Continue reading »]]> Forensic audit is needed or applied mainly in those situations which have legal consequences. In a forensic audit the auditor uses three types of skills to conduct an audit. Those skills are accounting skill, auditing skill and investigating skill and those skills assist in performing an audit examination into a company’s financial statements.

Forensic audit is one kind of investigation and unlike other audits it is accepted by court of law. Now-a-days it is a prominent issue and it has been used frequently because of the recent scandals of renowned organizations.

A forensic audit is an examination of an organization’s or an individual’s financial affairs which results in a report that is used for a court of law. This type of audit is required whenever law enactment officials need reliable data on a client’s economic activities. Its objective is to find out actual cash transaction, detecting accounting error and fraud, detailing total assets. It is mostly used as after-the-fact basis when organizations deduce that a fraud has occurred within their organization. Forensic audit uses both accounting standards and auditing techniques combined with investigating approaches to detect fraud and probable problem areas for further investigation in future.

A forensic auditor’s job does not confined only to identify fraud but also to provide litigation support in a court of law whether his findings result in a legal actions. For example in case of NGOs, they gain huge amount of donation from various parties including national and international donors. There was an allegation by court against the local fund agent about corruption, it is a forensic audit.

• The potential susceptive motive and greater opportunity to commit fraud
• Whether the committed fraud engaged conspiracy between several susceptive activities
• Whether the evidence contained in the form of proper documentation
• Doing unethical activity to destroy physical evidence
• Influence on others to gain personal benefits

To sum up, forensic audit is a special type of audit engagement in order to detect and investigate every kind of fraud which requires multidimensional skills including accounting skills, auditing skills and relevant as well as a clear legal understandings.

Continue reading »]]> At the end of each financial year, business organizations need to make some adjustments from different kinds of financial transactions occurred during the financial year in an organization, these adjustments are known as adjusting journal entry. Adjusting journal entries are usually made at the time of preparing financial statements at the end of financial year for an organization and it is maintained in order to follow Generally Accepted Accounting Principles (GAAP) such as revenue recognition principles and matching principles.

Adjusting journal entries are needed due to transaction effects in more than one period. Business transactions occurred accrual basis and therefore its effect can be extended to more than one financial year. Every single adjusting journal entry generally affects at least one income statement account and one balance sheet account. For example, ABC Inc. has a $ 5000 debit balance in its supply and stationery account at the end of a month, but ABC Inc. has only $ 1000 on its hand remaining and rest of the amount has been used during the month. Since ABC Inc. has used supply and stationery materials worth $ 4000 during the month, therefore the supply and stationery account requires $ 4000 adjustment as expense so that supply and stationery account is not understated in the balance sheet. Adjusting journal entries may be of different form such as accrued revenues, unearned revenues, prepaid expenses, accrued expenses and depreciation.

Types of adjusting journal entries

In the formal accounting process, each and every business transaction is recorded through general journal and at the end of each financial year, business organization needs to pass some financial adjustments and these financial adjustments are made through adjusting journal entry. There are commonly two types of adjusting entries made by an organization and these two are as follows:-

Accruals: Accruals means revenues have been earned but not received yet and expenses that have been occurred but not recorded yet by the entity. For example, bank interest revenue that has been earned in one month although the payment will be received from bank in the next month. Therefore, an adjusting entry is made in order to recognize the revenue in the month or period in which it was actually earned.

Differed: When expenses occurred but not paid in the same period in which such expenses occurred. This kind of transactions is considered as deferred or deferral payment. For example, the insurance premium of ABC Inc. has been due but it was not paid that period rather than next period. This kind of transaction is recorder through adjusting journal entry to follow the guideline of the GAAP.

