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Five Approaches to Transnational Financial Reporting
Five Approaches to Transnational Financial Reporting
Abstract
This paper seeks to give an analysis of financial reporting, which is transnational based. There are five approaches, which need to be known. Their disadvantages and advantages of the approaches should be known. It should be known that focus should be financial standards of reporting, as well as its consequences. The issues involved with the process needs to be known as well. The challenges and benefits of using this system provide the answers needed in financial accounting (Siciliano, 2003).
Analysis of transnational financial reporting
In financial reporting, which uses transnational means, the report is for the purpose of regulatory decisions, investment and lending. This report is valid, even if it is found in the home jurisdiction which is outside and has disadvantages, as well as advantages. The various jurisdictions have certain requirements, which have to be met, in order to become valid. This includes restatements, reconciliations and adjustments (Siciliano, 2003). There is a need to ensure that international convergence and consistency exists in the many standards of accounting. The information obtained is necessary for providing management with information, which is useful in making effective and efficient decisions. There are various parties, which benefit from financial reports including; creditors, lenders and investors.
According to the framework by FASB there are five major financial concepts, which are useful in financial reporting. They are known as statements and they include;
1.SFAC No. 1-These are concerned with issues of business enterprises and their financial reporting objectives. In coming up with a balance sheet, the format normally used is the one, which is liquid. They have advantages which need to be known. Most times, it represents retained earnings and income, which is comprehensive. They may appear as separate entities in a combined form. It is useful in certain areas such as leases, pensions and payments, which are share-based. The disclosures are usually simple and they make use of instruments, which are financial. The disadvantage is that it might be represented in different forms making it difficult to understand. (Revsine Et al, 2008).
2.SFAC No. 2- These are concerned with accounting information characteristics, which are qualitative. The advantage of this approach is that it is verifiable as well as reliable. This means that in order to obtain an amount, which is standard, many measures have to be used. The framework provided by the IASB is not concerned with issues related to verifiability. This is because discovery of financial statement elements occurs (Revsine Et al, 2008). Business enterprises have financial statements, which have ten elements each, according to the conceptual framework of FASB. This approach provides a framework that involves income in a comprehensive manner.
3.SFAC No. 5- These are concerned with business enterprises whereby, financial statements are measured and recognized. It is easy to find out how liabilities and financial assets are used for purposes of cost, thus an advantage. There is a criteria based on de-recognition and classification of a simple nature (Revsine Et al, 2008). Most users of financial statements have to ensure that they are aware of requirements for disclosure. This is because it involves the process of measurement which might times become difficult and this is a disadvantage.
4.SFAC No. 6- These are concerned with financial statements and the elements, which are associated with them. When equity changes, income are thus defined, and this is in terms of net assets. The advantages are that, it encompasses sources, which are non-power, events and transactions, which occur in any business enterprise. It can be amended to serve its intended purpose when financial statements are being presented. In any given period, the net assets are affected by either a decrease or an increase. This is thus reflected upon in the equity entity as well as the existing balance sheets. Equity holders are exempted as they are not affected by transaction changes. It also includes loses, gains, expenses and income, which is calculated in terms of the total amount (Revsine Et al, 2008). Equity changes are observed in all the periods where activities take place. Income should be reported in a comprehensive manner as it is an element of every financial statement. The disadvantage is that this is not acknowledged by IASB.
5.SFAC No. 7- These are concerned with measurements of accounting through the use of present value as well as cash flows. The advantage is that, it involves the process known as asset impairment. During every date of reporting, there has to be indicators of impairment. This means that there is an amount, which must be recovered, and this is in respects to fair value. A criterion exists and should be met since it is extremely reversal (Revsine Et al, 2008). On the other hand, cash flows have to be known as they occur after tax has been paid. This means that the business enterprise must ensure that capital is deployed effectively. The disadvantage of this approach is that it is time consuming as well as being costly.
The most favorable approach according to me is the SFAC No. 6, as it combines all the essential elements of a financial statement. It is easy to establish, which net assets have been affected by changes in equity. One is able to know and confirm all the activities, which take place in the financial statement. The balance sheets provide the total amounts, which were reported in the income (Barney, 2009).
Conclusion
In conclusion, standards of financial reporting are meant to provide reliable and transparent information to stakeholders. This is necessary for purposes of decision making. The information is useful for coming up with strategies for growth. In turn, the various firms benefit in many ways.
