Fascism Essay Example | Topics and Well Written Essays - 1250 words

Fascism - Essay Example Although a more full and complete analysis of fascism would necessarily require a comparison of fascism around the globe, this particular analysis will merely be concentric upon European fascism and the means by which it was defined in elaborated on by its most visible proponents; Adolph Hitler and Benito Mussolini. According to this level of analysis, the research will investigate Benito Mussolini’s â€Å"The Political and Social Doctrine of Fascism† and compare and contrast it to Adolph Hitler’s Mein Kampf. Further, the analysis will seek to consider what Hitler viewed as the primary and core weakness of democracy, his thoughts and beliefs with regards to individualism, and the underlying reason why Marxists and fascists must necessarily hate one another under the definitions of fascism that will be presented. Moreover, an analysis of bigotry and anti-Semitism will be discussed as a core and fundamental compound that fascism, regardless of its form, seeks to en gage. Most importantly of all, a fundamental level of comparison and contrast between these two characters and the means by which fascism evolved within their respective states will be engaged. One of the clearest levels of comparison exists between the writings of Benito Mussolini and Adolph Hitler is with respect to the degree of contempt that they both shared towards democracy and the idea and/or understanding that people or groups of people should have the determinant right to decide what the future of their nation/state might look like. As a means of understanding this, one should consider the following quote from Mussolini which is as follows: â€Å"The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State—a synthesis and a unit inclusive of all values—interprets, develops, and potentiates the whole life of a people† (Muss olini 14). Likewise, from a careful analysis of Mein Kampf it can be concluded that some of the primary reasons for Hitler detesting the concept and practice of democracy was due to the fact that he considered it to be socialist inspired, week, ineffective, inefficient, effeminate, and patently un-German. Due to such a strong distaste for the concept, it comes as little to no surprise that Hitler, although democratically elected, sought immediately to garner power to himself and his henchman as a means of rapidly turning the German Republic into the Third Reich. An important concept for the reader to grasp is the fact that although Hitler and Mussolini necessarily defined the epiphany of fascism within their respective systems as well as helped to pen some of fascism’s most memorable and defining texts, they were nonetheless merely the figureheads and dictators of these respective peoples. As such, the ills of fascism and the means by which it grew, if all, and was exhibited within both Germany and Italy necessarily engages the reader with the understanding that the people of these respective systems also identified heavily with the series and approaches that their leaders put forward. At multiple times throughout Mein Kampf particular refers to what key defines as Jewish Bolshevism/Jewish Marxism. Due to the fact that

The Allied Occupation of Japan Essay Example for Free

The Allied Occupation of Japan Essay In 1945, to end the Pacific war, Operations Olympic and Coronet, America’s proposed landings on Kyushu and the Tokyo Plain were the largest amphibious invasions ever planned. Thomas M. Huber: Pastel: Deception in the Invasion of Japan Command and General staff college, 1988 {www-cgsc. army. mil/carl/resources/csi/huber2/huber2. asp} The allied forces successfully invaded Japan and imparted values and ethics of democracy in Asia. The success measure is evident, exemplified and argued through various contexts. One it stopped the creation of a Draconian empire in Asia whose onset was the 1937 invasion of China. Shillony 1981: p 87. Brute force and escalation due to self atonement and belief that supremacy through war is power doomed the Japanese and was what the allied forces sought to destroy. Japan was defeated militarily. There deaths of over one and half million soldiers and hundreds of thousands of civilians were a blow to the empires magnum strength in Asia. Bailey, Paul J. 1996 Post War Japan: 1945 to present: The American interregnum p 22 . Though an atrocity to human life, militarily and as per the objectives of the allied invasion, this was a successful war. They won it and Japan when it withered to the onslaught conceded defeat and called on to the forces for a truce. ‘Japan was the only major nation in the world which had never been invaded’ Russell Brines: Macarthur’s Japan, 1948. p 13 It is within this context refutation of the win is made subjective. Within the Japanese empire, there was collective rebellion and repulse to accept defeat due to the implications. A split is seen to have emerged and a struggle to stop the emperor speech by some of the generals is indicative of the remaining strength of the Japanese army. By the end of 1941 Japan had completed a decade of planned industrial expansion and could look back upon a period of considerable achievement. Industrial output had risen from six billion yen in 1930 to thirty billion in 1941. To destroy this and that, was heavily demoralizing and they were defeated not due to the military power but the loss of kin and gains they had made. Jerome B Cohen: Japans Economy in War and Reconstruction. 1995 {pg1} it is arguably correct, that the success was only based on the physiological within the leadership structure of the empire. ‘The army insisted on the continuation of the war while prime minister Suzuki advised acceptance of the surrender terms†¦. Despite a desperate attempt by a few middle ranking officers from the imperial guards division in Tokyo on the night of 14the august to destroy the recordings of the emperors surrender speech, the broadcast went ahead. Bailey, Paul J. 1996 Post War Japan: 1945 to present: The American interregnum {pg 25} This proves, there was still military might in Japan and they would have escalated but a demoralised leader and generals due to the human suffering and loss of lives by innocent humans caved in to the terms of the surrender. However, this cannot be vilified since, it seen from the assertions and collective analysis by the context of Nakamura, Takafusa. 1990. The Post-war Japanese Economy: Its Development and Structure, the Americans, a key player in the allied forces, made the breaking up Japanese economic structures through the principals of Zaibastu dissolution. ‘The purpose of the Zaibastu resolution†¦. Is to destroy Japans military power both physiologically and institutionally’ this dimensional perspective is proving of political weakening and infiltration of Japans key and integral structures. It is indicative of a successful defeat. Nakamura, Takafusa. The Post-war Japanese Economy: Its Development and Structure: Economic democratization 1990 p 25 The principal objective of the Allied forces was to stop and reform the Japanese escalation. They made it possible and due to diversified interest, the objectives of the allied forces shifted based on each country’s policy on the war and Asia. It within this context the split of economic policies between the Union Soviet Socialist Republic and the United States is offset. USSR was instrumental in creating a Korea issue as its interest while from the spoils of Japan, the Americans made economic and military positions in Asia. Japans recipient nature after the war is indicative of its dissolved might and its pro United States policies. The recipient nature developed from the brute force of the American forces in the war and the final blow that was the atomic bomb that led to deaths of thousands of innocent civilians. This also signifies that, the Japanese had gone further in the war to form a formidable force whose strength could not be eased and only a political demoralization strategy within military options would create that opportunity, hence the brute action by the United States. Subsequently, the post-war Japan policies and principals all correlate with assertions which deem the allied forces won the war ‘the externally imposed occupation reforms greatly changed the fixed system of the pre-war Japanese economy and ended by preparing a rich soil not only for democratization but also for economic growth’ Nakamura, Takafusa. The Post-war Japanese Economy: Its Development and Structure: The post war Japanese economy1990. p 48 . Based on this fact, the essence of the invasion and its effectiveness in imparting or rather inducing policies and structures of the allied forces political and economic systems is within this context then. Beyond reasonable doubt, this was a complete and successful invasion. Factual evidence of the invasion and its extremes of success are seen in the Japanese leaders acceding to American war demands and surrender instructions. Based on the President Truman and the great general, in the Asian conflict General McArthur, principles on the Japanese escalation, prowess and economic structures, the Japanese had to go into the sea, board the US naval ship USS Missouri and sign the peace accord that made them safe than sorry in the naval ship. H. Passin, The Occupational: Some reflections, in C Gluck and S Graudbard, Showa: the Japan of Hirohito, 1992 p 108 In his explication of these events Passin is emphatic about the brute of the Americans. They assume the polity of the Japanese who had imbued themselves with extreme gusto, gist and were drunk with power. According to Passin the Americans showed off during the signing of the treaty. The subsequent course of events led to demilitarization of Japan, an ethic fact that shows Japan had been incapacitated and completely taken over. Further economic restructuring using America policies and reforming the country political and judicial system is indicative of the vast influence and filtration of the Japanese by the Americans deep in to their social economics, tradition and religious structures. The question of how long the American occupation and restructuring of the Japanese socio-political- economic structures would last was ambiguous then as Passin implies. It is long term and this often spells the question of whether these American policies are a continuation of the occupation. Seen from his virtues, Passin seems to admit hypothetically that the occupation was a long-term one and that the effects and the continuity was not parametrical hence no projections would ratify nor assume the end of the era. ‘Will the reforms last or will they disappear as soon as we leave? ’ this is and was then a fair question, but is it answerable? Despite all the fanfare and futurology we cannot really predict the future in any degree of complexity. H. Passin, The Occupational: Some reflections, in C Gluck and S Graudbard, Showa: the Japan of Hirohito, New York: Norton 1992 pg 125 . Another agreement with the purge is seen within the Robert Wolfe context. ‘In the interim, the basic policies regarding the removal of Japans wartime leadership had been translated into a far-reaching directive to the Japanese Government entitled Removal and Exclusion of Undesirable Personnel from Public Office’ Robert Wolfe, Americans as Proconsuls: United States Government in Germany and Japan, 1944-1952 p 188 Passin revisits the Zaibastu issue sceptically and quite emphatically. The Zaibastu principle is a proliferation like principle. All the structures of the economy and the legislative structures are brought to their knees through disintegrating them and making military and economic stability not to withstand any slight implication. According to Passin, the dissolution was controversial. ‘The dissolution of the Zaibastu remains the most controversial of the occupational measures with respect to its desirability and its effectiveness’ H. Passin, The Occupational: Some reflections, in C Gluck and S Graudbard, Showa: the Japan of Hirohito, New York: Norton 1992 pg 117 He is empathic in context. He is seeking to moralize the Zaibastu as a structure which was not only an integral Japanese economic and social stability pillar but also the basis of both. Evident is the aspect of powerlessness of the Japanese in this comment. It is practically impossible to bring about Japan based policy within this conflict period and the Americans and their allies are not only prejudiced against the structures that supported the brute Japan but also ready to destroy them. Japan within this context is displayed as a nabbed culprit who has no choice but to tow the line to get any reprieve or empathy but first has to undergo phases of self realism and reconstruction of moral authority over his self. The profoundness of the wining and the success is measurable within this perspective. What Passin implies is that Japan was now a pawn, a completely incapacitated nation. ‘The occupation penetration into even the most intimate of Japanese institutions, the family, parental authority†¦. was no mere exercise of missionary impulse’ H. Passin, The Occupational: Some reflections, in C Gluck and S Graudbard, Showa: the Japan of Hirohito, New York: Norton 1992 pg 117 What would further clarify the porous-ness of the Japanese nation under the American and allied forces? Within this ethical projection of the penetration, Japan is merely under the forces, rule and legislation of the occupier. It is not refutable, it is factual, the truth. Japan was conquered and it surrendered and it then caved in. Its structures were destroyed and the occupier built his within and made them the Japanese institutions which had and still use the same values and ethics to run. Without making the war the basis of success, it’s the objectives of the war that vilify the win. The draconian Japan was contained. The allied forces stopped the emergence of an Asian kingdom led by the Japanese and their ruthlessness. A regional conflict then was ensuing and the Japanese were instrumental in stifling and frustrating efforts of all well wishers. Containing Japan was moral and loosing the war would have led to regional imbalance. The discourse is contextual and this is seen through Robert E Edward variable assertions about American policies or post war Japan and the quite intricate policy administrations to avert shift of Japanese community trust on the new structures of peace, democracy and political inclination and stop possible uprising to oppose these new structures. To justify and prove that the allied forces won the war, Edwards says ‘American victory was a vindication of their own political institutions and ideals’ Ward, Robert E. 1987. Conclusion, in R. E. Ward and Y. Sakamoto (eds), Democratising Japan: the Allied Occupation {pg 397} , it is a case of proving the war was won and that there was escalation in the win and this was incorporation of the American policies into the Japanese system. The perspectives of the Japanese were and have been an Asian economic progress. As seen in the context of, Morris-Suzuki, Tessa. Invisible countries: Japan and the Asian dream {online} Japan sought to have an empire that would make it to the realm of military and economic strength and prowess. However it was the principles and modus that contradicted and dissented with the international community then hence the successful invasion of Japan by the allied forces to stop its escalation in principal. Sources Thomas M. Huber: Pastel: Deception in the Invasion of Japan Command and General staff college, 1988 {www-cgsc. army. mil/carl/resources/csi/huber2/huber2. asp} -Shillony 1981:87

