for copyrighted and patented works has been contested as a measure that interferes with the public rights to fair use of material, especially for information and research purposes. Therefore, it has become difficult to strike an appropriate balance between the protection of the rights of the creators of original works and the rights of the public. The question that will be examined in this research study is the extent to which IPR rights are a benefit to society. The economic incentive provided by IP rights to facilitate the creation of innovative works is undisputed and it also enables the propagation of wealth that is a benefit to society as a whole. Since it allows owners of copyrighted/patented works to earn more from their work, it also allows Government to increase taxes and improves the exchequer so that Government programs can benefit weaker elements of society. It also enables an artist/creator to be protected from unscrupulous elements and thus affords some protection to the vulnerable elements in society. An author is also legally entitled to moral rights to his work, however, in practice, this has not been rigorously upheld in the UK, as demonstrated in further material that follows. The right to ownership of property is the basis for a free and secure society, and by allowing ownership on patents, for example, there is also incentive provided to business to improve their investments.  

International Business in Emerging Markets Essay Example for Free

International Business in Emerging Markets Essay The global exchange of capital, goods and services also referred to as national trade is the pre-dominant part of all economies. Advancement in time of transportation, transnational corporations, globalization and outsourcing practices have led to the growth and importance of international trade (Anderson et al, 1993). This importance accrues from the amount of revenue this trade generates. The importance of this trade is apparent in the amount of money, time, human and other resources that go into the planning of global trade affairs (Bhagwati, 1992). Entire ministries and budgets are dedicated to prepare transnational trade efforts. Memberships to regional trade bodies such as the European Union receive higher priority than political alliances while negotiation of trade treaties takes more of the leadership’s time (Dixit et al, 1980). In addition to political envoys, governments have trade consuls in other nations (Mattli, 1999). It is thus alarming for a country to realize that her international trade position is not attaining the targets that would indicate prosperity. The UK is one of such whereby her deficit in goods and services has risen from 2. 2 to 3. 5 billion pounds between august and September 2009. The deficit with European Union countries widened in the same period. while that with non European countries replicated the downward trend. It is also reported that except for Oil and erratic commodities, the volume of exports in September was 0. 2 percent lower than the previous months with imports being higher by 4. 1 percent (ONS, 2009). This indicates an alarming trend which the concerned departments need to look into. Perhaps the downturn is due to external factors that might be within reach or not. However trade policy needs to be reviewed to check this spiral. This is especially to deal with identification of new global markets that can be used to add to the export tally thereby reducing the deficit. A look at theories of trade can assist in identifying new markets and potential angles that can be exploited to correct the adverse situation. International Trade Theories There are two broad themes in theories of international trade. The qualitative theories explain a countrys trade patterns, that is which products are traded and why. Instances are absolute advantage and comparative advantage. There are also quantitative theories that explain the terms of trade for instance relative prices of exports and imports in the trading activities. Changes in data such as factor supplies, technology, trade policy and global trends also come in as quantitative themes. More importantly in these quantitative analyses, there is consistent use of the general equilibrium (Dixit et al, 1980). The Mercantilist Theory. This is a qualitative theme in international trade. It postulates that while exporting is good for a country, importing is to be avoided. This rationale is based on the assumption of fact that revenue from exports is in gold standard currency. Thus accumulation of sufficient gold reserves can only be achieved through high rates of export. Mercantilism argued for close government regulation for two reasons: to maintain a favourable balance of trade thereby advancing aggressive export with restrictive import policies; and to promote the processing of raw materials at home instead of importing manufactured goods, which would distort production and employment at home. This is a classical theory that ignores not only the benefits of importing but also the reality that no country is self sufficient thus a need to import is inherent. An example of application is the Canadian Department of Foreign Affairs where Canadian traders have been informed that the Embassys mandate is to help exporters and non-disclosure of import relevant information. Absolute Advantage. Smith’s Theory of Absolute Advantage stated that countries should concentrate on producing what they are best at; that is products that they have absolute advantage in, Incentive to trade among countries is therefore created since each specializes in one product. Also as a classical theory, it is applicability is scant. In summary Smiths theory stated that unilateral trade liberalisation would be an advantageous policy for a country to follow, irrespective of the trade policies pursued by other countries. A drawback in Smiths postulation is if a nation has no absolute advantage over any of her potential trading partners with respect to any goods or services, then it means international trade is of no relevance to her (Dixit et al, 1980). Comparative Advantage Comparative advantage as developed by David Ricardo in his book, ‘The Principles of Political Economy’, is an improvement of the Absolute advantage theory. It declares that countries can trade without absolute advantage. They need comparative advantage where the relative cost of producing and exporting a product varies between trade partners. There are still benefits even if one trading partner is absolutely better in production. Comparative advantage has been the prevailing applied concept. It indicates that if two countries engage in trade, each will have the incentive to increase production, and decrease consumption, of goods in which it has the lower relative marginal cost prior to trade than the others. For instance if Britain has competitive equilibrium prices of 300 pounds per TV set and 4 pounds per bottle of whisky, while Japan has corresponding prices of 100000 and 2000 yen respectively, then ceteris peribus, if Britain produces one TV less then she would be able to utilise the freed resources to produce another 75 bottles of whisky. Japan on the other hand is able to produce one more TV set by freeing