Accounting

What factors do you consider to be primarily responsible for the Japanese accounting system being significantly different from other national systems and what influences do you consider the Japanese system will have on international accounting in the future?

Introduction

Japan as an accounting jurisdiction is characterized by the dominance of the state (Haller and Raffournier, 2003). The accounting rules have been set out in the past fifty years as statute law with an implicit objective that accounting should contribute to the growth of the national economy (Haller and Raffournier, 2003). Until recently, the accounting profession had played a minor role in shaping accounting practices, and he accounting profession and auditing practice was created by law after World War II as a discipline needed to reactivate the securities market in Japan (Haller and Raffournier, 2003).

Going back in time would show that industrialization of Japan began in 1868 after the Meiji Restoration (Nobes and Parker, 2004). In 1890 and 1899, the first Commercial Code was established based on a Franco-German model and oriented towards creditors and tax collection (Nobes and Parker, 2004). A deeper look at Japan’s accounting and financial reporting reflects a mixture of a number of domestic and international influences (Choi et al., 1992), with the first half of the twentieth century having the accounting thinking drawing influences from France and Germany (Lawrence, 1996), and the second half from the United States, that emphasizes on shareholder information (US) (Choi et al., 1999).

Because Japanese accounting system bents more to tax influences, it is classified as the uniform accounting approach (Choi et al., 1992). In addition, following the Hofstede and Gray’s framework would put Japan under the conservatism or masculinity cultural classification (Choi et al., 1992). However, it is widely known that Japan’s accounting system differs significantly from other national systems; therefore this paper is to discuss the factors for the differences and to consider whether the Japanese system will have any influence on international accounting in the future.

Legal System and Standard Setting

In terms of legal and institutional basis of accounting, the national government has the most significant influence on accounting in Japan (Arai and Shiratori, 1991 cited from Nobes and Parker, 2004). There are three main sources of regulation, all imposed by the government and administered by two separate ministries (Lawrence, 1996).

The Ministry of Justice (MoJ) is responsible for the Commercial Code; the Ministry of Finance (MoF) is responsible fro the Securities and Exchange Law, the tax law and regulations and the Business Accounting Deliberation Council, which is the body that publishes financial accounting standards (Lawrence, 1996). The legal framework is better illustrated below.

Adopted from Lawrence (1996)

The Commercial Code was enacted in 1899 and it deals with limited liability companies (Kabushiki Kaisha), such as incorporation procedures, issuance of shares, and duties and responsibilities of directors and statutory auditors (Haller and Raffournier, 2003). The code sets the legal framework of accounting in Japan and is in the centre of the triangular legal system, and given its generality, coupled with an implicit and persistent belief in Japan that accounting should eventually contribute to the development of the national economy as a whole (Haller and Raffournier, 2003).

Accounting Profession

The Japanese accounting profession is divided into two groups that provide services to third parties. One is the licensed tax practitioner (Zeirishi) and the other is the certified public accountant (Konin Kaikeishi) (Haller and Raffournier, 2003). Tax practitioners are individuals who have passed the required examinations or obtained through some other way (i.e. working as a tax agent of the Japanese Tax Administration for a certain number of years), and who are registered with the appropriate regional Certified Public Tax Accountants Associations (Haller and Raffournier, 2003).

They principally provide tax compliance and consulting services, which also includes bookkeeping and preparation of accounts (Haller and Raffournier, 2003). The certified public accountant is a registered member of the Japanese Institute of Certified Public Accountants (JICPA) (Nobes and Parker, 2004). In order to be a certified public accountant, one must pass three levels of examination (Nobes and Parker, 2004). University and college graduates are exempted from the preliminary CPA examination.

The intermediate examination includes economics, bookkeeping, financial accounting, cost accounting, the Commercial Code, business administration and auditing theory (Nobes and Parker, 2004). Those that pass are referred to as junior CPAs’ and they must undergo three years of apprenticeship before sitting the final test of technical competence, and submit a thesis and the passing rate is known to be low (Nobes and Parker, 2004).