Research paper on Mark Twain: Adventures Of Huckleberry Finn :: essays papers

Research paper on Mark Twain: Adventures Of Huckleberry Finn Mark Twains Adventures of Huckleberry Finn is a novel about a young boys coming of age in the Missouri of the mid-1800s. It is the story of Hucks struggle to win freedom for himself and Jim, a Negro slave. Adventures of Huckleberry Finn was Mark Twains greatest book, and a delighted world named it his masterpiece. To nations knowing it well - Huck riding his raft in every language men could print - it was Americas masterpiece (Allen 259). It is considered one of the greatest novels because it conceals so well Twains opinions within what is seemingly a childs book. Though initially condemned as inappropriate material for young readers, it soon became prized for its recreation of the Antebellum South, its insights into slavery, and its depiction of adolescent life. The novel resumes Hucks tale from the Adventures of Tom Sawyer, which ended with Hucks adoption by Widow Douglas. But it is so much more. Into this book the world called his masterpiece, Mark Twain put his prime purpose, one that branched in all his writing: a plea for humanity, for the end of caste, and of its cruelties (Allen 260). Twain, whose real name is Samuel Langhorne Clemens, was born in Florida, Missouri, in 1835. During his childhood he lived in Hannibal, Missouri, a Mississippi river port that was to become a large influence on his future writing. It was Twains nature to write about where he lived, and his nature to criticize it if he felt it necessary. As far his structure, Kaplan said, In plotting a book his structural sense was weak; intoxicated by a hunch, he seldom saw far ahead, and too many of his stories peter out from the authors fatigue or surfeit. His wayward techniques came close to free association. This method served him best after he had conjured up characters from lon ago, who on coming to life wrote the narrative for him, passing from incident to incident with a grace their creator could never achieve in manipulating an artificial plot (Kaplan 16). His best friend of forty years William D. Howells, has this to say about Twains writing. So far as I know, Mr. Clemens is the first writer to use in extended writing the fashion we all use in thinking, and to set down the thing that comes into his mind without fear or favor of the thing that went before or the thing that may be about to follow (Howells 186).