redeploying resources used to produce 50 bottles of whisky. It is to their mutual interest to do so since the pre-trade, relative price of a TV set is 50 bottles of whisky in Japan and 75 similar bottles in Britain. This is an inducement to Japan to expand TV production for export to Britain and import whisky from her. Presumably the relative price after commencement of trade will settle at between 50 and 75. The Ricardian Model assumes technology variations between nations. The assumptions in summary are: labor is the sole primary factor of production; Labor has constant returns; there is limited labor in respective economies; Mobility of labor across industries rather than countries; perfect competition situation. This theory has in modern times been reviewed to include intermediate goods, that is, capital goods for instance machinery thereby adjusting the labor only notion. These intermediate goods are tradable across countries in the current global situation (Dixit et al, 1980). Factors Endowment. Ricardos Comparative advantage theory was modified by Heckscher-Ohlin Theorem, also the Factor Proportions Hypothesis. Here a country should export products that are produced using factors that it is relatively well bestowed with. This is a separate theory but it also gives an explanation on the underlying factors as to comparative advantage. In each country, the factor that is relatively abundant is relatively cheaper. Also the good that is relatively intensive in using this factor this is relatively cheaper. Thus a country is expected to have comparative advantage in products that are intensive in the use of factors that are relatively abundant in supply. The H-O model assumed: inter sector factor mobility; distinction between labour and capital intensive; Factor variation between countries; free trade; and trans-country technology homogeneity. It however does not incorporate trade in intermediate goods. It was later challenged by the work of Wasilly Leontief who discovered that The US exported less capital intensive than it imported labour intensive products, also the Leontief’s paradox (Trebilcock et al, 2005). Contemporary Theories These include: the specific factors theory where in the short run mobility between industries in labor is possible and not possible in capital. It resembles a short run H-O model. If there is an increase in the price of a product then the owners of the factor specific to that product will profit in real terms; the new trade theory seeks to cater for the fact deficiencies of the two main approaches. That a lot of trade occurs between countries with identical factor of production endowment and the high level of multinational production, or foreign investment; the Gravity model that proffers an empirical analysis of international trade trends rather than the theoretical approaches detailed. It projects trade patterns on the basis of the distance between the nations and their economic size interaction. It imitates the law of gravity that factors distance and size. It considers factors such as levels of income, diplomatic ties and respective trade policy (Trebilcock et al, 2005). Emerging markets are nations described to be undergoing rapid growth and industrialisation in social and business activity. The concerned nations are usually said to be in a transition to fully developed status. Data on these countries has been compiled and a list of the top economics proffered. Examples of the dominant emerging economies are Brazil, Russia, India and China. They have been given the acronym, BRIC. Included are: Latin American countries such as Argentina; Asian countries such as South Korea; Russia in Eastern Europe; some in the Middle East; and parts of Africa for Instance South Africa. Lately though there have been shifts for instance Mexico has edged into the top four in terms of investment and development pushing ahead of Brazil. However China and India still dominate the list as the emerging markets with the best opportunities. As a factor of their GDP, population size, growth potential and level of imports (World Bank, 2000). These markets are characterised by robust economic growth, resulting in a rise in GDP and disposable income. Political and social stability is also an important indicator and condition for this categorisation. This implies that the population is able to purchase previously un-affordable goods and services . However quite a part of these countries population remain poor. International companies are presented with a large untapped market, providing them with an opportunity for market and financial growth. Luxury products such as high-end automobiles, designer clothing, and other Veblen goods benefit from such; but it is every day luxuries such as cell phones and brand name food products that reap the most from these markets.

Theprince By Machiavelli Chap :: essays research papers

The Prince Chapter Analysis The Prince, by Machiavelli, was written for the Italian deMedici family and intended to be used as a guidebook for retaining political power. In the chapter entitled "That We Must Avoid Being Despised and Hated," Machiavelli describes the traits that a leader should avoid. He also describes the traits a leader must have in order to have the respect and loyalty of his subjects. Machiavelli writes, "He is rendered despicable by being thought changeable, frivolous, effeminate, timid, and irresolute." Machiavelli believes the leader should never vacillate. The leader's words would become meaningless for he cannot gain anything by constantly changing his goals and his decisions. An example of this would be a manager wishes to complete a task and he orders his workers to begin this task. The manager later decides to change this task abandoning his first task, and he instructs his workers to begin the new task. The manager instructs his workers to return to the first task. The workers begin to become frustrated, and the manager has yet to accomplish a task. Thus, a leader must not vacillate in order to accomplish any goal. A leader must always accomplish the goals he sets out to accomplish, for if he chooses to attain a goal which he has no hope of gaining, then he is a frivolous ruler, and according to Machiavelli, deserves to become despised. A t imid ruler would be too weak and too scared to rule his people, and he would never get a task done. An effeminate ruler is thought to have feminine qualities. In those times, someone who was feminine could not be taken seriously. A leader must always resolve a problem for all problems allowed to "get out of hand" tend to become large problems, and this will show the leader's inability to resolve things. An example of this would be a king becomes aware that his crops were not as productive one year. The king decides nothing on it. Later that winter, his people begin to starve, but the king has done nothing to help. The starving people begin to revolt against this irresolute king. Therefore, a king must not be irresolute. Machiavelli describes these traits so the traits may be avoided by the leader. The leader would become despised and not respected by his citizens and fellow rulers if he is thought to be changeable, frivolous, effeminate, timid, and irresolute.