Continue reading »]]> Break even analysis is done before a product or service to be offered to the market. It provides an overall idea about how many units of a product to manufacture, what will be the price of a product and which advertising channel will be used for marketing purpose. Every manufacturing organization conducts break even analysis at the time of launching any product to the market in order to analyze overall economic effect of the new product. As break even analysis is conducted through predetermined assumptions, there are some limitations behind the break even analysis and these limitations are as follows:-

Limitations of Break Even Analysis 

Selling price is considered as constant: When break even analysis is conducted, manufacturing companies are assuming that the selling price of the product will be constant. But in today’s highly competitive business environment, the selling price of a product may need to be adjusted as per the market demand in order to stay competitive in the market. Selling price of goods and services may be constant when the goods and services are provided by the Government. This is a first and foremost limitation of break even analysis.

Production cost can be accurately divided into fixed and variable: Production cost cannot be divided into fixed and variable element because costs are linear within the relevant range and it changes when the number of units of a product changes. Fixed cost is assumed to be constant up to the relevant range irrespective of the production level which may often lead to wrong estimation at the time of using the break even analysis.

In multi product companies the sales mix is constant: Sales mix can never be constant, as competition is going on single product basis in the market. In today’s global competitive business environment, the choice of customers are changing at an accelerated way and therefore manufacturing companies are getting momentum customers choice competition to stay competitive in the market. For example, Apple Inc. has iPhone and iPad and they have many versions in order to offer superior customer buying experience. People also frequently change their linkages and therefore the sales mix is always shifted.

In manufacturing companies, inventories do not change: Inventories are always changing with the ongoing production system. This is another great limitation of break even analysis which is made through predetermined assumptions. It is really impossible to keep inventory unchanged and continue production. In manufacturing organizations, inventories always change due to continue its production process smoothly.

Continue reading »]]> All companies both publicly traded and private limited engage business transactions each and every day to their clients and related parties. The purpose of financial information is to have a clear understanding about the business performance for a given time period. Business and managers need financial information in various different purposes. Financial information provides many key insights of the business and assessment about the operational efficiency, profitability and financial performance for a given time. Reasons for need of financial information are as follows:-

Why Do Managers Need Financial Information 

To analysis business performance: Financial information provides an overall picture of operational result of a business and managers need such financial information to analysis for making future plan and strategy about the organization. These financial information is much more valuable both internally and externally in order to compare and make nest operational strategy to become more successful in the upcoming years.

To make and implement strategy: With a view to staying competitive in today’s competitive business environment, managers analyze the financial information and make strategy according to the analysis and considering others related factors of the business. Business managers also analyze competitor’s business and make some tactical decision to gain maximum benefit from these business strategies. These strategies require huge investment and help to gain competitive advantage over its competitors and allow identifying weakness and opportunity.

To make investment decision: Managers analyze financial information to inspect whether any merger and acquisition opportunity is available and it helps to determine the probable investment opportunity. Investment can be done many different ways and managers find and analyze the suitable solution for the company which may bring maximum return for the organization from many alternative investment opportunity.

To address risk associated with the business: Business is always risky and without risk no business organization can achieve its goal and objective. Therefore, managers review the financial information to see whether any possible future risk is coming and associated with the economy. They evaluate different kinds of risk factors associated with the business activities and make strategy in order to lessen such risk and work for implementing the operational strategy successfully.

Continue reading »]]> Every one dreams about studying abroad but it is somewhat expensive as compare to home country. Sometimes, studying in abroad becomes harder for those students who have no affordability to fund such expenses. Therefore, a proper planning is required to get them affordable to manage adequate funds that are needed when anyone is willing to go for higher study in abroad. When you are willing to apply to foreign institutions, you need to be proofed that you are financially sound and you are capable to afford study expenses during your study periods.

Higher education now has been become an essential part in the professional career and it also helps to bring prosperity in the personal life. Higher education is now considered as significant investment by an individual that will return throughout life span. Recently, education opportunity has become globalized and everyone has a great opportunity to take it in order to turning their future into bright success.

 Ways to Fund Overseas Study Expenses

Scholarship: There are numerous scholarships offered around the year by different university and it may be through government agency or any other media. For example, Commonwealth scholarship and Fulbright scholarships are most wanted and prestigious scholarship program across the world.