Financial Reporting in Japan

Business accounting in Japan mentions seven qualitative characteristics such as truthfulness of reporting, understandability, consistency of application and conservatism in general terms (Haller and Raffournier, 2003). The income statement is generally governed by the accrual basis of accounting, the realization principle and the matching of revenue with expenses (Haller and Raffournier, 2003).

Financial reporting under the Securities and Exchange Law requires an annual securities report (Yukashoken Hokokusyo) from all publicly held Japanese companies. The report is filed with the MoF, and submitted to all stock exchanges the securities are listed and available to the public (Haller and Raffournier, 2003). In addition, the Commercial Code also requires a statutory report from all companies (Choi et al., 1999).

The statutory report will consist of:

• Balance sheet
• Income statement
• Business report
• Proposal for appropriation of retained earnings
• Supporting schedules

In addition to the statutory report, all companies with shares more than ¥500 million or when liabilities are ¥20000 million or more will be required to have their business report, including those items in the descriptive sections which relate to the accounting records audited by independent accountants (Haller and Raffournier, 2003). To give a better view of how Japanese accounting standards may differ from the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRSs), please refer to the appendix.

Conclusion

Factors That Contribute the Difference Between the Japanese Accounting System and Other Countries’ Accounting System Looking at the brief outline of the Japanese accounting system, it can be drawn that the main factors that contribute the difference between the Japanese accounting system and other countries stems from the mix cultural influence from the Franco-German model in the early stages and the United States after the World War II (Nobes and Parker, 2004), which effectively made the accounting system difficult to classify whether it was more of a tax based accounting system or otherwise.

In addition, the Japanese accounting standard setting bodies are controlled solely by the Diet, unlike many other countries that have a separate accounting entity that is not bounded by the government like the United States’ Financial Accounting Standrads Board (FASB), Malaysia’s Malaysian Accounting Standards Board (MASB) or the United Kingdom’s Accounting Standards Board (ASB) (Haller and Raffournier, 2003). Due to the bounded relationship the standard setting process would favor the government’s objective more (Lawrence, 1996).

In addition, much changes to fit the international arena has been contributed by the existence of a nationalistic culture that has prevented changes, therefore further causing the differences between other nations’ accounting system (Lawrence, 1996).

Influences the Japanese system will have on international accounting in the future Moving on from the factors causing the differences between the Japanese accounting system and other nations, Japanese system may not have much influence on international accounting. This is because, to date the Japanese government has already made much reform to bring them closer to the International Financial Reporting Standards (IFRS) and The BADC has launched a major project to do just that (Haller and Raffournier, 2003).

Many new standards have been issued and the older ones have been revised, and by 2002 only few differences could be identified from the IAS (Haller and Raffournier, 2003). Further efforts have been made by the Diet, which is still in progress to transfer the standards-setting responsibility from the government to the private sector and to function independently under a foundation which is financed primarily by contributions from listed and over-the-counter companies, to create a more transparent standard-setting process, independent and responsive to the changing environment in financial reporting (Haller and Raffournier, 2003).

Therefore, it can be concluded that the Japanese accounting system will not have much influence on international accounting in the future but, more of the harmonization of international accounting will influence the Japanese accounting system promoting more changes to the system with the advent of IFRSs.

Bibliography

1. Lawrence, S. 1996, International Accounting, 1st ed., London, International Thomson Business Press.
2. Nobes, C. and Parker, R. 2004, Comparative International Accounting, 8th ed., New Jersey, FT Prentice Hall.
3. Frederick, D. S. C. and Mueller, G. G., 1992, International Accounting, 2nd ed., New Jersey, Prentice Hall.
4. Frederick, D. S. C., Frost, C. A. and Meek, G. K., 1999, International Accounting 3rd ed., New Jersey, Prentice Hall.
5. Haller, A. and Raffournier, B., 2003, International Accounting, 2nd ed., London, International Thomson Business Press.
6. Japanese Institute of Certified Public Accountants, 2006, ?History of Accounting and Auditing System in Japan’, online, date accessed 18th February 2006. Available from: http://www.jicpa.or.jp/n_eng/e-history.html/

During the stock count e observe the following weaknesses and ascertain the risks associated with them and developed following suggestions to develop controls to address these weaknesses. The details of these are as follows: 1 . Excessive Accessories stocks found as compared to system report. Observations:- During the audit we observe that some of stock physically available is in excess as compared to the stock as per stock report. For details of these please, see annex “A”. Later on discussion with store uncharged Mr..