The Impact of the Automobile on the United States Essay -- Automobiles

The Impact of the Automobile on the United States The automobile has had a profound impact on the United States. It has brought us superhighways, paved bridges, motels, vacations, suburbia, and the economic growth which accompanied them. Today, the automotive industry and nearly one million related industries employ about twenty percent of all American workers. The US produces more automobiles than every other nation combined. This product has become a symbol of the American way of life. The US is sometimes referred to as â€Å"a nation on wheels.† Considering these facts, one must wonder what the United States was like before the revolutionary innovation of the automobile. The first automobile was invented by a French artillery officer, Nicholas Joseph Cugnot. His self-propelled vehicle was powered by steam. Other models of steam-powered automobiles were created by different innovators, but these models were eventually made obsolete by the internal-combustion powered car invented by Jean Joseph Etienne Lenior. This technology reached the United States when Charles and Frank Duryea made the first successful American gasoline automobile. Ransom Eli Olds had the earliest assembly line for automobiles and began mass production. Later, Henry Ford’s Model T dominated the car industry and remained the most popular automobile for nearly twenty years. In the early days of the automobile, there was not a real automotive industry. Only a few hundred cars were made in the early years of automobile manufacturing. They were very seldom seen and only could be afforded by the wealthy. The car was such an unfamiliar spectacle, it was sometimes featured in circuses. Eventually, the car began to increase in popularity. During the 1920s, the US economy was on the rise and one of the main reasons was the automobile. Assembly lines were becoming more efficient, thus, admitting cars to be made more cheaply and allowing prices of cars to drop. From 1909 to 1925, the price of a Ford Model T dropped from $950 to $290. This allowed more people to be able to afford them. Millions were sold. The automobile, once a rare luxury, was becoming a part of American life. It had a ripple effect on US industries. With the increase in automobiles, came an increase in related products. Large quantities of glass, rubber and steel were needed t... ...nvolved with the safety of Americans. Many actions by the government such as the seatbelt requirement and the establishment of the Environmental Protection Agency (EPA) have made the automobile safer for the general public. The automobile has had many different effects on the United States, both good and bad. In the future it will continue to shape our culture, commerce and surroundings. Works Cited 1Thomas DiBacco, Lorna Mason, Christian Appy, History of the United States, vol. 2 (Evanston: McDougal Littell Inc.), p. 324. 2John Rae, The American Automobile Industry, (Boston: G.K. Hall & Company), p. 89-92. 3John Rae, The American Automobile Industry, (Boston: G.K. Hall & Company), p. 96. 4John Rae, The American Automobile Industry, (Boston: G.K. Hall & Company), p. 188. 5John Rae, The American Automobile Industry, (Boston: G.K. Hall & Company), p. 89-90. 6American Lung Association of California, , 13 April 2001. 7National Center for Injury Prevention and Control, , 14 April 2001.

Learning Check

Chapter 14 Auditing the Revenue Cycle |Learning Check | The revenue cycle includes the activities involved in the exchange of goods and services with customers and the realization of the revenue in cash. The classes of transactions in this cycle for a merchandising company are sales, sales adjustments, and cash receipts. The primary accounts affected by these transactions are sales, accounts receivable, cost of sales, inventory, cash, sales discounts, sales returns and allowances, bad debts expense, and allowance for uncollectable accountsSpecific audit objectives for the revenue cycle are derived from the five categories of management's financial statement assertions. b. Specific audit objectives for credit sales transactions include the following: |Specific Audit Objectives | |Transaction Objectives | |Occurrence. Recorded sales transactions represent goods shipped or services provided during the period. |Recorded cash receipt transactions represent cash received during the period. | |Recorded sales adjustment transactions during the period represent authorized discounts, returns and allowances, and | |uncollectable accounts. | |Completeness. All sales cash receipts and sales adjustments made during the period were recorded. | |Accuracy. All sales and cash receipts and sales adjustments are accurately valued using GAAP and correctly | |journalized, summarized and posted. | |Cutoff.All sales, cash receipts and sales adjustments have been recorded in the correct accounting period. | |Classification. All sales, cash receipts, and sales adjustments have been recorded in the proper accounts. | |Balance Objectives | |Existence. Accounts receivable representing amounts owed by customers exists at the balance sheet date. | |Completeness. Accounts receivable include all claims on customers at the balance sheet date. |Rights and Obligations. Accounts receivable at the balance sheet date represent legal claims of the entity on | |customers for payment. | |Valuation and Allocation. Accounts receivable represents gross claims on customers at the balance sheet date and | |agrees with the sum of the accounts receivable subsidiary ledger. The allowance for uncollectable accounts | |represents a reasonable estimate of the difference between gross receivables and their net realizable value. |Disclosure Objectives | |Occurrence and Rights and Obligations. Disclosed revenue cycle events and transactions have occurred and pertain to | |the entity. | |Completeness. All revenue cycle disclosures that should have been included in the financial statements have been | |included. | |Understandability. Revenue cycle information is appropriately presented and information in disclosures is | |understandable to users. |b | 14-3. Following are a few examples of differences between how the auditor might use the knowledge of the entity and its environment for a computer company v. a hotel. a. Certain balance sheet accounts like accounts receivable and inventories are go ing to be very significant for the computer manufacturer, but relatively immaterial for the hotel. The computer company is also likely to have a higher ratio of sales to fixed assets, or sale to total assets, than the hotel. b.The computer company auditor will have significant issues associated with the risk of misstatement with respect to the existence of receivables and inventories that are not present for the hotel. The computer company auditor will also have to address valuation and allocation issues associated with the collectability of receivables and lower of cost or market of inventories that are insignificant for the hotel. The hotel will have a potential risk of material misstatement in terms of how it accounts for revenues from properties that it manages for others, as opposed to properties that it owns. 14-4.Factors that might motivate management to deliberately misstate revenue cycle assertions include: †¢ Pressures to overstate revenues in order to report achievin g announced revenue or profitability targets or industry norms that were not achieved in reality owing to such factors as global, national, or regional economic conditions, the impact of technological developments on the entity's competitiveness, or poor management. †¢ Pressures to overstate cash and gross receivables or understate the allowance for doubtful accounts in order to report a higher level of working capital in the face of liquidity problems or going concern doubts.Factors that might contribute to unintentional misstatements in revenue cycle assertions include: †¢ The volume of sales, cash receipts, and sales adjustments transactions is often high, resulting in numerous opportunities for errors to occur. †¢ The timing and amount of revenue to be recognized may be contentious owing to factors such as ambiguous accounting standards, the need to make estimates, the complexity of the calculations involved, and purchasers' rights of return. 