Self-financing: When anyone is willing to study abroad through self-financing and it is somewhat tough to manage the whole tuition fees along with living expenses. Therefore, everyone has to make proper plan about foreign study through self-financing. It can be monthly savings and other means of savings.

Taking part in internationally recognized test: Most of the foreign university accepts a wide range of internationally recognized qualification test. For example, GRE, GMAT, SAT, TOEFL, and IELTS. If anyone having good score to such standardized examination qualification, can able to get admitted into ranked university around the world.

Education loan: Education loan can be a reliable source for completing higher study opportunity in abroad and there are many financial institutions offer education loan comparatively lower interest rate from the commercial loan.

Continue reading »]]> Give yourself a flying start. Take part in organizational internship program to gain first hand real organizational settings and experience with a leading and multidimensional working environment. Internship program is fast-paced and challenging. Throughout the way, you will have chance to develop valuable skills and experience, and will provide you with the support and guidance you need to make the most of your time with practical working environment.

As an intern, you will not be standing on the sidelines by watching us rather you will begin to build your professional network as you work with some of the best and brightest industry practice in order to achieve your academic excellence. You will be given real responsibilities and held accountable from the very beginning of your internship program. You will be held to a high standard and expected to perform, and will provide support you to ensure you achieve your potential. Internship program  is a fast paced, challenging aimed at building a broad knowledge base and honing one’s skills to become a world–class professional to materialize their academic achievement. On completion of the program, you will walk away with valuable experience and a great addition to your professional achievement. And you may also be offered a full-time placement in your organization where you have completed your internship program. Internship program is aimed at developing tomorrow’s leaders and a highly successful career progression ladder.

Internship program provides following benefits include:

• Fresh graduates get an opportunity to work with practical organizational settings.

• Provide handsome intern-ships allowance.

• Fresh graduates get chance to materialize their academic achievement working with an organization.

• Fresh graduates have chance to develop valuable skills and experience within an organizational settings.

Continue reading »]]> Repurchasing of stock is an alternative to paying out dividend to shareholders. In the process of stock repurchase, the firm pays cash to repurchase stocks from the market in order to reduce the number of outstanding shares in the market. It also may be done through treasury stock method.

The stock repurchase option has been increased greatly over the past few years by different firms around the world due to keep control its shareholders power. However, stock repurchase option is not regular exercise by every firm rather it is exercised when any negative impact of stock price is likely to happen.

To the firm, there are some advantages over stock repurchase option and they are as follows:-

• When company has excess cash on hand and presently there is no further investment plan, the management may decide to repurchase stock from the market rather than paying higher dividend to shareholders

• Treasury stock can be used for future acquisitions or used as a basis for stock option.

• When management is holding stock, they would prefer stock repurchase rather than a dividend because of the favorable tax advantage.

• Treasury stock can be sold to the market as and when the firm needs additional funds for investment.

Continue reading »]]> The enterprise resource planning system is a computer based integrated system used to handle the business activities efficiently. Generally, every ERP system combines traditional managerial approach into mechanized and integrated approach controlled through technical know-how and improved technology.

Improved Business Process Integration: Enterprise resource planning system is consist of different kinds of modules where a module represents a particular business segment. When data is entered in one component of business segment for example receiving materials, it automatically other relates other modules such as accounts payable module and inventory module. This kind of processing happens at real time basis i.e. when a transaction occurs. Since, in ERP data needs to be entered only once at the inception of transaction, it eliminates the multiple entries of the same data. Therefore, the possibility of duplication of data is reduced.

Integrated Management Information System: The business organizations need a diverse decision support tool that is available to an ERP system which assists in efficient utilization of resources for example materials management, production process and human resources management. As a component of management information system, an ERP system provides many standard operational reports as and when needed.

Improved Efficiency and Productivity: The enterprise resource planning system offers a significant result to the efficiency of day to day business activities and transactions for example receiving order, on time delivery, total quality management, invoice reconciliation, sales realization, and cash management. Operational cycle time is significantly reduced for sales to generate cash.