Adele it came to know that, this problem occurred due to stock shifting, adjusting stock report, bulk quantity counting of stock really with routine activities etc. Some Grins and store issues are also not properly posted in time, that is why this issue raise. Recommendations:- The posting issue should not have any excuse; store team should manage their time to post all types of documents in system to update the stock report. It is also recommended that store team should adopt the policy of efficiency instead of effectiveness. 2.

Less quantity of stocks found physically as compared to Accessories stock report. Observations:- We observed that some stocks in actual are less as compare to reported quantity. For details of these, please see annex “B”. Recommendations:- It is recommended to post issuance in system carefully and posting of issuance should be checked on daily basis. We recommended that the issuance book should be systematized and in new software this document will move as prepared by, approved by and deliver by and finally system post this issue automatically. 3. Stock not found physically but mentioned in stock report.

Observations:- During the audit we observed some quantity of stock not physically in store as compared with stock report. For details of these please see annex “C” Later on discussion with store uncharged it came to know that due to the shifting of store items o new place and some issuance are also not posted/misplaced, that’s why these items showing in report. It is recommended that all issuance should be posted timely in software on daily basis, the items which are not physically exist should be located in report and adjust the report as per the actual conditions to maintain the proper stock report.

To resolve this problem the store team should get the approval of management, and after approval they have to adjust the stock accordingly. 4. Items not in report but physically exist During the course of audit it was found that some of the items are physically exist in he store but there is no record of these in the accessory report. For details of these please, see annex “D”. Recommendations:- It is recommended that store issue returns must be recognized when received at store.

Proper record and physical stock must be kept by the store team. 5. Old Stock found in store During the course of audit it was found that lot of space was covered by old stock this stock is not in use since more than 2 year as per information given by the store team these items include: Inlay card Poly bag Buttons For details of these please, see annex “E”. It is recommended that time period should be defined after which certain item will be considered a part of dead stock.

By doing this, dead stock will be separated from old stock. After this, dead stock should be sold at reasonable price and old stock should be properly placed at certain area with label of old stock and should not be mixed with fresh stock. When this old stock will not be used for a certain defined time period, it should be classified as dead stock and be sold as well. 6. Placement and Item codes It is observed that some items such as LABEL and THREAD are placed in different parts in a few boxes. . Thread of one shade found in different boxes and in different places and some of poly bags have no item codes. For details of these please, see annex “F”. Recommendations:- It is recommended that every item in store must be placed at single place so that these can be easily accessible. Secondly item codes must be mentioned on the items properly. 7. Practice of Safety Stock not adopted It was found during our audit that concept of safety stock was not being considered by the store management.

The different routine items like stationary, kitchen items, some stitching general items like needles, commonly use thread and stitching aching spare parts etc. Don’t have any safety stock formula, and this problem can stuck the flow of work. It is recommended that store team should be provided with all information about crucial items of different departments which may cause disturbance in the flow of work. Store should have a safety stock of all such items so that these could be used in case of emergency shortage.

By doing this smooth running of flow work can be ensured. They should also consult with management in this regards. 8. Tagging and dust issues It is observed that some of the items are not properly tagged and there is dust on the teems also. This type of issues create risk like decrease in the value of stock it may also create delay problem for production if the things are not properly tagged and placed. Recommendations:- It is suggested that all the items with proper identification should be at specific place and should cover properly.

Proper posting in software will be helpful to maintain the record. 10. Goods directly issued to department without any knowledge of store During the course of our audit it is observed that, some required items are issued directly to the department from where the items are demanded and all the paper work (documents) starts after this, and the store team prepares GRIN after receiving he store issue requisition and ZIP from the department.

Recommendations:- It is recommended that if there is any item require urgently in any department and they purchase this on emergency basis, then this item should come first in store and issued from store as well ,and then store uncharged will prepare the GRIN after receiving the documents. By doing this there will be no ambiguity in record and all the items will come into the knowledge of store uncharged. 11. No record for items under RSI. 500. Observation:- It is observed that the items purchased which having value less than 500 rupees have no record in the store.