14-5. a. Following ar e example analytical procedures that the auditor might use to estimate total revenue for a household appliance manufacturer and for an airline. Industry |Possible Analytical Procedures | |Household Appliance Mfg. |Use past ratio of net sales to capacity with adjustments for capacity | | |changes. | | |Use a combination of past ratios of market share with adjustments of | | |current changes in market share. Requires knowledge of the total market | | |size in the industry. |Airline |Estimate net revenues using information on utilization of capacity | | |(airline seat miles) and average revenue per seat. | b. Two analytical procedures that the auditor might use to estimate gross margin for company might include. |Analytic Procedure |Audit Significance | |Compare historical trends in market share and |Companies with commanding market shares often are able to obtain larger | |gross margin with current unaudited data. gross margins. | |Evaluate the percentage of revenues coming from |Comp anies with a high proportion of revenues from new products may earn | |new products. |premium gross margins due to the ability to innovate. | c. Two analytical procedures that the auditor might use to estimate net receivables and the allowance for doubtful accounts for company might include. |Analytic Procedure |Audit Significance | |Accounts receivable turn days |Understanding a company’s history of accounts and sales volume can assist| | the auditor in evaluating net receivables and the adequacy of the | | |allowance for doubtful accounts. | |Evaluate the entities history of uncollectable |This procedure is primarily related to the adequacy of the allowance for | |accounts expense to net credit sales, with |uncollectable accounts. The above history of accounts receivable turn | |adjustment for economic conditions |days would be most useful for evaluating estimating gross receivables | | |given sales. 14-6. Several control environment factors and their applicability to reven ue cycle assertions are: †¢ Integrity and ethical values – reduction of risk of overstatement of revenues and receivables by eliminating incentives to dishonest reporting. †¢ Commitment to competence – by chief financial officers and accounting personnel. †¢ Management's philosophy and operating style – conservatism in developing such accounting estimates as the allowance for uncollectable accounts and allowance for sales returns. Human resource policies and practices – bonding of employees who handle cash 7. The following table summarizes the functions that apply to credit sales transactions, the department that performs the functions, and the principal documents or records produced in performing the function. | |Department that performs function |Principal documents and records produced in performing the | |Function | |function. |Initiating credit sales |Sales department |Documents | | | |Customer Order | | |Credit department |Sales Order | | | | | | | Computer Files and Records | | | |Customer Master File (with credit information) and Accounts | | | |Receivable Master File. | | |Perpetual Inventory | | | |Authorized Price List | | | |Open Order File | |Delivering good and |Warehousing and shipping department for |Documents | |services |goods. Shipping documents | | | |Reports of unfilled orders and back orders | | |Line operating departments for services. | | | |Computer Files and Records | | | |Open Order File | | | |Perpetual Inventory | | | |Shipping File | |Recording sales |Accounting (Billing) |Documents | | | |Sales Invoice | | | |Sales Reports and Sales Journal | | | |Various Exception Reports | | | |Monthly Customer Statements | | | | | | |Computer Files and Records | | | |Sales Transaction File | | | |Accounts Receivable Master File | 14-8. In order to assess control risk as low based on programmed control procedures the auditor should test the following. |Control |Importance to Control Risk Assessment | | Programmed control procedures |If a programmed control procedure in critical to a low control risk assessment then| | |the auditor should directly test the control procedure. |Computer general control procedures |In order to obtain assurance that the programmed control procedure functions | | |effectively throughout the period the auditor also needs to these the effectiveness| | |of computer general control procedures. | |Manual follow-up procedures. |Programmed controls usually report exceptions noted when performing the control. | | |As a result auditors also need to test the effectiveness of manual controls that | | |follow-up on reported exceptions. | 14-9. The following tables describes programmed controls for a typical manufacturing company. |Potential Misstatement |Programmed Control |CAATs (Assuming Test Data) | |a. |Sales invoices may not be |The computer compares entries in the sales |Submit test data for a transaction that has | | |recorded. |journal with underlying shipp ing information. |shipping information, both with and without a | | | |All shipping documents must be matched with a|supporting sales invoice. | | | |sales invoice. | | |b. |Sales invoice may be recorded |The computer compares dates on the sales |Submit test data with dates on sales invoices | | |in the wrong accounting period. invoice with dates on shipping documents. |that both do and do not match with dates on | | | | |related shipping files. | |c. |A fictitious sales invoice, or |The computer will not prepare a sale invoice |Submit test data with sales invoice information | | |a sales transaction for which |without underlying information on shipping |that both is and is not supported by underlying | | |revenue should not be |files. |shipping information. | | |recognized, is recorded. | | | |d. Sales are made without credit |The computer searches a field for appropriate|Submit test data for sales orders that both are | | |approval. |credit authorization before an order is |and ar e not supported by appropriate credit | | | |placed on an open order file. |authorization. | |e. |A sales invoice has incorrect |The computer matches quantities on a sales |Submit test data for sales invoices that both do | | |quantities or prices. |invoices with underlying shipping information|and do not match underlying shipping information | | | |and matches prices with an authorized price |and authorized price lists. | | | |list. | |f. |Sales invoices may not be |The computer checks run-to-run totals of |Submit test data for batches that with complete | | |posted or may not be |beginning accounts receivable balances, plus |and incomplete data sets in terms of completed | | |journalized |sales transactions, with the ending |transactions. | | | |receivable balances. | | |g. |Sales invoices may be posted to|The computer matches customer information on |Submit test data with underlying information that| | |the wrong customer’s accounts. the sales invoice with the master custo mer |both does and does not match with information on | | | |file, the sales order, and the shipping |previously created sales order and shipping | | | |documents. |files. | 14-10. A common management control involves having managers with responsibility for sales to review daily or weekly sales reports to assess the reasonableness of recorded sales. Further management responsible for warehousing and shipping should review daily or weekly sales and inventory movement reports to assess the reasonableness of recorded sales and inventory removed from the perpetual inventory. 