References
Revsine, Lawrence. Et al. (2008). Financial Reporting and Analysis. New York: Mc Graw Hill.
Siciliano, Gene. (2003). Finance for Non-Financial Managers. New York: Mc Graw Hill.
Barney Jacob. (2009). Beyond economics: the U.S. recognition of international financial reporting standards as an international sub delegation of the SEC’s rulemaking authority Vanderbilt Journal of Transnational Law Vanderbilt University, School of Law.
Earned Value Management (EVM)
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Earned Value Management (EVM)
Section I: MS Project exercise
Task Objective Deliverables Duration Staff
Water To find water sources Tank 10th November to 14th November 2014 Water Manager
Food To find sources of food Stock 14th November to 16th November 2014 Food Manager
Farm Identify location of Farm Land 16th November to 17th November 2014 Owner
Iron Sheets Obtain enough iron sheets Iron-20 Irons 17th November to 18th November 2014 Worker
Wire Mesh Get equal length wire mesh Length- 20m 18th November to 19th November 2014 Worker
Chicken Obtain source of chicken Number 19th November to 20th November 2014 Owner
Card Boxes Find required numbers 5 Card boxes 20th November to 22ndNovember 2014 Worker
Locks Determine the number 5 Locks 22nd November to 24th November 2014 Owner/Manager
Engineer To design project 1 24st November to 25th November 2014 Hired
Building Stones Find how to obtain them 500 stones 25th November to 26th November 2014 Bought
Medicine for chicks Find where they are sold 4 per day 26th November to 26th November 2014 Buy
Chicken Doctor/Advisor Know where specialists are found 1 26th November to 27th November 2014 Supplier
Tape Measure Find the length required Unlimited Length 27th November to 28th November 2014 Buy
Cement Determine source of cement 5 bags 28th November to30th November 2014 Buy
Shovel Find the number 1 or 2 30th November to 1stDecember 2014 Buy
Chipboards Find location 5 1st December to 3rd December 2014 Buy
Tress Find the number 50 3rd December to 4th December 2014 Buy/Own
Light Energy How to install it Reliable 4th December to 5th December 2014 Reliable and available
Showers Know how many 3 5th December to 6th December 2014 Worker
Wood Determine how to use it 30 6th December to 7th December 2014 Worker
Scooper
Number to use 2 7th December to 8th December 2014 Worker
Cutting Machine How many are required 2 8th December to 9th December 2014 Worker
Wheelbarrow The number of them 2 9th December to 10th December 2014 Owner
Nails The number and where to find long lasting nails 2 Kilograms 10th December to 11th December 2014 None
Driller To know the number required 1 11th December to 12thDecember 2014 None
Table 1: Updated project schedule
Name Formula Value ($) Remarks
Cost variance (CV) EV – AC (15000-7500) 7,500 Under budget
Schedule Variance (SV) EV – PV (15000-5000) 10000 Ahead of schedule
Cost Performance Index (CPI) EV/AC (15000/7500) 2 The project gets 2 cents out of every $1.
Scheduled Performance Index (SPI) EV/PV (15000/5000) 3 The project progressed at 3% of the original rate planned
Estimate at Completion (EAC) AC + (BAC-EV0/CPI
{7500 + (10000-15000)/2 1250
–
Estimate to Complete (ETC) EAC – AC
(1250-7500) -6,250 –
Variance at Completion (VAC) BAC – EAC
(10000-1250) 8,750 –
Table 2: EVM report
Section II: EVM paper
Summary of changes
The project aimed at establishing a poultry farm. The following changes have been made in the original schedule. Firstly, the current project schedule contains five work packages as opposed to the original schedule that had seven work packages. The reduction in the number of packages resulted into a significant change in time schedule. The task durations have been reduced to meet the new schedule. Moreover, the new schedule does not recognize work package for non-staff resources. Additionally, a single work package of duration was developed by merging the start and finish work packages. The new schedule consists of updated start and finish period contained in the same column.
On the other hand, the new project schedule will utilize an outline view in order to deliver the project that aligns with Work Breakdown Structure (WBS). WBS assists in establishing different project deliverables and obtaining detailed information about different schedules and activities by breaking them down into small and manageable activities. The main idea of using EVM is estimates, implementing WBS allows easier cost estimation of small activities ensuring the project operates within the planned budget (Schwalbe 296).