Siemens Home and Office Communication Devices LLC

JOB ANALYSIS INFORMATION FORM

Job analysis: Management Accountant

A.    Organizational Locator

The following partial organizational chart identifies the position and locator of Management Accountant for the Siemens Home and Office Communication Devices LLC. Functionally, the Management Accountant (MA) provides all the internal information support for tactical and strategic decision making at every level of management (Atkinson, Banker, Kaplan & Young, 2001). He reports to the Chief Financial Officer, together with the lateral equals: Chief Marketing Officer, the Chief Production Officer, among other officers of the company. 

Figure 1

Organizational Locator of Management Accountant

Especially highlighted in the ever-changing environment in the manufacturing industry where Siemens belong, the position of Management Accountant (MA) is an indispensable provider of critical information to management on such areas as, but not limited to the following major functions:  (a) budget preparation and implementation, and performance review which consists of assisting the various managers of the company identify, allocate and manage the resources necessary to achieve its unit goals and objectives, (b) revenue and cost management which determines specific management accounting strategies that maximizes the organization’s income generating and target costing trajectories (Atkinson et al, 2001), and (c) strategic planning and consulting which is a component of management accounting that integrates all the qualitative and quantitative factors to map out the directions towards the long term, (Garrison & Noreen, 2004) Anthony & Govindarajan, 2003).

In more functional detail these consists of the: (1) adoption of the activity-based budget management that utilizes a zero-based projections based on targets; (2) Financial analysis to determine the operating efficiency and effectiveness of every productive segment as well as in aggregation, especially the production department (Gibson, 1998) of the company so that proper decision making and controls can be made in the areas of profitability, stability, solvency, turnovers, and other indicators of organizational health. This is aimed at developing short, medium and long-term strategies for the entity (Anthony & Govindarajan, 2003). Likewise, (3) the need to utilize relevant and applicable traditional and strategic management accounting tools (Agamata, 2002) to address recurring and non-recurring issues critical to the company’s operational efficiency and effectiveness; (4) the identification of internal operating as well as external weakness and opportunities, commonly called the SWOT factors and processes to the company brought about by its market status and position.

Similarly, Management Accountants also guide managers in developing proactive technology-driven measures and techniques to lead in a competitive market (Anthony & Govindarajan, 2003). All these specific management approaches are designed to preempt the competition’s strategic move to dominate the market with the best customers possible (Taylor & Greco, 2002).

The job analysis process required the preparation of the following job description information which can help attain a good job design (Tropman, 2001) through a job analysis information form (JAIF). Below is the summary of questionnaire including several other methods of data gathering such as interview, questionnaire or observations, focus group discussion.

Below is a rundown of the questionnaire type:

       Question:     What is the primary responsibility for the job?

     Answer:      Preparation of the regular (periodic) and special production reports especially in the areas of budgeting, revenue and cost management and strategic planning for all decision makers in all management levels including Siemens. This also includes the preparation of the regular (periodic) and special production reports especially in the areas of budgeting, revenue and cost management and strategic planning for all decision makers in all management levels including Siemens.

  Question:     What is the next logical position to which you would expect to be promoted?

  Answer   :     The Chief Financial Officer, who represents the entire financial and management accounting functions in the company

   Question :     What are some of your primary job duties? Indicate which of these are done on a daily, weekly and monthly schedule, periodic or irregular intervals?

   Answer   :     Daily: Accumulation and sorting of accounting data prepared and submitted by the Management Accounting staff in charge of budget, revenues/cost, strategic planning inputs. Weekly: Preparation and submission of weekly production reports along – utilization of budget, variance analysis and; Monthly: Preparation of monthly reports on budget utilization, including variance analysis; Attends management meeting to clarify analytical data for managers.

Questions:       Are there any duties that you currently perform that you deem unnecessary. If yes please give examples.

Answers:          To backup the treasury accountant in his financial tasks almost daily who is always in

meetings. The treasury accountant should undertake custodianship instead of recording.

Questions:         Are there any duties that you are not performing at this time that should be included in

your current job duties?