14-11. The sub-functions involved in cash receipts include (1) receiving cash receipts, (2) depositing cash in bank, and (3) recording the cash receipts. 14-12. a.Two important controls pertaining to cash sales and the transaction class audit objectives to which they relate are: †¢ The customer's expectation of a printed receipt and supervisory surveillance of over the counter sales transactions helps to ensure that all cash sales are processed through the cash registers or terminals – completeness. †¢ Independent check by supervisor on the accuracy of cash count sheets, and verification of agreement of cash on hand with totals printed by a cash register or terminal – existence or occurrence and valuation or allocation. b. Two important controls pertaining to the initial handling of mail receipts are (1) immediate restrictive endorsement of checks received and (2) preparation of a multi-copy listing (prelist) of mail receipts. 14-13. a.A lockbox is a post office box that is controlled by the company's bank. The bank picks up the mail daily, credits the company for the cash, and sends the remittance advices to the company for use in updating accounts receivable. This system eliminates the risk of diversion of the receipts by company employees and failure to record the receipts. b. Depositing receipts intact daily means that all receipts are deposited; that is, cash disbu rsements should not be made out of undeposited receipts. This control reduces the risk that receipts will not be recorded (completeness), and the resulting bank deposit record establishes the existence or occurrence of the transactions. 14-14.Four controls that can aid in preventing or detecting errors or irregularities in recording cash receipts are summarized below along with potential tests of controls: |Control |Test of Control | |Independent check of agreement of validated deposit slip |Inspect a sample of daily cash summaries and examine evidence of | |with daily cash summary. |agreement with validated deposit slip by responsible employee. | |Computer check of information included in the cash receipts |Use CAATs to test computer matching of information from cash receipts | |journal with information from prelist. journal with electronic prelist. Also follow-up on how exceptions are | | |reported and examine evidence or correction of errors reported on | | |exception reports. | |Preparation of periodic independent bank reconciliations. |Examine a sample of periodic bank reconciliations. Make inquiries about | | |bank reconciliation procedures and test accuracy on a sample basis. | |Mailing of monthly statements to customers. |Observe the mailing of monthly statements to customers.Make inquiries | | |about procedures to follow-up on issues raised by customers, and examine | | |reports or other evidence of follow-up. | 14-15. a. The functions pertaining to sales adjustments transactions are: granting cash discounts; granting sales returns and allowances; and determining uncollectable accounts. b. The following three types of controls pertaining to sales adjustments transactions have as their common focus establishing the validity, or existence of occurrence, of such transactions: †¢ Proper authorization of all sales adjustments transactions. The use of appropriate documents and records, particularly the use of an approved credit memo for granting credit for returned or damaged goods, and an approved write-off authorization memo for writing off uncollectable customer accounts. †¢ Segregation of duties for authorizing sales adjustment transactions and handling and recording cash receipts. 14-16. a. The accounts receivable balance is a function of the transactions that are posted to the account, namely credit sales, cash receipts, and sales adjustments. A sound system of internal controls over these three transaction cycles that ensure the completeness and accuracy of these transactions, should also ensure the completeness and accuracy of account receivable. b.The primary control over the balance involves sending monthly statements to customers and having an independent function to receive and follow-up on any issues raised by customers. c. The rights and obligations assertion for accounts receivable involves selling, or factoring, cash receipts. If an entity sells its receivables, it should keep a documentary record of the rece ivables that have been sold or pledged, and have a process for following up on collection of those receivables and the reduction of the related liability to the factoring agent. These records should be compared with monthly statements received from a bank or factoring agent. d.Public companies normally control establish controls over the presentation and disclosure assertion and related audit objectives through an effective and independent disclosure committee. The disclosure committee should have individuals who are knowledgeable about GAAP and the transactions being processed. 14-17. The following table provides example controls and tests of controls for each assertion (and transaction level audit objective) related to credit sales and cash receipts. Examples emphasize programmed control procedures where appropriate. Student should note that tests of controls should also emphasize testing computer general controls, observing exception reports, and testing manual follow-up of items that appear on exception reports. Credit Sales Assertion (Audit Objective) |Control |Test of Controls | |Existence and Occurrence (Occurrence) |Computer matches sales invoice information |Submit test data where invoice data does not match | | |with underlying shipping information. |with underlying shipping information. | |Completeness (Completeness) |Computer prints a report of all goods |Submit test data with shipments that have not been | | |shipped but not billed. |billed to test accuracy of report of all good shipped | | | |but not billed. |Existence and Occurrence / Completeness |Comparison of invoice date with the |Submit test data with shipments in one period and | |(Cutoff) |accounting period when goods were shipped. |billing in the subsequent period. | |Valuation and Allocation (Accuracy) |Computer matches sales prices with |Submit test data with invoice prices that do not match| | |authorized price list and sales order. |the authorized price list or sales