Performance results of the project
The objective of this project is to build a poultry farm. The performance of the project will be evaluated through developing a checklist approach that assessed the productivity of the project. Additionally, the project team will conduct an assessment through randomly selecting different work packages and evaluating them based on the expected results. Finally, project evaluation will involve determining the total budget spent in the whole implementation process and relating it to the scheduled cost to estimate the amount used in excess of the estimated, or the amount left. The following areas establish the performance results for the project:
Operational-The project operational objectives are achieved, and the client gets what he or she had requested. All the expected changes and schedules are communicated on time to allow the client prepare for any cost associated with change in schedule. The performance results of the project are evaluated on the basis of accomplishment of all tasks including those changed during the implementation process.
Risk identification: At the end of the project the project manager should define all risks that interfered with the effectiveness of implementing the project and show how they were mitigated. Risks increase the cost of the project, but the nature of risk determines the impact it causes in a project.
The impact of changed schedule: The project underwent a change on the initial schedule, and this interferes with the initial cost and implementation time as demonstrated on the project timeline. The end results should indicate what extra values were added after changing the project schedule, and how the project would have failed if it maintained its original schedule. Additionally, any change in the project plan results into a significant change in cost. The performance results will establish how effective was the proposed change and how it helped conserve resources, hence reducing the budget.
Performance measurement baseline
The main performance measurement baselines utilized in MS projects currently are Technical, cost, and schedule (Taylor 55). Performance measurement baseline represents a collection of work packages defining the deliverables of an MS project in order to fulfill project goals and objectives. Additionally, performance measurement baseline assists in making the estimation of the exact duration and work effort for each package. Moreover, the baseline makes estimate of the resources needed in terms of budget to produce deliverables and within the specified period. Finally, it defines any internal or external factors that the project team needs to start a work package. The following is a poultry farming project, and the project team has reduced the number of work packages from seven to five. The team has come up with cost estimates for all tasks required to complete the project. The project’s main performance baseline is cost.
Cost forms the most critical aspect of any budget and will act as the most important performance measurement baseline for the poultry farm project. Any approach by the project team to implement any technical activity or reschedule an activity must be associated with cost. Costs in MS project occur under two categories: Distributed budget and undistributed budget (Taylor 55). Distributed budget cost caters for accounts that control active activities being performed for the project. The project team actively involves in minimizing work packages from seven packages to five packages through making several changes on the main schedule. All these activities require budget allocation made possible through distributed budget category. Using the distributed budget as an aspect of performance measure on cost, the project manager can easily measure the cost of implementing the whole project by easily tracking all expenditures.
On the other hand, undistributed budget caters for the scheduled plans that have not yet started. The completion technique used by project managers in executing work packages indicates the percentage of work complete. Those tasks that record less than 5% are termed “not done” and fall under the undistributed budget. The project team revised project work packages to fit five tasks. These tasks fall under the undistributed budget because they were proposed, but have not been accomplished. In addition, the project is at its initial stages of implementation meaning the budget has not been fully utilized. The undistributed budget prevents the project team from making unexpected use of funds set aside for major tasks that were rescheduled. The project also must provide a summary of all tasks performed and the tasks not performed in order to account for the cost of material and services purchased. The cost baseline performs all these tasks.
Cost also represents the performance measurement baseline for this project because the project team works underestimates. The estimated budget for the project is $5,000. The high cost of implementation and the limited amount of finances forced the project team to reduce the number of work packages to five. The project also incurs a lot of risks during implementation, which are a function of cost. In order to effectively carry out the project and make it successful, the team must employ effective cost management and systems. Cost management helps in proper allocation of finances to all tasks and making a workable prediction on any future changes in the economy. On the other hand, cost is associated with many risks that the project team cannot afford taking. The project has taken care of all costs associated with planning, execution, and completion of the project by applying best practices. The best practices employed by the project team involved establishing a team to deal with cost management before embarking on other major activities of the project.
Earned Value Analysis (EVA)
The concept of EVM forms the fundamental approach to MS project management commonly used by many project managers. It forms a sound management approach that assists in the effective implementation of all projects in different fields by offering all levels of management through project schedule and cost. All projects undergo a performance analysis process to determine whether they are worth of execution. Earned Value Analysis (EVA) is a performance measurement tool used by project managers to compare planned and actual project results. The following tool would be of great use on the poultry farm project to forecast future costs issues brought about by rescheduling project tasks. Defining project quantities forms the first step in analyzing the project using EVA. The main qualities of importance as Budgeted Cost of Work Scheduled (BCWS), Budgeted Cost of Work Performed (BCWP) and the Actual Cost of Work Performed (ACWP). These are represented by Planned Value (PV), Earned Value (EV), and Actual Cost (AC) respectively (Nagrecha 5).