Educational level.  Graduate of BS Accountancy; must be a Certified

Management Accountant (CMA),

Experience   : Two years experience in management accounting in a related field. If applying            from internal sources, a consistent very satisfactory performance evaluation rating for at least three evaluation periods.

Question          What are some of the skills required to perform successfully in this position

Answer:           Computers with windows applications; fax and photocopying machines,

Question          What types of equipment are you required to operate?

Question          Briefly describe the working conditions

Answer:           Unionized group;

40 hours workweek, need to render overtime from to time;

Team environment; Must be heavy practitioner of  Ethics for Management Accountants;

High Confidentiality of sensitive data.

                Based on the above job analysis, the following job description can be designed and formalized. Hence, considering the job analysis conducted the job description is presented below:

JOB DESCRIPTION

Job Title           :                              Management Accountant

Department     :                               Controller/Accounting

Reports to       :                                Chief  Financial Officer

Wage Classification:                       Salary Plus Performance Bonus

General Description of the job:       Accumulates and manages financial and cost accounting

                                                        information (budgets, revenues and cost, etc) for purposes of

                                                        decision making by managers in various levels.

Job Activities   :                               Gathers financial and management data/information affecting all

                                                   units of the company; classifies and sorts accounting information

                                                   according to segments, products, geographical locations, and other

                                                   means needed by all decision makers; gathers the specific plans

                                                   and activities of each segments and quantifies to articulate the

                                                   plans towards the short-medium-long term; analysis of internal and

                                                  external data through trending, ratio percentages, fractions etc.

                                                  Prepares financial executive summaries for all unit managers;

                                                  Attaches various formatted financial and management reports for

                                                  submission to the various managers;  Attends meetings where

                                                  management accounts may help internalize and understand

                                                  implications of management reports.  Supervises three assistants.

                                                  Other related tasks assigned from time to time.

General Qualifications Requirements

Experience and Training                With two years of related experience

.

                                                        If applying from internal sources, must meet a continuous very

                                                        satisfactory performance evaluation for at least three consecutive

                                                        periods.

Education:                                       A graduate of BS Accountancy

Knowledge, Skills and Abilities       Proficient in Windows applications; analytical skills, with ability to

be team-oriented; Technical: Computer skills in an accounting

environment Analytical skill, Time management, communications

proficiency in oral and written English. Leadership skill in

supervising a small accounting unit. Interpersonal skills as this

required working with people

Machines Operated                         Computers, fax, telephone and other office appliances;

photocopying machines

Tests                                              Candidates must pass the company aptitude test.

Responsibilities                              Must be able to gather, handle, analyze and interpret accounting

                                                      data and information for submission and discussion with the various

                                                      managers of the company.

Working conditions                       Unionized group; 40 hours workweek, need to render overtime from to time;

        Team environment; Must be heavy practitioner of  Ethics for

       Management Accountants

Part B Requirement.

                      Below is a list of resumes taken from the different sources. Partly, the resumes were

collected based on the following job postings: (a) Internal job posting which requires that any form of vacancy shall be filled up initially by qualified applicants from within the company.  In this way, existing employees are given the chance to apply and be promoted to the positions they are aiming for or aim for the position that best suits their qualifications and this is done through posting of internal applications and imposing a deadline to allow teachers; (b) from JobsDb.com or other websites such as JobStreet.com and other similar portals which Siemens Home and Office Communications utilized as venue for easy access of applicants and which is one of the most successful online job placements on the internet. (c) direct application and submission of resumes from walk-in applicants which is the traditional way of job application and this involves the manual submission of resumes at the premises of the company; (d) referrals from employees and clients which is a system of recruitment based on expanded circle of referrals. In this regard, recruitment is not posted but provided mostly by parties knowledgeable to the company or its officers. And (e) other sources can be in the form of unsolicited letters through received the mails with the applicant simply exploring the means to possibly, by luck, be able to get employed therein.

The applicants are summarized as follows:

          Applicant number 1 is a graduate of BS Accountancy with a three-year experience as cost accountant at Dow Chemical, Inc. His credentials include exposure to a wide variety of reports being submitted to the management for decision-making, passed the qualifying test and interviewed with good results. Availability is immediate but without supervisory experience.