Audit – Solutions for Chapter 2

* Solutions for Chapter 2 * Corporate Governance Review Questions: 2-1. Corporate governance is defined as: â€Å"a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organization. The owners (stockholders) elect a board of directors to provide oversight of the organization’s activities and accountability back to its stakeholders. † The key players in corporate governance are the stockholders (owners), board of directors, audit committees, management, regulatory bodies, and both internal and external auditors. -2. In the past decade, all parties failed to a certain extent. For detailed analysis, see exhibit 2. 2 in the chapter and repeated here: Corporate Governance Responsibilities and Failures Party | Overview of Responsibilities| Overview of Corporate Governance Failures| Stockholders| Broad Role: Provide effective oversight through election of Board process, approve major initiativ es, buy or sell stock. | Focused on short-term prices; failed to perform long-term growth analysis; abdicated all responsibilities to management as long as stock price increased. Board of Directors| Broad Role: the major representative of stockholders to ensure that the organization is run according to the organization charter and there is proper accountability. Specific activities include: * Selecting management. * Reviewing management performance and determining compensation. * Declaring dividends * Approving major changes, e. g. mergers * Approving corporate strategy * Overseeing accountability activities. | * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that rovided perverse incentives, including incentives to manage earnings. * Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expertise to perform duties. * Continually re-priced stock options when market price decline d. | Management| Broad Role: Operations and Accountability. Managing the organization effectively and provide accurate and timely accountability to shareholders and other stakeholders. Specific activities include: * Formulating strategy and risk appetite. * Implementing effective internal controls. * Developing financial reports. Developing other reports to meet public, stakeholder, and regulatory requirements. | * Earnings management to meet analyst expectations. * Fraudulent financial reporting. * Pushing accounting concepts to achieve reporting objective. * Viewed accounting as a tool, not a framework for accurate reporting. | Audit Committees of the Board of Directors| Broad Role: Provide oversight of the internal and external audit function and the process of preparing the annual accuracy financial statements and public reports on internal control. Specific activities include: * Selecting the external audit firm. Approving any non-audit work performed by audit firm. * Selecting and/or approving the appointment of the Chief Audit Executive (Internal Auditor), * Reviewing and approving the scope and budget of the internal audit function. * Discussing audit findings with internal auditor and external auditor and advising the Board (and management) on specific actions that should be taken. | * Similar to Board members – did not have expertise or time to provide effective oversight of audit functions. * Were not viewed by auditors as the ‘audit client’. Rather the power to hire and fire the auditors often rested with management. Self-Regulatory Organizations: AICPA, FASB| Broad Role: Setting accounting and auditing standards dictating underlying financial reporting and auditing concepts. Set the expectations of audit quality and accounting quality. Specific roles include: * Establishing accounting principles * Establishing auditing standards * Interpreting previously issued standards * Implementing quality control processes to ensure audit quality. * Educating members on audit and accounting requirements. | * AICPA: Peer reviews did not take a public perspective; rather than looked at standards that were developed and reinforced internally. AICPA: Leadership transposed the organization for a public organization to a â€Å"trade association† that looked for revenue enhancement opportunities for its members. * AICPA: Did not actively involve third parties in standard setting. * FASB: Became more rule-oriented in response to (a) complex economic transactions; and (b) an auditing profession that was more oriented to pushing the rules rather than enforcing concepts. * FASB: Pressure from Congress to develop rules that enhanced economic growth, e. g. allowing organizations to not expense stock options. Other Self-Regulatory Organizations, e. g. NYSE, NASD| Broad Role: Ensuring the efficiency of the financial markets including oversight of trading and oversight of companies that are allowed to trade on the exchange. S pecific activities include: * Establishing listing requirements – including accounting requirements, governance requirements, etc. * Overseeing trading activities,| * Pushed for improvements for better corporate governance procedures by its members, but failed to implement those same procedures for its governing board, management, and trading specialists. Regulatory Agencies: the SEC| Broad Role: Ensure the accuracy, timeliness, and fairness of public reporting of financial and other information for public companies. Specific activities include: * Reviewing all mandatory filings with the SEC, * Interacting with the FASB in setting accounting standards, * Specifying independence standards required of auditors that report on public financial statements, * Identify corporate frauds, investigate causes, and suggest remedial actions. * Identified problems but was never granted sufficient resources by Congress or the Administration to deal with the issues. | External Auditors| Broa d Role: Performing audits of company financial statements to ensure that the statements are free of material misstatements including misstatements that may be due to fraud. Specific activities include: * Audits of public company financial statements, * Audits of non-public company financial statements, * Other accounting related work such as tax or consulting. | * Pushed accounting concepts to the limit to help organizations achieve earnings objectives. Promoted personnel based on ability to sell â€Å"non-audit products†. * Replaced direct tests of accounting balances with a greater use of inquiries, risk analysis, and analytics. * Failed to uncover basic frauds in cases such as WorldCom and HealthSouth because fundamental audit procedures were not performed. | Internal Auditors| Broad Role: Perform audits of companies for compliance with company policies and laws, audits to evaluate the efficiency of operations, and audits to determine the accuracy of financial reporting pr ocesses.Specific activities include: * Reporting results and analyses to management, (including operational management), and audit committees, * Evaluating internal controls. | * Focused efforts on ‘operational audits’ and assumed that financial auditing was addressed sufficiently by the external audit function. * Reported primarily to management with little effective reporting to the audit committee. * In some instances (HealthSouth, WorldCom) did not have access to the corporate financial accounts. | 2-3.The board of directors is often at the top of the list when it comes to responsibility for corporate governance failures. Some of the problems with the board of directors included: * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that provided perverse incentives, including incentives to manage earnings. * Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expe rtise to perform duties. * Continually re-priced stock options when market price declined. 2-4.Some of the ways the auditing profession was responsible were: * Too concerned about creating â€Å"revenue enhancement† opportunities for the firm, and less concerned about their core services or talents * Were willing to â€Å"push† accounting standards to the limit to help clients achieve earnings goals * Began to use more audit â€Å"shortcuts† such as inquiry and analytical procedures instead of direct testing of account balance. * Relied on management representations instead of testing management representations. * Were too often ‘advocates’ of management rather than protectors of users. 2-5.Cookie jar reserves are essentially liabilities or contra-assets that companies have overestimated in previous years to use when times are tougher to smooth earnings. The rationale is that the funds are then used to â€Å"smooth† earnings in the years when earnings need a boost. â€Å"Smooth† earnings typically are looked upon more favorably by the stock market. An example of a cookie jar reserve would be over-estimating an allowance account, such as allowance for doubtful accounts. The allowance account is then written down (and into the income statement) in a bad year. The result is to increase earnings in the subsequent year. 2-6.Users should expect auditors to have the expertise, independence, and professional skepticism to render an unbiased and justified opinion on the financial statements. Auditors are expected to gather sufficient applicable evidence to render an independent opinion on the financial statements. 2-7. The Sarbanes-Oxley Act was designed to â€Å"clean-up† corporate America, especially in the realms of financial reporting. The overall intent was to encourage better corporate governance; to make the audit committee the auditor’s client; encourage the independence and oversight of the board, a nd improve the independence of the external audit profession.There were certainly many factors that led to the Sarbanes-Oxley Act, but the failures at Enron and WorldCom will probably be pointed to in the future as the major factors that led to the act being passed when it was. The Congress intended to develop a new reporting process that would provide just cause for the public to again trust financial statements and the audit processes leading up to the audit opinion. 2-8. The PCAOB is mandated by Congress to set standards for audits of public companies and perform quality control inspections of CPA firms that audit public companies.In order to carry out these responsibilities, the PCAOB requires all firms that audit U. S. listed (public) companies to register with it. It performs annual inspections on all audit firms that audit more than 100 public companies each year. It performs less frequent inspections, usually once every three years, for audit firms that audit less than 100 c ompanies annually. The PCAOB issues Inspection Reports for each inspection that is performed. The first part describes problems they encountered in their reviews of audits and that part is made public.The second part describes problems that the firms have with their quality control process. The second part is not issued publicly unless the firms fail to address the problems pointed out within a reasonable time frame – usually no more than a year. 2-9. Management has always been responsible for fairness, completeness, and accuracy of financial statements, but the Sarbanes-Oxley Act goes a step further by requiring the CEO and CFO to certify the accuracy of financial statements with criminal penalties as a punishment for materially misstated statements.The CEO and CFO must make public their certifications and assume responsibility for the fairness of the financial presentations. It thereby encourages organizations to improve their financial reporting functions. 2-10. Whistle bl owing enables violations of a company’s ethical code to be reported to appropriate levels in an organization, including the audit committee. Because of its presence, potential violators know that there is a real possibility and simple avenue by which inappropriate actions may be revealed.As such, it contains a preventive component that is indirectly helpful to the audit committee in fulfilling its corporate governance role. 2-11. There are a number of provisions that are designed to increase auditor independence. First, Rule 201 of the Act prohibits any registered public accounting firm from providing many non-audit services to their public audit clients. Second, the audit committee became the â€Å"client† instead of management, and only the audit committee can hire and fire auditors. Third, audit partners are required to rotate every five years.Finally, the auditors are expected to follow fundamental principles of independence that have been enacted by the SEC (more details in Chapter 3). 2-12. Management is responsible for issued financial statements. Although other parties may be sued for what is contained in the statements, management is ultimately responsible. Ownership is important because it establishes responsibility and accountability. Management must set up and monitor financial reporting systems that help it meet its reporting obligations. It cannot delegate this responsibility to the auditors. 2-13.An audit committee is a subcommittee of the board of directors that is composed of independent, outside directors. The audit committee has oversight responsibility (on behalf of the full board of directors and its stockholders) for the outside reporting of the company (including annual financial statements); risk monitoring and control processes; and both internal and external audit functions. 2-14. An outside director is not a member of management, legal counsel, a major vendor, outside service provider, former employee, or others who may have a personal relationship with management that might impair their objectivity or independence.The audit committee is responsible for assessing the independence of the external auditor and engage only auditors it believes are independent. Auditors are now hired and fired by audit committee members, not management. The intent is to make auditor accountability more congruent with stockholder and third-party needs. 2-15. The primary point of this question is for students to understand that the audit committee’s role is one of oversight rather than direct responsibility. For example, management is responsible for the fairness of the financial statements.Auditors are responsible for their audit and independent assessment of financial reporting. The audit committee is not designed to replace the responsibility of either of these functions. The audit committee’s oversight processes are to see that the management processes for financial reporting are adequate and the audito r’s carry out their responsibilities in an independent and competent manner. 2-16. The audit committee has the ability to hire and fire both the internal auditor and the external auditor.However, in the case of the internal audit function, the audit committee has the ability to hire and fire the head of internal audit as well as set the audit plan and budget. The audit committee does not control regulatory auditors, but should meet with regulatory auditors to understand the scope of their work and to discuss audit findings with them. 2-17. The Sarbanes-Oxley Act applies only to public companies. Therefore, the Act does not require non-public companies to have audit committees. That is not to say that it does not happen or is not a good idea, however.Most stakeholders want an independent party to ensure that their interests are being considered. The AICPA recommends audit committees for smaller public companies. 