order. | |Presen tation and Disclosure |Computer matches customer number on sales |Submit test data the customer information on the sales| |(Classification) |invoice with customer number on sales |invoice does not match the underlying sales order. | | |order. | |Rights and Obligations |If an entity sells its receivables, it |Observe and reperform procedures for documenting | | |should keep a documentary record of the |receivables that have been factored or sold. | | |receivables that have been sold and it | | | |should compare that record with monthly | | | |statements received from a factoring | | | |company. | | Cash Receipts Assertion (Audit Objective) |Control |Test of Controls | |Existence and Occurrence (Occurrence) |Independent check of agreement of cash and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. |independent check of the prelist with the cash | | | |receipts journal. | |Completeness (Completeness) |Independent check of agreement of cas h and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. independent check of the prelist with the cash | | | |receipts journal. | |Existence and Occurrence / Completeness |Preparation of periodic independent bank |Observe and test the accuracy of independent bank | |(Cutoff) |reconciliations. |reconciliations. | |Valuation and Allocation (Accuracy) |Independent check of agreement of cash and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. |independent check of the prelist with the cash | | | |receipts journal. |Presentation and Disclosure |Mailing of statements to customers. |Make inquiries about mailing of monthly statements to | |(Classification) | |customers. Observe notes and procedures used to | | | |follow-up upon questions raised by customers. | |Rights and Obligations |If an entity sells its receivables, it |Observe and reperform procedures for documenting | | |should keep a documen tary record of the |receivables that have been factored or sold. | |receivables that have been sold and it | | | |should compare that record with monthly | | | |statements received from a factoring | | | |company. | | 14-18. a. The transaction classes that should be considered in assessing control risk for accounts receivable assertions are: credit sales, cash receipts, and sales adjustments. b.In assessing control risk for the existence or occurrence account balance assertion for accounts receivable, the following transaction class control risk assessments should be considered: †¢ Existence or occurrence for sales transactions that increase accounts receivable. †¢ Completeness for cash receipts and sales adjustments transactions that decrease accounts receivable. c. A revised acceptable level of detection risk for tests of details and a revised level of substantive tests must be determined for an assertion when the relevant final or actual inherent risk assessments, contr ol risk assessments, and analytical procedure risk assessments, differ from the planned assessed levels. 14-19. The following table explains some example preliminary audit strategies for each financial statement assertion in the context of the audit risk model. Assertion |Inherent Risk |Control Risk |Analytic Procedures Risk |Test of Details Risk | |Existence and |Maximum due to revenue|Low if internal |Moderate to high depending on|Moderate which will allow for smaller sample sizes| |Occurrence |recognition problems. |controls over the |reliability of expectation |and changing the timing of confirmations of | | | |occurrence of sales are|model. |receivables. It will also reduce the extent of | | | |strong. | |cutoff tests. | |Completeness |Moderate.Not a |Low if internal |Moderate to high depending on|Moderate to high which will allow for smaller | | |significant inherent |controls over the |reliability of expectation |sample sizes and changing the timing of | | |risk. |occurrence of sales are|model. |confirmations of receivables. It will also reduce| | | |strong. | |the extent of cutoff tests. | |Rights and Obligations|Moderate to high |Moderate to high |Moderate to high depending on|Low: Consider confirming with factoring agent and| | |depending on the |depending on internal |reliability of expectation |search for large unusual cash receipts. | | |entity’s ability to |controls. However, |model. | | |generate operating |control are more | | | | |cash flow. |nonroutine than | | | | | |routine. | | | |Valuation and |High or maximum due to|Moderate to high |Moderate to high depending on|The auditor can test the accuracy of receivables | |Allocation |subjective nature of |depending on internal |reliability of expectation |at gross value with confirmation. The auditor | | |allowance. |controls over |model. should consider extensive tests of the allowance | | | |collection of | |after year-end. | | | |receivables. | | | |Presentation and |Inherent risk is | Moderate to high |Maximum: Analytical |Maximum to High. It is often cost effective to | |Disclosure |usually high or |depending on internal |procedures are not directed |substantively test disclosures which are not | | |maximum. controls over |at testing disclosures. |complex for receivables. | | | |disclosures. | | | 14-20. In vouching recorded accounts receivable transactions to supporting documentation, a sample of debits to customers' accounts is compared to data on supporting sales invoices and matching shipping documents, sales orders, and customer orders. The evidence obtained pertains primarily to specific audit objectives derived from the existence or occurrence, rights and obligations, and valuation or allocation assertions for accounts receivable. 14-21.Both the sales cutoff test and the cash receipts cutoff test pertain to accounts receivable. The sales cutoff test involves: †¢ Examining shipping documents for several days before and after the cutoff date to determi ne the date and terms of shipment. †¢ Tracing shipping documents to sales and inventory records to establish that the entries were made in the correct accounting period. †¢ Inspecting invoices for a period of time before and after the cutoff date to ascertain the validity and propriety of the shipments and corresponding entries. †¢ Inquiring of management about any direct shipments by outside suppliers to customers and determining the appropriateness of related entries.In performing a cash receipts cutoff test, the auditor may be present at the balance sheet date to personally observe the promptness of the cutoff. In particular, the auditor determines that all collections received prior to the close of business are included in cash on hand or in deposits in transit and are credited to accounts receivable. Alternatively, the auditor may review the daily cash summary and validated deposit slip for the last day of the year. Both cutoff tests relate to the occurrence and completeness audit objectives for accounts receivable. 