Applicant number 2 is a graduate of BS Chemical Engineering with a license. He has a five-year experience with an affiliate of Siemens in Dallas and was referred by the CEO of that affiliate company. A very active, skilled worker, he is well-versed in communication and interpersonal skills, adept at computer applications and has a strong character of assertiveness and being able to correlate himself with the top management. He has a knack for persuasion but was found to have a track credibility problem with the former employer.

Applicant number 3 is a BS Accountancy graduate with a one-year management accounting experience with Southern Bell in a supervisory position. He has passed the interviews and written qualifying tests with very satisfactory results. He has a master’s degree and was credited with a paper on Management Accounting in the electronics industry. His availability is immediate and has a limited supervisory experience but with a pleasant personality needed to manage people.

Applicant number 4 is a BS Accountancy graduate who applied through the JobsDB.com; without experience. A fresh graduate without supervisory experience, the applicant had excellent skills in management accounting, highly proficient in networked computers and a number of applications; He is taking up the CMA norm and is to take the certification examination for CMAs within the month.

Applicant number 5 is Business Management graduate with a two-year academic background in management accounting. He has a three-year experience as Senior Management Accountant of Sara Lee in the Houston area and has a number of commendations as Management Accountant from the company.

Applicant number 6 is a BS Accountancy graduate from a foreign country, graduated with honors and has a five-year audit experience with KPMG. When tested, he has excellent skills in Management Accounting and reporting with high accuracy results. He is not a resident of the United States.

Applicant number 7 is a BS Accounting graduate of a local university in San Antonio, Texas. He has a Master’s Degree but appears to be too old for the job and may not be able to cope with the demands of supervision and the fast-paced environment. He has extensive experience in auditing and management accounting.

Applicant number 8 is lady CPA and a CMA licensee as well. Armed with a three-year experience with Samsung USA assigned as Management Accountant with the electronics division, she applied through the JobStreet.com and is a resident of the Dallas/Fort Worth area. Highly skilled in interpersonal and analysis, the applicant is known to many employees of Siemens. However, she appeared to have been employed by three firms in a period of five years.

Applicant number 9 is a BS Accountancy graduate with high honors. A CPA licensure topnotcher, the applicant has no experience, but turned out to have an exceptional skill as a fast learner. Applicant number 10 is an incumbent employee of Siemens. A CPA taking up training as CMA, the applicant can had a record of very satisfactory performance rating with the credit division of Siemens. Although she is very qualified for the job, she is however an asset of her unit who cannot be released without affecting the operations of the credit area. She has no possible replacement if she transfers as Management Accountant of SHC. This is promotion for her.

The Selection Process.

         Based on the list of applicants, there appears to be a limited number  who exactly qualifies for the position. Although a few – Applicants number 3, 8 and 10 are the most likely candidates, Siemens must undertake a set of processes to prepare any of these shortlisted candidates in the event that one is chosen for the position. Thus the criteria of the vacancy and the characteristics of the applicants will have to be calibrated to determine who best qualifies for the job.

        The critical factors of the Management Accountant position for Siemens are: supervision considering that the information for decision making will come from the subordinates, education and skills.  Closing in on the three qualifiers, applicant number 3 appears a good choice but will have to be reprocessed through training as he has limited experience on the job and lacks supervisory exposure as well. Applicant number 8 is an ideal candidate for the position except for the turnover rate of successive employment which could put the company to another recruitment stage should the candidate decides to leave again.

           Applicant number 10 is equally a good candidate with a plus being an existing employee of Siemens. Thus, the final selection stalemate will have to be broken through a number of recruitment factors Siemens might adopt. First, existing employees will have to be given preferences in terms of internal recruitment to maintain morale and recognize loyalty. Training will not be difficult for applicant number 10 considering she is an incumbent employee and is assumed to be thoroughly familiar with the business. The vacancy she will create can readily be filled up by candidate number 3 or 8 who can be taken in to replace candidate number 10. Or replacement for candidate number 10 can come from within Siemens anew. Whoever among applicants 3 or 8 is not hired can be classified under active file and serve as reserve candidate during the current period. Thus, priority queuing could be candidates number 10, 8 and 3. In all cases, Siemens will only incur minimal cost to train, compliance requirements for the position of management accountant adequately addressed and a good gesture of recognition for loyalty and performance accorded candidate number 10.