2-18. The external auditor should discuss any controversial accou nting choices with the audit committee and must communicate all significant adjustments made to the financial statements during the course of the audit. In addition, the processes used in making judgments and estimates as well as any disagreements with management should be communicated.Other items that need to be communicated include: * All adjustments that were not made during the course of the audit, * Difficulties in conducting the audit, * The auditor’s assessment of the accounting principles used and overall fairness of the financial presentation, * The client’s consultation with other auditors, * Any consultation with management before accepting the audit engagement, * Significant deficiencies in internal control. 2-19. The audit committee needs to ensure that the auditor is independent with respect to the annual audit.In order to ensure that independence, the audit committee must consider all other services that might be performed by the external auditor and app rove any such services, in advance. If the audit committee approves the services, they are in essence saying that the provision of the services will not impair the auditor’s independence. 2-20. Good governance is important to the external auditor for a number of reasons, including, but not limited to the following. Good governance * usually leads to better corporate performance, reflects a commitment to a high level of ethics, integrity, and sets a strong tone for the organization’s activities, * requires a commitment to financial reporting competencies and to good internal controls, * reduces the risk that the company will have materially misstated financial statements. If a client does not have good governance, there are greater risks associated with the client. For example, their poor performance may lead to financial failure and lack of payment of the audit fee.Or their poor governance may lead to improprieties in financial reporting, which puts the auditor at risk in terms of litigation (if the improprieties go undetected by the auditor). 2-21. The auditor might utilize the following procedures in determining the actual level of governance in an organization: * observe the functioning of the audit committee by participating in the meetings, noting the quality of the audit committee questions and responses, * interactions with management regarding issues related to the audit, e. g. * providing requested information on a timely basis, quality of financial personnel in making judgments, * accounting choices that tend to ‘push the limits’ towards aggressiveness or creating additional reported net income, * the quality of internal controls within the organization. * review the minutes of the board of directors meetings to determine that they are consistent with good governance, * review internal audit reports and especially determine the actions taken by management concerning the internal auditor’s findings and recommendations , * review the compensation plan for top management, review management expense reimbursements to determine (a) completeness of documentation, (b) appropriateness of requested reimbursement, and (c) extent of such requests. * review management’s statements to the financial press to determine if they are consistent with the company’s operations. 2-22. Good corporate governance is correlated with increased corporate performance as measured by return on equity, or return on capital. Generally, good corporate governance reduces audit risk as it is less likely that the organization will suffer from problems of management integrity, or would have an environment that might allow or permit fraud.Less audit risk implies that the amount of work to render an opinion on the financial statements would also be less than that required for a company with poorer corporate governance. 2-23. The three categories of audit standards are general standards, fieldwork standards, and reporting standards. General standards cover the characteristics of the auditor – technical training and proficiency, independence, and due professional care. Fieldwork standards provide guidance concerning planning and performing the audit.Reporting standards cover the essential elements of the auditor’s communication, including the opinion, the criteria against which the assertions were tested, and an explanation of the basis for the attestor’s opinion. 2-24. Due professional care is the expectation that an audit will be conducted with the skill and care of a professional. The standard of due professional care plays a role in litigation against auditors. Plaintiffs will try to show that the auditor did not do what a reasonably prudent auditor would have done.To evaluate the standard, a third-party also decides whether someone with similar skills in a similar situation would have acted in the same way. 2-25. There are three important dimensions identified in Exhibit 2. 5 : * Scope of Information on which assurance is provided, * Nature of Organizations on which assurance is provided, * Domicile of Company being audited. These three dimensions influence the identification of applicable auditing standards as follows: * A U. S. public company filing annual reports follows PCAOB standards. A U. S. non-public company issuing financial statements, follows AICPA standards, * A foreign company filing financial statements in a different country follows International Standards or the standards of that country, * U. S. companies reporting on other than financial information follows AICPA Attestation or Assurance Standards. 2-26. For the most part, the standards issued by the IAASB are quite similar to that of the two U. S. based audit standard setters. They differ in the following major ways: The auditor must assess the appropriateness of the accounting framework against which the audit opinion will be given (U. S. standards require only that the auditor commu nicate if the accounting is not consistent with U. S. GAAP. ) * IAASB utilizes a concept of Professional Skepticism rather than independence. * The IAASB utilizes a concept of ‘reasonable assurance’ compared with the U. S. evidence on sufficiency of audit evidence and due professional care, * The IAASB standards include both audit standards and assurance standards. 2-27.The IAASB Audit Standards are quite consistent with that of the PCAOB as well as that of the AICPA. Most of the concepts are the same, but are stated differently. They are very similar in the following ways: * Requirement of independence, * Gathering and evaluation of sufficient evidence, * Documentation of audit work, * Audit designed to minimize audit risk, * Due professional care vs. reasonable assurance, * Nature of the audit report The AICPA and the IAASB have announced a plan to work towards convergence of existing and future standards. The PCAOB has not yet announced a plan for convergence. 2-28.A n audit engagement applies to the development of an opinion on an organization’s financial statements. It is planned that the financial statements will be used by third parties who do not have direct access to client data. The audit engagement is a form of ‘positive assurance’ in which an opinion must be rendered. An assurance engagement differs from an audit in a number of important dimensions: * It can apply to almost any assertion that management wants to make as long as there is agreed-upon criteria by which to test management’s assertion. It is preferable that the criteria are generally accepted. An assurance engagement generally requires a third party (although assurance can also be provided to the audit client), but it is an identified third-party as opposed to a potential user of financial statements, * Assurance can be given on individual items of a company’s financial statements, rather than the full set of statements. 2-29. Assurance enga gements are designed to provide ‘positive assurance’, i. e. the item being attested to is either properly presented, or is not properly presented. For example, one of the Big 4 firms provides assurance to the audience that the votes are properly maintained and counted for the Emmy Awards.A ‘limited assurance engagement’ does not contemplate a full audit or assurance engagement such that sufficient information (evidence) is gathered to warrant a positive statement about whether the item being assured is, or is not, properly presented. Rather, based on a more limited amount of work, the auditor either states that ‘nothing came to his or her attention – based on the limited procedures – that indicates something is not fairly presented’. This is often referred to as ‘negative assurance’. An even more limited assurance engagement is one in which the accountant expresses ‘no assurance’ whatsoever on the item be ing reported. -30. * Auditing Standards apply to the auditor’s task of developing and then communicating an opinion on financial statements and, where applicable, independent opinions on the quality of an organization’s internal control over financial statements to the board, management, and outside third parties. * Assurance Standards apply the auditor’s task of developing and communicating an opinion on financial information outside of the normal financial statements, or on non-financial information to management, the board, and outside third-parties.Assurance services are engagements in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users about the outcome of the evaluation or measurement of a subject matter against criteria. * Attestation Standards is a term used by the AICPA to describe assurance services that involve gathering evidence regarding specific assertions and communicating an opinion on th e fairness of the presentation to a third party. Compilation and Review Standards refer to AICPA Standards that apply only to non-public companies where the board or a user has requested some assurance on the fairness of presentation of financial statements. These are referred to as negative assurance standards because the auditor does not gather enough evidence to support a statement as to whether the financial statements are fairly presented. 2-31. Independence means objectivity and freedom from bias. The auditor can favor neither the client nor the third party in evaluating the fairness of the financial statements The auditor must be independent in fact and in appearance.Independence in fact means the auditor is unbiased and objective. An auditor could be independent in fact if he or she owned a few shares of common stock in an audit client, but might not appear independent to a third party. Independence in appearance means that a third party with knowledge of the auditor’ s relationship with the client would consider the auditor to be independent. Professional skepticism, as used in the standards promulgated by the IAASB, has a broader meaning in that it refers to all of the factors that would affect an auditor’s ability to exercise proper skepticism in an audit engagement.The factors to be considered vary from those associated with the individual, such as objectivity, to those associated with the structure of the firm. These are similar to the independence standards that emphasize both audit firm relationships to the client as well as objectivity. However, the IAASB emphasis on professional skepticism goes a bit further: an auditor could be objective, but not necessarily exercise professional skepticism, i. e. being open to potential explanations of events that are not consistent with the auditor’s prior experiences. Professional skepticism appears to be a broader term than independence. 2-32.PCAOB – sets audit standards for the audits of all public companies that are registered with the SEC AICPA * sets audit standards for audits of non-public companies * sets attestation standards for areas other than public company reports on internal control sets standards for assurance services that are less in scope than an audit, such as reviews and compilations IAASB – sets standards for financial statement audits on an international basis. Right now, the international standards are being increasingly accepted by all political jurisdictions, but particularly in Europe and many developing countries. Harmonization with U.S. will continue to be an objective. GAO – sets the standards for financial audits of governmental entities within the U. S. and certain other organizations that receive Federal financial assistance. Goes beyond financial statement audits and also provides standards related to program audits for economy and efficiency of operations. IASB – sets standards for the professional prac tice of internal auditing around the world. Incorporates other standards by reference where applicable. 2-33. General Standards: The audit and attestation standards both require adequate technical training, expertise, and knowledge.They also both require independence and due professional care. The attestation standards differ in that they explicitly require links between assertions and reasonable criteria and a reasonably consistent estimation process; the audit standards implicitly assume this link. Fieldwork Standards: The audit and attestation standards both require planning and sufficient evidence. The audit standards go a step further in requiring an understanding of the entity and its environment. Reporting Standards: The reporting standards are completely different. Each reflects the underlying purpose of the engagement, i. . , the audit is designed to test whether the financials adhere to GAAP, whereas the attestation is designed to test a broader and more diverse set of ass ertions. 2-34. An audit program follows good corporate governance in the following way: Good governance is critical to the development of sound controls in an organization. The stronger the controls, the less risk that the financial statements will be misstated. The development of audit programs follow the standards in determining that sufficient evidence is gathered in order to evaluate the assertions being addressed in the audit engagement.Further, the gathering and evaluation of that evidence must be done by auditors who are independent of the client – in both fact and in appearance. Finally, the work must be carried out by auditors that understand the standards and exercise due professional care in the conduct of the audit engagement. 2-35. The major planning steps are: * Meeting with the audit client * Developing an understanding of the client’s business and industry * Develop an understanding of the client’s financial reporting processes and controls * Dev elop an understanding of materiality Develop a preliminary audit program that identifies the audit objectives defined in chapter 1. 2-36. Materiality is defined as the â€Å"magnitude of an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. † Materiality guidelines usually involve applying percentages to some base, such as total assets, total revenue, or pretax income and consideration of qualitative factors such as the impact on important trends or ratios.The base should be a â€Å"stable† account however, making total assets a better choice than pretax income. 2-37. The auditor would take a sample of all additions to PP&E and verify the cost through reference to vendor invoices to determine that cost is accurately recorded and that title has passed to the company. If the company was considered high risk, the auditor might choose to physically verify the existence of the asset. Multiple Choice Questions: 2-38. d. 2-39. d. this is part of the profession’s problem, but not a cause of the failure. 