Standardized Operations: The enterprise resource planning system helps gaining a competitive advantage over the business competitors, which ultimately builds a standardized business operation. Since overall business activities are controlled through the implementation of ERP systems and therefore, each business operation moves within a standard process.

Flexibility and technical know-how: Due to competitive global business environment, where production plants, distribution channels and corporate offices situated in different geographical locations, business organizations require multi dimensional ERP modules, in order to get success in competitive business environment. The ERP system provides significant resources and help to create business operations as flexible as possible.

While ERP provides so many technical and non-technical benefits; its proper utilization and successful implementation is a strategic decision, involving significant financial resources, and business process re-engineering. There must be dedication from all levels of an organization.

Continue reading »]]> International business plays an important role in the economic development of a country as it gives greater businesses opportunity to sell the goods and services they produce. When a business organization is dependent on its domestic market, it is more likely to failure in this domestic market. Capable of selling internationally significantly reduces the chances of such business failure as market demands for goods and services are prone to change always. For example, China manufacturers who sell into American and Europe have seen some markets drop due to the economic crisis but have successfully increased sales to other countries where demand for Chinese goods has risen extensively.

Economic importance of international business

• Opportunity to earn foreign exchange: International business creates an opportunity to export goods and services throughout the world. This kind of business opportunity assists to earn valuable foreign currency in exchange of goods and services. This foreign currency is used to pay for various kinds of imports for example, oil and lubricants and other essential commodity. Foreign exchange enables to make the domestic business more profitable and sustainable to strengthen the economy of a country.

• Efficient utilization of scare resources: As international business is competitive and therefore business organization tries to utilize its resources more efficiently, because business has to produce a variety of goods on a large scale basis for the international markets. International business creates an urgency of optimum resources utilization in order to become more competitive in the international market.

• Gain competitive advantage: International business helps to gain a competitive advantage over domestic market easily. The fundamental objective of an international business is to ensure high profits delivering best quality products. This unique feature of a business organization assists to gain competitive advantage over the domestic markets.

• Allocation of business risks: International business reduces business risk through global operations. This is possible because of global operation throughout the world. So, a potential loss in one country can be minimized by a profit in another country.

• Improve operational efficiency: International business requires efficient management in order to bring success in multidimensional business activities. Without strong and efficient operational teamwork, it will not be able to face the competition in the international market. Therefore, it needs efficient management techniques to improve operational efficiency in the recent competitive global business environment.

• Obtain benefits from state: International business helps to bring huge amount of foreign currency for the country through exports. Therefore, business organizations who are involved in foreign exports are likely to get many business benefits and facilities from the state. It also gets many financial and tax benefits from the state in terms of cash incentives.

• Business expansion and diversification: International business offers new geographical destinations in order to expand and diversify business activities. International business also searches new customers through entering into new global destinations.

• Increase global competition: As international business face severe quality competition with its competitors and therefore business organization must produce high-quality goods at low cost to win global competition and gain large market share. It employs huge amount of money on advertising using different types of media in order to sustain such competitive business environment.

Continue reading »]]> Open market operation is the most powerful instrument for the central bank to conduct open market operation to buy and sell in open debt markets and government securities for its own account. These securities may be treasury securities, treasury bonds, treasury bills and other kinds of debt securities. The central bank prefers to use treasury bills due to its extended market acceptance and liquid features welcoming by the majority of the investors who participate central bank’s open market operations. Treasury bills can be sold in bulk amount without disrupting the prices or the yields of bills. The major participants of such kind of open market operation are mainly commercial banks and also other financial intermediaries who are dealers in government securities.

The unit of the central bank that decides on the general issues of changing the rate of growth in the money supply in the form of open market operation sales or purchase of securities in order to stable money supply in the market. The open market operation is conducted through a committee and they meet as per their scheduled time frame to monitor economic activities and behaviour of economic variables under present market situations. The economic variable may include short term interest rates, the U.S dollar exchange rates with major foreign currencies, commodity prices and foreign currency reserve. After this kind of analysis, this market operation committee sets the direction of monetary policy for the upcoming future keeping stable situation of both money supply and demand in the form of open market operation.