List of References

Agamata, Franklin. Management Advisory Services, 2002 Edition, Redman Printing, Manila, 2002

Anthony, R and Govindarajan,V,  Management Control Systems, 11th International Edition, Mac-Graw-Hill Education

                Asia, Singapore, 2003

Atkinson, A, Banker, R., Kaplan R., and Young, S. Management Accounting, 3rd Edition, Prentice Hall International,

New Jersey, 2001

Drucker, Peter F. “The Discipline of Innovation”, Harvard Business Review, The Innovative Enterprise, 2002

Garrison R. and Noreen, E. Managerial Accounting, Tenth Edition, McGraw-Hill Education, Asia, 2004

Hinkley, R. Corporate Social Responsibility Report, How Corporate Law Inhibits Social Responsibility, Business Ethics, 2002:

                Available: http://www.medialens.org/articles/the_articles/articles_2002/rh_corporate_responsibility.html (1 May 2008)

Horngren, C., Sundem, G. and Stratton, W., Introduction to Management Accounting, 11th International Edition, Pearson

Education Asia Pte. Ltd. Singapore. 2000

Kaplan, R. and Norton, D. Strategy Maps, Converting Intangible Assets into Tangible Outcomes, Harvard School

Publishing, Boston, 2004

Naylor, Mary and Susan Greco, Customer Chemistry, How to Keep the Customers You Want, MacGraw-Hill, New York, 2002

Peters, Tom “Liberation Management”, Necessary Disorganization for the Nanosecond Nineties, Fawcett Columbine, New York,

1992

Shaw, J. Corporate Governance & Risk: A Systems Approach, 61-82, John Wiley & Sons, New Jersey, 2002.

Tropman, J. E, The Compensation Solution: How to Develop an Employee-Driven Rewards System, Jossey-Bass, San

               Francisco, California, 2001

Attachments:

Siemens Home and Office Communication Devices LLC

Summary of Candidates’ Qualifications

Job Vacancy: Management Accountant

Name of Candidate

Recruitment Source

Educational &

Professional

Qualifications

(BSA/CMA)

Experience

(2 years related)

Skills

·    Team

·      IT/Communications

·     Supervisory

·     Leadership

Aptitude test  Rating Score out of 100

Interview

Rating

out of 100

Remarks

ANTHONY RIES

(1)

Classified/Want ads

BS Accountancy;

Three-years experience in related job with DowChem.
Team-oriented;

Microsoft Office Applications;

Enterprise Resource Package;

With supervisory exposure;

90

90

Immediately available

STEPHEN

BOOTH

(2)

Referral From CEO of Siemens affiliate

BS Chem Engineering;

Five-year experience in unrelated job

Team-oriented

Microsoft Word and Excel & ERP;

No supervisory exposure

87

95
Persuasive but lacks track record credibility; not immediately available

JOHN BELMONT

(3)

JobsDB.com

BS Accountancy (UTex-San Antonio) with MBA in the discipline.

One-year in identical task

45 wpm

Windows 2000. Microsoft Word & Excel, ERP;

Excellent communications;

Limited supervision but with potentials; very pleasant personality.

95

95

Lives in Dallas area; immediately available

STANLEY

FORD

(4)

JobsDB.com

Fresh

BS Accountancy;

To take CMA norm within the month.

No experience but highly proficient in Management Accounting.

50 wpm

Graphics artist

Windows 2000. Microsoft Word & Excel, ERP and Network

90

85

Not readily available;

ALFRED

ST. JOHN

(5)

JobStreet.com

BS Business Management;

3-year academic background in MA

Three-year as Senior Mgt Accountant  with Sara Lee

45 wpm

Customer service skills.

87

87

With commendations from company for good performance

PAUL

CLARKE

(6)

JobDB.com

BS Accountancy honors

Audit experience with KPMG; excellent skills in MA

45 WPM

Microsoft Office Applications

Audit software

ERP

94

90

Not a resident of the USA.