2-40. a. 2-41. d. 2-42. a. 2-43. . 2-44. d. 2-45. b. 2-46. a. 2-47. f. Discussion and Research Questions: 2-48. a. The auditor might use the following approaches to determine whether a corporate code of ethics is actually followed: * observe corporate behavior in tests performed during the audit, e. g. approaches the company takes to purchasing goods, promoting personnel, and so forth, * observe criteria for promoting personnel; for example does performance always take on greater importance than how things are done, * observe corporate plans to communicate the importance of ethical behavior, e. g. ebcasts, emails, and so forth to communicate the importance of ethics, * review activity on the client’s whistleblowing website, or a summary of wh istleblowing activities reported by the internal auditor, * read a sample of self-evaluations by corporate officers, the board, and the audit committee and compare with the auditor’s observations of behavior, * examine sales transactions made during the end of quarters to determine if the sales reflect ‘performance goals’ as opposed to the company’s code of ethics. b. Are auditors equipped to make subjective judgments?This should be a great discussion question because many young people are attracted to the accounting profession because there are rules and relative certainty as to how things are done. However, as the profession is evolving, more judgments are required in both auditing and accounting. Audit personnel need to be equipped to make judgments on whether the company’s governance structure operates as intended and whether there are deficiencies in internal control when it does not operate effectively. The profession believes that auditors ca n make such judgments. . Assessing the competence of the audit committee can occur in a number of ways. Fortunately, the most persuasive evidence comes from the auditor’s direct interaction with the audit committee on a regular basis. The auditor can determine the nature of questions asked, the depth of understanding shared among audit committee members, and the depth of items included in the audit committee agenda. Many audit committees have self-assessment of their activities using criteria developed by CPA firms, or by the National Association of Corporate Directors.The auditor should also review the minutes of the audit committee meetings and determine the amount of time spent on important issues. An external auditor should be very reluctant to accept an audit engagement where the audit committee is perceived to be weak. There are a number of reasons including: * The lack of good governance most likely influences the organization’s culture and is correlated with a lack of commitment to good internal control. * The auditor has less protection from the group that is designed to assist the auditor in achieving independence. The company may be less likely to be fully forthcoming in discussions with the auditor regarding activities that the auditor might question. d. Internal auditing is an integral part of good corporate governance. It contributes to corporate governance in three distinct ways: * It assists the audit committee in its oversight role by performing requested audits and reporting to the audit committee, * It assists senior management in assessing the continuing quality of its oversight over internal control throughout the organization, * It assists operational management by providing feedback on the quality of its operations and controls. -49. a. Corporate governance is defined as: â€Å"a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organiza tion. The owners (stockholders) elect a board of directors to provide oversight of the organization’s activities and its accountability to stakeholders. † The key players in corporate governance are the stockholders (owners), board of directors, audit committees, management, regulatory bodies, and auditors (both internal and external). b.In the past decade especially, all parties failed to a certain extent. For detailed analysis, see exhibit 2. 2 in the chapter and reproduced below: Corporate Governance Responsibilities and Failures Party | Overview of Responsibilities| Overview of Corporate Governance Failures| Stockholders| Broad Role: Provide effective oversight through election of Board process, approve major initiatives, buy or sell stock. | Focused on short-term prices; failed to perform long-term growth analysis; abdicated all responsibilities to management as long as stock price increased. Board of Directors| Broad Role: the major representative of stockholders to ensure that the organization is run according to the organization charter and there is proper accountability. Specific activities include: * Selecting management. * Reviewing management performance and determining compensation. * Declaring dividends * Approving major changes, e. g. mergers * Approving corporate strategy * Overseeing accountability activities. | * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that provided perverse incentives, including incentives to manage earnings. Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expertise to perform duties. * Continually re-priced stock options when market price declined. | Management| Broad Role: Operations and Accountability. Managing the organization effectively and provide accurate and timely accountability to shareholders and other stakeholders. Specific activities include: * Formulating strategy and risk appetit e. * Implementing effective internal controls. * Developing financial reports. * Developing other reports to meet public, stakeholder, and regulatory requirements. * Earnings management to meet analyst expectations. * Fraudulent financial reporting. * Pushing accounting concepts to achieve reporting objective. * Viewed accounting as a tool, not a framework for accurate reporting. | Audit Committees of the Board of Directors| Broad Role: Provide oversight of the internal and external audit function and the process of preparing the annual accuracy financial statements and public reports on internal control. Specific activities include: * Selecting the external audit firm. * Approving any non-audit work performed by audit firm. Selecting and/or approving the appointment of the Chief Audit Executive (Internal Auditor), * Reviewing and approving the scope and budget of the internal audit function. * Discussing audit findings with internal auditor and external auditor and advising the Boa rd (and management) on specific actions that should be taken. | * Similar to Board members – did not have expertise or time to provide effective oversight of audit functions. * Were not viewed by auditors as the ‘audit client’. Rather the power to hire and fire the auditors often rested with management. Self-Regulatory Organizations: AICPA, FASB| Broad Role: Setting accounting and auditing standards dictating underlying financial reporting and auditing concepts. Set the expectations of audit quality and accounting quality. Specific roles include: * Establishing accounting principles * Establishing auditing standards * Interpreting previously issued standards * Implementing quality control processes to ensure audit quality. * Educating members on audit and accounting requirements. | * AICPA: Peer reviews did not take a public perspective; rather than looked at standards that were developed and reinforced internally. AICPA: Leadership transposed the organization fo r a public organization to a â€Å"trade association† that looked for revenue enhancement opportunities for its members. * AICPA: Did not actively involve third parties in standard setting. * FASB: Became more rule-oriented in response to (a) complex economic transactions; and (b) an auditing profession that was more oriented to pushing the rules rather than enforcing concepts. * FASB: Pressure from Congress to develop rules that enhanced economic growth, e. g. allowing organizations to not expense stock options. Other Self-Regulatory Organizations, e. g. NYSE, NASD| Broad Role: Ensuring the efficiency of the financial markets including oversight of trading and oversight of companies that are allowed to trade on the exchange. Specific activities include: * Establishing listing requirements – including accounting requirements, governance requirements, etc. * Overseeing trading activities,| * Pushed for improvements for better corporate governance procedures by its membe rs, but failed to implement those same procedures for its governing board, management, and trading specialists. Regulatory Agencies: the SEC| Broad Role: Ensure the accuracy, timeliness, and fairness of public reporting of financial and other information for public companies. Specific activities include: * Reviewing all mandatory filings with the SEC, * Interacting with the FASB in setting accounting standards, * Specifying independence standards required of auditors that report on public financial statements, * Identify corporate frauds, investigate causes, and suggest remedial actions. | * Identified problems but was never granted sufficient resources by Congress or the Administration to deal with the issues. External Auditors| Broad Role: Performing audits of company financial statements to ensure that the statements are free of material misstatements including misstatements that may be due to fraud. Specific activities include: * Audits of public company financial statements, * Audits of non-public company financial statements, * Other accounting related work such as tax or consulting. | * Pushed accounting concepts to the limit to help organizations achieve earnings objectives. * Promoted personnel based on ability to sell â€Å"non-audit products†. Replaced direct tests of accounting balances with a greater use of inquiries, risk analysis, and analytics. * Failed to uncover basic frauds in cases such as WorldCom and HealthSouth because fundamental audit procedures were not performed. | Internal Auditors| Broad Role: Perform audits of companies for compliance with company policies and laws, audits to evaluate the efficiency of operations, and audits to determine the accuracy of financial reporting processes. Specific activities include: *Reporting results and analyses to management, (including operational management), and audit committees, * Evaluating internal controls. | * Focused efforts on ‘operational audits’ and assumed that fina ncial auditing was addressed sufficiently by the external audit function. * Reported primarily to management with little effective reporting to the audit committee. * In some instances (HealthSouth, WorldCom) did not have access to the corporate financial accounts. | c. There is an inverse relationship between corporate governance and risk to the auditor i. e. he better the quality of corporate governance, the lower the risk to the auditor. This relationship occurs because lower levels of corporate governance implies two things for the auditor: * There is more likelihood that the organization will have misstatements in its financial statements because the commitment to a strong organizational structure and oversight is missing, * There is greater risk to the auditor because the governance structure is not designed to prevent/detect such misstatements, and will likely not be as forthcoming when the auditor questions potential problems. -50. Element of Poor Corporate Governance| Audit Activity to Determine if Governance is actually Poor| Risk Implication of Poor Governance| The company is in the financial services sector and has a large number of consumer loans, including mortgages, outstanding. | This is not necessarily poor governance. However, the auditor needs to determine the amount of risk that is inherent in the current loan portfolio and whether the risk could have been managed through better risk management by the organization. The lack of good risk management by the organization increases the risk that the financial statements will be misstated because of the difficulty of estimating the allowance for loan losses. The auditor will have to focus increased efforts on estimating loan losses, including a comparison of how the company is doing in relation to the other companies in the financial sector. | The CEO and CFO’s compensation is based on three components: (a) base salary, (b) bonus based on growth in assets and profits, and (c) significant s tock options. This is a rather common compensation package and, by itself, is not necessarily poor corporate governance. However, in combination with other things, the use of ‘significant stock options’ may create an incentive for management to potentially manage reported earnings in order to boost the price of the company’s stock. The auditor can determine if it is poor corporate governance by determining the extent that other safeguards are in place to protect the company. In combination with other things, the use of ‘significant stock options’ may create an incentive for management to potentially manage reported earnings in order to boost the price of the company’s stock. The auditor should carefully examine if the company’s reported earnings and stock price differs broadly from companies in the same sector. If that is the case, there is a possibility of earnings manipulation and the auditor should investigate to see if such manipula tion is occurring. The audit committee meets semi-annually. It is chaired by a retired CFO who knows the company well because she had served as the CFO of a division of the firm before retirement. The other two members are local community members – one is the President of the Chamber of Commerce and the other is a retired executive from a successful local manufacturing firm. | There is a strong indicator of poor corporate governance.If the audit committee meets only twice a year, it is unlikely that it is devoting appropriate amounts of time to its oversight function, including reports from both internal and external audit. There is another problem in that the chair of the audit committee was previously employed by the company and would not meet the definition of an independent director. Finally, the problems with the other two members is that there is no indication that either of them have sufficient financial expertise. This is an example of poor governance because (1) it s ignals that the organization has not made a commitment to independent oversight by the audit committee, (2) the lack of financial expertise means that the auditor does not have someone independent that they can discuss controversial accounting or audit issues that arise during the course of the audit. If there is a disagreement with management, the audit committee does not have the expertise to make independent judgments on whether the auditor or management has the appropriate view of he accounting or audit issues. | The company has an internal auditor who reports directly to the CFO, and makes an annual report to the audit committee. | The good news is that the organization has an internal audit activity. | The bad news is that a staff of one isn’t necessarily as large or as diverse as it needs to be to cover the major risks of the organization. The external auditor will be more limited in determining the extent that his or her work can rely on the internal auditor. The CEO is a dominating personality – not unusual in this environment. He has been on the job for 6 months and has decreed that he is streamlining the organization to reduce costs and centralize authority (most of it in