14-22. a. It may not be necessary to confirm accounts receivable when: †¢ The balance is immaterial to the financial statements. †¢ The use of confirmations would be ineffective as an audit procedure. The auditor's combined assessment of inherent risk and control risk is low, and that assessment, made in conjunction with the evidence expected to be provided by analytical procedures or other substantive tests of details, is sufficient to reduce audit risk to an acceptably low level for the applicable financial statement assertions. b. Factors to be considered in choosing the form of confirmation request are (1) the acceptable level of detection risk and (2) the composition of the customer balances. The positive form is used when detection risk is low or individual customer balances are relatively large. The negative form should be used only when all three of the following conditions apply: †¢ The acceptable level o f detection risk for the related assertions is moderate or high. A large number of small balances is involved. †¢ The auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration. c. When no response is received after the second or third positive confirmation request to a customer, the auditor should apply such alternative procedures as (1) examining subsequent collections and (2) vouching open invoices comprising the customer's balance. Alternate procedures may be omitted when both of the following conditions apply: †¢ There are no unusual qualitative factors or systematic characteristics related to the nonresponses, such as that all nonresponses pertain to year-end transactions. The nonresponses, projected as 100% misstatements to the population and added to the sum of all other unadjusted differences, would not affect the auditor's decision about whether the financial statements are materially misstated 14-23. a. The aged trial balance is used primarily in assessing the adequacy of the allowance for uncollectable accounts. b. Procedures applied to the aged trial balance include (1) footing and crossfooting the aged trial balance and comparing the total to the general ledger balance for accounts receivable and (2) testing the aging of the amounts shown in the aging categories by examining supporting documentation such as dated sales invoices. c.After testing the accuracy of the aged trial balance the auditor should perform the following procedures to draw a conclusion about the fair presentation of the allowance for doubtful accounts. †¢ Examine past due accounts for evidence of collectability such as correspondence with customers and outside collection agencies, credit reports, and customers’ financial statements. †¢ Discuss collectability of accounts with appropriate management personnel. †¢ Evaluated management’s process for estimated the allowance for doubtful accounts using hindsight. †¢ Evaluate the adequacy of the allowance given information about industry trends, aging trends, and collection history for specific customers. d.Hindsight allows auditors to evaluate the reasonableness of management’s process for estimating the allowance for doubtful accounts. The reliability of management’s process for developing this accounting estimate can be gauged by evaluating estimates in prior periods and the degree to which those estimates accurately estimated subsequent uncollectable accounts. 14-24. GAAP disclosure for accounts receivable include: †¢ Disclosure of receivables from employees, officers, affiliated companies and other related parties. †¢ Appropriate classification of material credit balances. †¢ Appropriate classification of current and noncurrent receivables. †¢ Disclosure of pledging, assigning, or factoring receivables.

Pronouncing the Spanish B and V

Pronouncing the Spanish B and V Although the Spanish b and v arent difficult to pronounce, they are often confusing for beginning Spanish students, who are easily tempted to give them the same sounds as they have in English. How B and V Are Pronounced Alike The most important thing to remember about pronouncing the Spanish b and v is that in standard Spanish they are pronounced exactly alike. Although English makes a clear distinction in how the two letters are pronounced, Spanish does not. For all practical purposes, the b and v can be thought of as the same letter in terms of pronunciation. In fact, is isnt unusual for native Spanish speakers, especially children, to confuse them when spelling, and a few words (such as ceviche or cebiche, a type of seafood dish) can be spelled with either letter. What can make matters somewhat complicated for beginning Spanish students is that each of the letters has two distinct sounds that vary depending on the letters or sounds around them, and both are different from (although similar to) the English sounds. The two sounds are: The hard b or v: This sound is known in phonetics as a voiced stop. It is much like the English b but less explosive.The soft b or v: This sound is the more common of the two and is classified as a voiced bilabial fricative, meaning that a voiced sound that is squeezed between the two lips, forming a kind of buzzing sound. In other words it is much like the English v but with the two lips touching instead of the lower lip and upper teeth. The sound of the English v such as in the word victory does not exist in standard Spanish. The hard b or v is used after pauses, such as at the beginning of a sentence or when a word is standing alone and begins with b or v. It is also used after the m or n sounds, the latter of which can sound much like an m when it comes before a b or v. Some speakers also use the hard b or v after the d in words such as advertencia (warning). See the boldfaced examples in these sentences: Vamos a la playa. (Lets go to the beach. The v comes at the beginning of the sentence.)Queremos terminar el embargo contra el paà ­s. (We want to end embargo against the country. The b comes after an m.)Envolvieron los galletas con film transparente. (They wrapped the cookies in plastic wrap. The n in envolvieron sounds much like an m. Note how the only the first v in envolvieron gets the hard sound.) In other situations, the soft b or v is used. Between vowels it can become extremely soft. La evolucià ³n se estudia en clases de biologia. (Evolution is studied in biology classes. Note how the b in biologà ­a gets the soft sound even though it comes at the beginning of the word. In normal speech, there is no pause between biologà ­a and the preceding word.)Cantabamos en la playa. (We were singing on the beach. The b is pronounced because it comes between two vowels.) ¡Brava! (Excellent!) (The first letter gets the hard sound because its at the beginning of an utterance, but the v is between vowels.) In the word obvio (obvious), the b gets the hard sound, while the v gets the soft sound. When spelling out loud in Spanish, the b is sometimes referred to as be alta, be grande, or be larga in order to distinguish it from the v, usually called uve (which became its official name a few years ago), ve baja, ve chica, or ve corta. The Problem of Homophones Although the Latin b and v were pronounced differently, they gradually merged in Spanish. As a result, some words are spelled differently but have the same pronunciation. Usually the context will make clear which word was meant. Here are the most common such homophones: basta (enough), vasta (vast)bello (beautiful), vello (down of a bird)bienes (property), vienes (conjugated form of venir, to come)rebelarse (to rebel), revelarse (to reveal oneself)baca (luggage rack), vaca (cow)acerbo (bitter), acervo (heritage) Key Takeaways In standard Spanish, the b and v are identical in terms of pronunciation.The b and v are pronounced somewhat like a soft version the English b after a pause and after the m sound.In other situations, the b and v are pronounced somewhat like the English v but with the lips touching each other.