The total cost of purchasing project materials was $3370. Adding the cost of labor and buying chickens adds up to &5000. The sum of all budgets allocated to the program was $10,000. The actual cost of work performed is $7500 and the Earned value of $15000. Table 2 provides the estimated future cost issues.
Given; PV = 5,000, EV = 15,000, and AC = 7,500
The values shown in table 2 indicate that the project will be $8,750 more at the time of completion. The calculations indicated that the project is under budgeted, but ahead of schedule.
Works Cited
Nagrecha, S. An introduction to Earned Value Analysis. 2002. Web November 28, 2014
http://www.pmiglc.org/COMM/Articles/0410_nagrecha_eva-3.pdf
Schwalbe, Kathy. Information Technology Project Management. 7th ed. Cambridge, Ma:
Course Technology, 2014. Print.
Taylor, James. Project Scheduling and Cost Control: Planning, Monitoring and Controlling the
Baseline. Ft. Lauderdale, Fla: J. Ross Pub, 2008. Print.
Fitzgeralds view of the American exhibits the death of the American Dream.
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The American dream
Fitzgerald’s view of the American exhibits the death of the American Dream. The novel endeavors to give a glimpse of the affluent life of the high class people in the twenties as observable from the life of a moralistic young man called Nick Carraway. Out of the narrator’s dealings with the high placed society, the audience can note the alteration in the modern values and their consequential changing of the eventual American Dream. The American Dream is highly notable in terms of the materialism, power, and additionally the absence of the morality in the high society. In back.ing of his view, Fitzgerald avails his initial picture of the American dream and also presents its modern version. The Great Gatsby indication of the American dream notes the perseverance and hope as the main qualities others include the idea of success contrary to all odds (Fitzgerald, 100-111).
Life of the James Gatz fully outlines this literal picture as endure all odds to become a real American hero. Through his youthfulness Gatz sticks to his ambition of becoming a great man but intense hard work and industriousness. Furthermore, traits of James are observable from his interaction through romantic life with Hopalong Cassidy. Mr. Gatz confesses to Nick “Jimmy was bound to get ahead. He always had some resolves like this or something. Do you notice what he’s got about improving his mind? He was always great for that” as he was showing him the journal (Fitzgerald, 175). James Gatz interaction with the American dream further is witnessed from a perception that his program especially for self-improvement emanated from Ben Franklin’s Autobiography, stringently from the tiny details.
Notably, from the illustrations the audience notes the hardworking trait and the urge for adventure. James Gatz’s headwork wins his admiration with other characters in the novel for instance, Jay Gatsby, who creates the true picture of the American dream which is the eternal hope. F. Scott Fitzgerald notes that wealth, lack of humanity and privilege are the main cause of the fall of the American dream and money is constantly used as the medium of undertaking the dealings that prompts the death of the American dream. Money effortlessly combines hope and success to eradicate the apparent position of American dream and even replace with materialism. Gatsby successful applies illegal dealings to acquire money which he spends in affluent life: large mansion, lavish parties, conspicuous collection of clothing which ultimately exhibits extends of corruption in his dealings (Fitzgerald, 144-5).
He does his business virtually above the law as from the novel, the traffic police fails to undertake consequential repercussions on him due to his established authority. Deplorable qualities of the American dream is notable from the life of Tom and Daisy Buchanan, whose lives are characterized by the absence of the any hope and full of regrets as the cornerstone of the character is majorly money and wealth. They were careless people, Tom and Daisy- They smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made…” (Fitzgerald, 180-181) are the Nick’s descriptions of Buchanan. Buchanan is careless; for instance, he exhibits lack of regret when he learns of Gatsby’s death he only responds, “I told him the truth…What If I did tell him? That fellow had it coming to him” (Fitzgerald, 187) and even confesses that he is responsible for the death of Gatsby and the suicide by Wilson but he perpetually continues to feel innocent because he has never felt shame as he is a member an established social elite. The upper class category consists of the heartless citizenry who have amassed wealth through dehumanization or trading their souls.
Works cited
Fitzgerald, F S. The Great Gatsby. , 2012. Print.