him). | A dominant CEO is not especially unusual, but the centralization of power in the CEO is a risk that many aspects of governance, as well as internal control could be overridden. The auditor should look at policy manuals, as well as interview other members of management and the board – especially the audit committee. The centralization of power in the CEO is a risk that many aspects of governance, as well as internal control could be overridden. This increases the amount of audit risk. | The Company has a loan committee. It meets quarterly to approve, on an ex-post basis all loans that are over $300 million (top 5% for this institution). | The auditor should observe the minutes of the loan committee to verify its meetings. The auditor should also intervie w the chairman of the loan committee to understand both its policies and its attitude towards controls and risk. There are a couple of elements in this statement that carries great risk to the audit and to the organization. First, the loan committee only meets quarterly. Economic conditions change more rapidly than once a quarter, and thus the review is not timely. Second, the only loans reviewed are (a) large loans that (b) have already been made. Thus, the loan committee does not act as a control or a check on management or the organization. The risk is that many more loans than would be expected could be delinquent, and need to be written down. The previous auditor has resigned because of a dispute regarding the accounting treatment and fair value assessment of some of the loans. | The auditor should contact the previous auditor to obtain an understanding as to the factors that led the previous auditor to either resign or be fired. The auditor is also concerned with who led the c harge to get rid of the auditor. | This is a very high risk indicator. The auditor would look extremely bad if the previous auditor resigned over a valuation issue and the new auditor failed to adequately address the same issue.Second, this is a risk factor because the organization shows that it is willing to get rid of auditors with whom they do not agree. This is a problem of auditor independence and coincides with the above identification of the weakness of the audit committee. This action confirms a generally poor quality of corporate governance. | 2-51. a. External auditors are supposed to perform audits of financial statements to ensure that the statements are free of material misstatements. They work for each of the parties to a certain extent and since they are independent, they will not favor any party over the other.The auditors are an independent and objective attestor that evaluates the quality of financial reporting and conveys an opinion to all parties involved in corp orate governance. b. Some of the ways the accounting profession was responsible were: * Were too concerned about creating â€Å"revenue enhancement† opportunities, and less concerned about their core services or talents * Were willing to â€Å"push† accounting standards to the limit to help clients achieve earnings goals * Began to use more audit â€Å"shortcuts† such as inquiry and analytical procedures instead of direct testing of account balance. Relied on management representations instead of testing management representations. c. The term â€Å"public watchdog† implies that auditors will look over the business world and stop bad things from happening. In terms of financial statements, Arthur Levitt said, â€Å"We rely on auditors to put something like the good housekeeping seal of approval on the information investors receive. † The term â€Å"public watchdog† places a great deal of responsibility on the shoulders of auditors to protect the public’s interests. 2-52. b&c. Cookie jar reserves are essentially funds that companies have â€Å"stashed away† to use when times get tough. The rationale is that the reserves are then used to â€Å"smooth† earnings in the years when earnings needs a boost. â€Å"Smooth† earnings typically are looked upon more favorably by the stock market. An example of a cookie jar reserve would be over-estimating an allowance account, such as allowance for doubtful accounts. The allowance account is then written down (and into the income statement) in a bad year.Auditors may have allowed cookie jar reserves because they are known to smooth earnings, and smooth earnings are rewarded by the market. On the flip side, fluctuating earnings are penalized, and present more risk to the company of bankruptcy or other problems. The Sarbanes-Oxley Act addressed the issue by creating an oversight body, the PCAOB, but also addressed the issue in other ways. For example, Congr ess felt that creating more effective Boards would decrease the use of earnings management. Allowing improper revenue recognition is one thing that auditors may have done in their unwillingness to say â€Å"no† to clients.For example, companies shipped out goods to customers at the end of the year for deep discounts and allowed returns at the beginning of the next year. This practice is known as channel stuffing. Since the goods had a great chance of being returned, it would be improper to recognize all as revenue. Again, auditors were unwilling to say â€Å"no† to clients. Greed is probably the reason here. If companies claim more revenue, their stock would grow in the short-term, making management richer, and making management more willing to give pay raises to their auditors.With the establishment of stronger audit committees and certification of financial statements in the Sarbanes-Oxley Act, this kind of accounting trickery will certainly decrease. Creative accoun ting for M&A included the use of the â€Å"pooling† method of accounting. Pooling allowed acquiring companies to value existing assets at historical costs and did not require the recognition of goodwill for the acquisition. Because true costs (values) were not shown on the financial statements, management was often encouraged to bid up prices for acquisitions with the result that many of them were not economic.The creative accounting also shielded the income statement from charges that would have otherwise hit income including: goodwill amortization, depreciation, and depletion expenses. Greed, the same reasons as the revenue recognition issue, was most likely the motivation for this creative accounting. Discussion between an educated audit committee and auditor plus certification of financial statements required by Sarbanes-Oxley will certainly address this issue. Assisting management to meet earnings.Too often, auditors confused ‘financial engineering’ with val ue-adding. In other words, auditors often sought to add value to their clients by finding ways to push accounting to achieve earnings objectives sought by management. These earnings objectives then played a major role in escalating stock prices – all desired because of the heavy emphasis of management compensation on stock options. Incentives were misaligned. Most of management compensation came in the form of stock options.Better audit committees, increased auditor responsibility, identification of users as the client of the auditor, and management certification of statements will address the issue via requirements of the Sarbanes-Oxley Act. 2-53. a. Some ways that the impact of the Sarbanes-Oxley Act affects the external audit profession: * The creation of the PCAOB puts a watchful eye on the accounting industry. * Reporting on internal controls is required by the external auditor, adding to their workload but also strengthening their value to organizations and giving them more assurance when giving an audit opinion. Auditors can now feel more comfortable taking issues to the audit committee * Audit partners must rotate off every five years. This will create a difficult transition at every client every five years. * With the cooling off period, audit partners or managers cannot take jobs with clients as easily. b. The Sarbanes-Oxley Act encourages effective internal audit functions for all public companies. The internal audit profession has been active in assisting companies in complying with the internal control provisions of the Act. c. This could be argued either way.On one side, the legislation clearly creates a â€Å"watchdog† of the accounting industry, which decreases the power and prestige as the profession is no longer self-regulated. On the other hand, the Act and recent business press has brought a lot of attention to the accounting industry, which has educated the world about the role of accountants in the economy, and possibly incr eased their power and prestige. Now, there is a general feeling that the public accounting profession has reestablished itself as a watchdog for investors and see the audit committee as their primary client.Overall, the consensus seems to be that the profession has regained a great deal of its prestige. 2-54. a. The Sarbanes-Oxley Act changed responsibilities of management in the following ways: * Requirement that CEO and CFO certify the financial statements and disclosures * Requirement that companies provide a comprehensive report on internal controls over financial reporting * Requirement to describe whether they have implemented a Corporate Code of Conduct, including provisions for whistleblowing, and processes to ensure hat corporate actions are consistent with the Code of Conduct. b. Under The Sarbanes-Oxley Act, management is no longer the â€Å"client. † The auditor reports to the audit committee, who is independent of management. With these changes, the auditor shoul d be able to be â€Å"tougher† on management because the audit committee will be demanding it. However, the auditor still has to work with management to gain access to needed information, as well as understanding management intent as management intent drives some accounting treatments. . The CEO and CFO, as members of management, are ultimately responsible for the financial statements. The chair of the audit committee and the external auditor are then responsible to a certain extent, probably more in the minds of the public than in reality. Finally, the Director of Internal Audit is the least responsible of the group, as they are essentially employees of management and the audit committee. 2-55. a. The audit committee must be comprised of â€Å"outside† independent directors, one of whom must be a financial expert.The audit committee now has the authority to hire and fire the external auditor, and will therefore serve as the auditor’s primary contact, especially for accounting and audit related issues. In addition, the audit committee sets the scope for and hires internal auditors. They must review the work of both parties. b. The audit committee certainly takes on much more responsibility with the new standard. They will now be much more informed about the audit function and financial reporting processes within their company. The auditor must report all significant problems to the audit committee.For auditors, the reporting relationship should reinforce the need to keep the third-party users in mind in dealing with reporting choices. c. The audit committee is basically in a position of mediator, but not problem solver. One member must be a financial expert, but all members must be well versed in the field. This financial knowledge can help the audit committee to understand the disagreement. Ultimately, the auditor has to be able to give a clean audit opinion. If they believe a certain accounting treatment to be wrong, they do not have to give that clean opinion.In this way, neither the audit committee nor management can necessarily solve a dispute. d. The accounting choice is acceptable, and thus, the financial statements are fairly presented in accordance with GAAP. The fact that the auditor believes there is a better treatment should be communicated to important parties as follows: * Management – the communication should be made directly, and the rationale for the auditor’s opinion should be explained to management and documented in the working papers. The working papers should also include the client’s rationale for the chosen accounting treatment. Audit Committee – Both management’s chosen treatment and the auditor’s preferred treatment should be communicated to the audit committee. Preferably the communication would include both verbal communication and written communication. The rationale for accepting management’s accounting treatment should also be communicate d. * Users of the Financial Statement – There is no required communication to the outside users of the financial statements as long as the auditor has concluded that the financial statements are fairly presented in accordance with GAAP. 2-56. . An audit committee is a subcommittee of the board of directors; it is responsible for monitoring audit activities and serves as a surrogate for the interests of shareholders. Audit committees should preferably be composed of outside members of the board, that is, members who do not hold company management positions or are closely associated with management. b. The following information should be discussed with the audit committee: * A summary of the auditor's responsibilities under GAAS. Auditor responsibilities change over time as new standards are issued.The audit committee should always be aware of the nature of the audit function within the organization. * Initial selection or major changes in significant accounting policies that c ould have a material affect on financial statement presentation. The audit committee needs to know how the choice may affect both current reports and future financial reports as well as the rationale for the choice because it is presumed that companies select the accounting principles that best reflect the economic substance of their transactions and are thus changed only when dictated by standard-setting bodies or when the economics of the situation change. The process utilized by management to make significant estimates and other management judgments such as loan loss reserves in banks and savings and loans and insurance reserves in insurance companies. * Significant audit adjustments that may reflect on the stewardship and accountability of management, even if management agreed to make the adjustments. * The auditor's review of and responsibility for other information contained in an annual report (outside of the audited financial statements). * All major accounting disagreements with management, even if such disagreements are eventually resolved to the auditor's satisfaction. The auditor's knowledge of management's consultation with other auditors regarding accounting or auditing issues. * Any significant accounting or auditing issues discussed with management prior to the acceptance of the audit engagement – in particular, any positions taken regarding the proper accounting of controversial areas should be disclosed. * Any difficulties encountered in performing the audit, especially any activities undertaken by management that might be considered an impairment of the audit function. * Internal audit plans and reports and management’s responses to those reports. The extent to which the client has implemented a comprehensive plan of risk assessment and the organization’s plans to mitigate, share, control, or otherwise address those risks. * Any known internal control weaknesses that could significantly affect the financial reporting pro cess. The rationale for this communication is that the board of directors through