10 Ideas to Make the Most Out of Thanksgiving Break

10 Ideas to Make the Most Out of Thanksgiving Break It’s that Thanksgiving Break time of year and you’re looking to make the most of it. You want a good spread of ideas to choose from, so here are the most popular choices among college students these days. 1. Travel to a Small Town Right, so this is probably one of the coolest ideas ever. You get a group of friends together, pool your money and travel to a small town that really takes the Thanksgiving break seriously. We’re talking snow, parades, with decorations everywhere. It can be costly for cabins and hotels, but if you know someone on campus from one of those small towns and it doesnt turn into a tourist trap, then hop on that! Some small towns out there really do things right. Everyone gets involved. The whole town makes a thing of it. 2. Round up the Family Thanksgiving Break is a time to head home and be with the family. These days it can be hard, and lots of families get spread out when the kids get into college. Plus, back home with family and familiar faces you can recharge. 3. Stay on-Campus and Sleep No one says you have to leave or get involved in any of the festivities. You can choose to just sleep all through the break and really recharge your batteries for winter quarter. Besides, the college always has something going on for the students that stick around. 4. Prepare for the Dreaded Black Friday It’s the modern consumer world and one way or another we’re all affected by the biggest shopping day of the year. Whether you take part, work in the retail/service industries, or you just like to wear sweats and watch the mayhem on Live Streams†¦prepare. 5. Eat Tons of Delicious Food Thanksgiving is about the food when you get right down to it. And, it’s everywhere if you know where to look. Eat it up! Live it up! Dig in! Sure, you might gain a pound or two, but whatever. You can always burn that off before the spring and summer anyway. Dive into the pies and hometown delicacies. Honestly, you really only do live once and Thanksgiving only comes around once a year. 6. Get Ahead on Your Studies You know what tests and classes are coming down the pike. You could invest the time in extra study or brushing up on topics that you’ll soon be tested on. Nothing wrong with that, but do keep in mind this is a holiday. 7. Go Check out a Nutcracker Show Have you ever been to a real Nutcracker show? These things are amazing! Tchaikovsky is a master. For the better ones expect to pay a decent price, but it’s easily worth it. There’s the ballet version and other kinds of musicals but the point is to go see a holiday show. And, it’s a great date idea as well. 8. Take Part in Sports Fanaticism In America, Thanksgiving Day is a mega day for football lovers. In some circles football can easily overshadow any hint of Thanksgiving. If you’re not really into sports or football has never been your thing, get into it for once! Get into the weird commercials, all the yummy football foods and jump up and down during big plays. It’s fun. Here’s the lineup according to the National Football League for 2013 Thursday, November 28th (Thanksgiving Day) Packers vs. Lions – 12:30 PM (ET) Raiders vs. Cowboys 4:30 PM (ET) Steelers vs. Ravens 8:30 PM (ET) 9. Watch Awesome Thanksgiving Day Movies It’s that time of year to watch the movies that bring us back and spread some light and easy holiday cheer. There are so many to choose from. After about twenty minutes of searching around Google for the most popular favorites, here on the ones that make it onto most Thanksgiving Day movies lists. Planes, Trains and Automobiles Dutch A Charlie Brown Thanksgiving It’s a Wonderful Life Grumpy Old Men Home for the Holidays Miracle on 34th Street Pocahontas Son in Law Garfield’s Thanksgiving 10. Take it Back to Grade School Thanksgiving is a wonderful time, along with Christmas and New Year’s, to get crafty. Go back to grade school. It’s time to cut out and color some paper turkeys. It’s time to make Christmas decorations out of popcorn. It’s time to make some caramel apples. Before you know it Thanksgiving Break is over and it’s back to the books. Might as well make the best of it, right? Hey, make sure to listen to some old classical holiday music. Have a good time and live it up. If you can, do the small town thing though because that will make for some lifelong Thanksgiving memories. Do you have any plans for the Thanksgiving break? Share your ideas in comments!