Defining the Humanities Essay

After reading this week’s lecture and my understanding of what humanities are is the study of what people have experienced and how they express this experience. Humanities are how people have interacted throughout their existence and how people interact today. Humanities are the study of the philosophical beliefs of a culture. The philosophical approach to understanding a culture is what separates humanities from science and history. Science and history are exact and rarely are open for debate once it is proven to be fact. Science will set out to prove its point, whatever it may be, through precise calculations. Science also studies theory and probability. Science lacks imagination in their calculations whereas humanities use imagination to understand past culture. Science wants to prove how people came to exist whereas humanities seek to understand why people exist. History is different from humanities because history studies documentation as facts and undisputable regarding what happened. Humanities seek to answer why it happened and to understand it. History was recorded in books in libraries, Humanities are written on walls in caves or in the design contained in buildings. Today cultures express their interests, their experiences, and their values through many forms such as art, music, and movies. Sharing experiences is perhaps the most basic form of explaining who people are. By sharing these experiences in the forms of art, music, and movies, it allows us to share information about us through our creativity. In today’s culture these three forms of expression allow people to show their individuality and to connect with many on different levels. Art takes many forms and is interpreted by an individual differently. Colors and design reflect our feelings. Black and white expresses loneliness and pain whereas bright colors express happine ss. A painting for example, allows an artist to express themselves in a way he or she feels. It is their visualization of their thoughts (Kitchin, 2004). Society looks at the painting and is free to interpret it their way. One person may see happiness whereas another sees sadness. A picture of time square could mean chaos and seem overwhelming to one from a rural area where someone from a city sees everything he or she needs. People continue to express themselves with music. The meanings behind the words of the songs often come from the feelings and the experiences of the author. It is the responsibility of the musician to express those feelings and experiences through sound. Music with soul (Hakes, 2011). Music has been very important to our culture. Think of how important the Beatles were to world or even the Grateful Dead. My personal favorite band is Linkin Park. They are my favorite because I can relate my life to the words of their song. Their music attracts those who appear to be weak or who do not appear to be societies strongest. Their song â€Å"The Little Things Give You Away† was written about Hurricane Katrina. The devastation from Hurricane Katrina was widespread devastation. Their song attempts to reflect through music the pain and suffering affected by it. Movies are much like music however instead of only simply able to hear words and visualize it; the movies create the visualization for the person. Movies use categorization such as romance, action, and drama. Movies based on real life events attempt to capture those events and explain them. Movies can show the romance side of a situation or even the heroics. The recent movie Argo is about the falling of the United States Embassy in Iran, which was overrun. This movie reflects the horror that six members went through while showing the heroics of a CIA member to return the members of the Embassy to the United States. These three forms of expression will continue to exist as time continues. They are acceptable means of expressions and are a very important part of today’s society. All three bring joy to people and if capable a person can express him or herself like none before. References Kitchin, M. (2004). Art and expression. Retrieved from http://www.students.sbc.edu/kitchin04/artandexpression/artandexpression.html Hakes, T. (2011, March 11). Music as expression vs. music as entertainment. Retrieved from

What is hypnosis Essay Example

What is hypnosis Essay Example What is hypnosis Essay What is hypnosis Essay It is actually a social interaction in which one person suggests to another that certain perceptions, feelings, thoughts, or behaviors will spontaneously occur. Many people have questions such as: â€Å"Who can experience hypnosis? † â€Å"Can it enhance recall of forgotten events? † â€Å"Can it force people to act against their will? † â€Å"Can it help people heal or receive their pain? † Is it harmful or helpful, and etc. What do you think? Who can experience hypnosis? To an extent we are all open to suggestion.If one was standing upright, with eyes closed, and is told that they are shaking your right hand, most will start to shake your right hand. People who respond to suggestions without hypnosis are the same people who respond with hypnosis. Hypnotic ability is the ability to focus attention totally on a task, to become imaginatively absorbed in it, to entertain fanciful possibilities. Can it enhance recall of forgotten events? Most people believe t hat our experiences are in our brain and we can recall them by breaking through defenses.Sixty years of research proves that this theory is wrong. We do not â€Å"soak in† everything around us. We permanently store only some of our experiences. â€Å"Hypnotically refreshed† memories combine fact with fiction. Since 1980, UFO abductions have been reported by thousands of people who are predisposed to believe in aliens, are highly hypnotizable, and have undergone hypnosis. Can hypnosis force people to act against their will? Researchers have enticed hypnotized people to perform dangerous acts such as; putting ones hand into acid, then throwing the acid in a researchers face.The hypnotized being later denied their actions, and stated that they would never follow such orders. Martin Orne and Frederich Evans Hypnosis unleashed that they used a control group. Orne asked individuals to pretend they were hypnotized. The laboratory assistants were unaware, so they treated both groups the same. The result of the experiment was that all the unhypnotized participants performed the same acts as those who were hypnotized. Can hypnosis help people heal or relieve their pain? Hypnotherapists try to help patients connect their own healing powers.Posthypnotic suggestions have helped alleviate headaches, asthma, and stress-related skin disorders. In one statistical digest of 18 studies, the average client whose therapy was supplemented with hypnosis showed greater improvement the 70 percent of other therapy patients. Hypnosis seemed especially helpful for the treatment of obesity. However, drug, alcohol, and smoking addictions have not responded well to hypnosis. In controlled studies, hypnosis did speed the disappearance of warts, but so did the same positive suggestions given without hypnosis.Hypnosis can relieve pain. When unhypnotized people put their arm in an ice bath, they felt intense pain within 25 seconds. When hypnotized people did the same after being g iven suggestions to feel no pain, they indeed reported feeling little pain. As some dentists know, light hypnosis can reduce fear, thus reducing hypersensitivity to pain. Hypnosis inhibits pain-related brain activity. In surgical experiences, hypnotized patients have required less medication, recovered sooner, and left the hospital earlier than unhypnotized control patients.Nearly 10 percent of us can become so deeply hypnotized that even major surgery can become so deeply hypnotized that even major surgery can be performed without anesthesia. Half of us can gain at least some pain relief from hypnosis. The surgical use of hypnosis has flourished in Europe, where one Belgian medical team has performed more than 5000 surgeries with a combination of hypnosis, local anesthesia, and a mild sedative. Hypnosis as a Social Phenomenon Our attentional spotlight and interpretations powerfully influence our our ordinary perceptions.Might hypnotic phenomena reflect such workings of normal consc iousness, as well as the power of social influence? Advocates of the social influence theory of hypnosis believe they do. Does this mean that subjects consciously fake hypnosis? No, like actors caught up in their roles, they begin to feel and behave in ways appropriate for â€Å"good hypnotic subjects. † The more they like and trust the hypnotist, the more they allow the person to direct their attention and fantasies. †

montaigne essays

montaigne essays Montaigne in his Apology for Raymond Sebond begins his exploration into the human capacity for knowledge with this belief that only though God can one achieve true knowledge. God is the only infinite, all seeing, being with divine wisdom. He is not subject to the laws and rules of the human domain, and he exists in a realm outside of human comprehension. God is an unchanging, permanent being, and only from this state can the concept of truth propagate. Montaigne believes that the one tie that binds all truth is this idea of permanence. Montaigne even states, Truth must be the same everywhere (xxvi). He insists that the only product of humanity that has withstood the test of time and has not changed since its inception was the Catholic Church. The dogma of the Catholic is categorized as, What has been held always, everywhere by all. The strength in the Catholic faith comes from its static nature, which provides a source of truth for humanity. Catholic truth is in strict conformity with the existence of God, and knowledge can only come from an almighty source. Montaigne goes on to say that, No creature ever is: a creature is always shifting, changing, becoming. Man embodies the idea of impermanence. He is fragmented, does not have divine reasoning abilities, and has a finite amount of time allotted to him. Human reasoning, which creates the concept of knowledge, is in direct confrontation with the qualities of truth. Plato Aristotle, and Sexius Empiricus all conceded the fact that when it comes to the human being, there is no exact standard of truth. All humans view the concept of truth differently, and thus, it can only be associated to an opinion. Like wise a mortal man cannot know everything there is to know about a certain being, or structure or thing. He cannot possibly know the inner workings of such thing only through the use of his senses, he can only for his own opinion...

Dionysus Is the Greek God of Wine and Drunken Revelry

Dionysus Is the Greek God of Wine and Drunken Revelry Dionysus is the god of wine and drunken revelry in Greek mythology. He is a patron of the theater and an agricultural/fertility god. He was sometimes at the heart of frenzied madness that led to savage murder. Writers often contrast Dionysus with his half-brother Apollo. Where Apollo personifies the cerebral aspects of mankind, Dionysus represents the libido and gratification. Family of Origin Dionysus was the son of the king of the Greek gods, Zeus, and Semele, the mortal daughter of Cadmus and Harmonia of Thebes [see  map section Ed]. Dionysus is called twice-born because of the unusual manner in which he grew: not only in a womb  but also in a thigh. Dionysus the Twice-Born Hera, queen of the gods, jealous because her husband was playing around (again), took characteristic revenge: She punished the woman. In this case, Semele. Zeus had visited Semele in human form but claimed to be a god. Hera persuaded her that she needed more than his word that he was divine. Zeus knew the sight of him in all his splendor would prove fatal, but he had no choice, so he revealed himself. His lightning brightness killed Semele, but first, Zeus took the unborn from her womb and sewed it inside his thigh. There it gestated until it was time for the birth. Roman Equivalent The Romans often called Dionysus Bacchus or Liber. Attributes Usually, visual representations, like the vase shown, depict the god Dionysus sporting a beard. He is usually ivy-wreathed and wears a chiton and often an animal skin. Other attributes of Dionysus are thyrsus, wine, vines, ivy, panthers, leopards, and theater. Powers Ecstasy madness in his followers, illusion, sexuality, and drunkenness. Sometimes Dionysus is associated with Hades. Dionysus is called the Eater of Raw Flesh. Companions of Dionysus Dionysus is usually shown in the company of others who are enjoying the fruit of the vine. Silenus or multiple sileni and nymphs engaged in drinking, flute-playing, dancing, or amorous pursuits are the most common companions. Depictions of Dionysus may also include Maenads, the human women made mad by the wine god. Sometimes the part-animal companions of Dionysus are called satyrs, whether meaning the same thing as sileni or something else. Sources Ancient sources for Dionysus include Apollodorus, Diodorus Siculus, Euripides, Hesiod, Homer, Hyginus, Nonnius, Ovid, Pausanias, and Strabo. Greek Theater and Dionysus The development of Greek Theater came out of worship of Dionysus in Athens. The major festival at which the competitive tetralogies (three tragedies and a satyr play) were performed was the City Dionysia. This was an important annual event for the democracy. The theater of Dionysus was on the south slope of the Athenian Acropolis and held room for an audience of 17,000. There were also dramatic contests at the Rural Dionysia and the Lenaia festival, whose name is a synonym for maenad, Dionysus frenzied worshipers. Plays were also performed at the Anthesteria festival, which honored Dionysus as the god of wine.

Assignment Example | Topics and Well Written Essays - 250 words - 215

Assignment Example ible inconsistency between traits of God and existence of evil that people suffer has a solution and this clarifies the point that despite sufferings that people undergo, God is all-powerful and cares about people. While the omnipresent feature means that God knows everything that people go through and having authority and being a loving and caring God would mean that He foresees any calamity and can protect people from it, bad things still happen to people. While evil defines a bad thing that destabilizes a system, and this is evident in such phenomena as diseases and calamity, the concept of moral evil offers a solution to the problem of evil. Under the concept, a moral agent exist that causes evil and human actions identifies the agency. This, together with the fact that God gave human being authority on earth and the freedom of choice, means that God may foresee evil and have authority over it, but He grants human being the freedom to decide on acting as an agent of moral evil or not. If man chooses to act morally then God’s authority becomes effective and He protects people from evil. Otherwise, man causes evil (Klibengajtis 4- 6). God granted man freedom and authority in earth and human actions, in consistency with God’s authority, causes evil. People’s sufferings are therefore consistent with the belief that God is all-powerful and cares for people because God acts on people’s will to either allow of prevent evil depending on human

Leadership Approaches for Today's Employees Assignment

Leadership Approaches for Today's Employees - Assignment Example Some of the forms of indirect leadership style styles are Charismatic, servant, task oriented and laissez faire. Charismatic leadership is where leaders are extremely energetic in driving others forward (Daft & Lane, 2008). Employees that respond best to this leadership style are those that have had long-term commitments with the leader. An example is where the employer is the team leader of his employees in a project. Servant leadership style involves leading simply by virtue of meeting the needs of the team (Daft & Lane, 2008). It is ideal with few employees in small organizations. An example is where the employer does part of the work before his employees. Laizzes faire is where individuals do their tasks at their own pace and time. The style is ideal for employees in a less competitive environment. An example is where every employee and employers set the rules. Task-oriented leadership style focuses only on getting the job done. Employees who are hands-on thrive with this leadership style. This, in turn, can help them identify areas for development that will help them get more involved (Egner, 2009). An example is where the employer gives out the rules. The different aspects of leadership styles are charismatic, servant, laizzes faire and task oriented. Successful leadership requires incorporation of various leadership styles as management

How can power be used ethically in organizations Essay

How can power be used ethically in organizations - Essay Example It is in the hands of the leaders to use power ethically because they are also organization’s ethic officers and use it for the best interests of the organization (Johnson 2009). In the present paper it is explained ‘how power can be used ethically in organizations’ to derive benefits from legitimate use of power by presenting theoretically concepts and arguments related to the same. Theoretical Concept of Power & Ethics To know how to use power ethically in an organization first power, organizational politics and ethics concept should be understood clearly. â€Å"Power refers to a capacity that A has to influence the behaviour of B so B acts in accordance with A’s wishes† (Bass 1990, p.170). Power is used as a means by leaders to achieve their goals. However power is different from leadership as power requires only dependence and not goal compatibility as in the case of leadership that requires compatibility of goals between the leader and their fol lowers and also power can be exercised both by a group and individual to influence an individual or a group (Robbins et al 2011). ... ns and the moral code† and â€Å"Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for a given situation† (Crane and Mitten 2007) based on the cultural and legal standards. In this perspective Leaders should be conscious of the morality of their actions at all times and a leader to be successful must not only take right actions but through right means and with right intentions according to Ciulla (2005). Therefore ethical behaviour refers to conforming to moral principles as well as to cultural and legal standards. It is very common for employees to indulge in organizational politics to exert more influence, for career advancement and for gaining credit and rewards. Organization politics refers to â€Å"use of power to affect decision making in an organization or on self-serving and organizationally unsanctioned behaviours† (Robbins et al 2011, p. 415). It is used in all organizations in some form or the other everyday and by everyone. However not all organizational politics is illegitimate or unethical there is also a legitimate and ethical dimension to it (Robbins et al 2011). Leader’s bear more responsibility to exercise power ethically in an organization compared to others and can create ethical organizations through their responsible behaviour. People emulate their leader’s behaviour, attitudes and values because they consider them to be attractive, credible and legitimate as they exert power through their position of authority they occupy (Johnson 2009). Therefore power to be used ethically in an organization the focus should be on the leader’s behaviour. But what constitutes ethical use of power and how to differentiate it from unethical use is complex and