JAIME

THOMAS

(7)

Walk-in

BS Accounting with Master’s Degree

Extensive experience in audit and management accounting

35 wpm

Microsoft Word and Excel

Satisfactory communication skills

85

86

Appears too weak for the job. May not stand against fast-paced stress

MARY NATHALIE

STANFORD

(8)

JobStreet.com

BS Accountancy

CPA/CMA

Experience with Samsung electronics division as Management Accountant

55 WPM

Windows Vista/2000

Microsoft Applications and ERP;

Low loyalty index

90

94

Resident of Dallas, known to many Siemens employees

KEVIN

CHARLES

(9)

Employee

Referral

CPA with honors

No experience

60 wpm

Windows 2000/XP

Microsoft Office Applications

Exceptional skill

97

84

Fast learner

SHERRYL

CRUZ

(10)

Internal Job Posting

CPA with CMA credits
Internal MA experience with Siemens’ Credit with very satisfactory performance

56 WPM

Team-oriented leadership

Office applications with ERP;

Audit software

95

95
Needs replacement in the credit division. Cannot be released without replacement

RESUME NO. 1

CURRICULUM VITAE

POSITION APPLIED FOR      : MANAGEMENT ACCOUNTANT

Name               :                       ANTHOMY RIES

Education        :                       BS Accountancy

Work Experience:

            Management/|Cost Accountant

            2004-2007

            Dow Chemicals, Inc.

Freeport, Texas

Area of Responsibility:

Tasks:

Financial analysis and management reporting of Texas manufacturing operations for purposes of Target Costing,.Logistics Management, Transfer Pricing, Responsibility Accounting and Performance Reporting System. Supervises three Financial analysts performing budget variance reports, target cost analysis and performance reports.

Reports Prepared:

Performance Reporting System furnished all Managers articulating financial and operating performance on a monthly basis. This includes segment reporting of all DowChem operating units.  The reports guide managers on target costing through activity-based management approach to manufacrturing.

Skills

I am team-oriented with mastery level skills in Microsoft Office Applications, JD Edwards Enterprise Resource Planning package; All Microsoft Office Applications; With supervisory exposure.

Reference/s      Andrew Sparks

                        Plant Supervisor

Dow Chemicals, Freeport, Texas

Michael Scaffold

Senior Management Accountant

Dow Chemicals,Freeport, Texas

Others             Immediately available

RESUME 2

Curriculum Vitae

Objective    :   Apply professional management accounting tasks

Name         :   Stephen Booth

                          Lake Charles, Louisiana

Course Completed: BS Chemical Engineering

Experience:

                        Reengineering Auditor

                        Siemens Water Technologies

                        Dallas, Texas

                        2002-2007

                        Responsibilities:

          Job analysis of all staff positions, preparation   of job descriptions and establishment of work systems to improve efficiency, manage costs and increase funds flow.

Skills:

                          Knowledge in operating all office machines; Enterprise Resource Planning software; Team oriented and willing to undergo supervisory training.

Reference:  Roger Spelling

                     Chief Executive Officer

                     Siemens Water Technologies

                     Dallas, Texas

Resume 3

CURRICULUM VITAE

Name :    JOHN BELMONT

Address:  Houston, Texas

Course :   BS Accountancy

                 University of Texas, San Antonio

                 Texas

                 Master in Business Administration

                 University of Texas

Experience:

                  Management Accountant

                  Dallas Technologies, Inc.

                  2007-2008

Skills

                  Keyboarding

                  Mastery of all MS Office Applications

                  Knowledge of ERP (JDE & SAP)

                  Good communications and potentials

                  Immediately available

Resume 4

Curriculum Vitae

NAME…………….Stanley Ford

ADDRESS……….Forth Worth, Texas

EDUCATION…….BS Accountancy

Experience……….None

Skills………………Keyboarding, Graphics

                              Windows and Office Applications

                                  ERP (SAP) & Network

Others…………….Available for employment in two months

Resume 5

CURRICULUM VITAE

Name              : Alfred St. John

Address        :  Dallas, Texas

Education   : BS Business Management major in Management Accounting

Experience     :

                            Senior management accountant

                          Sara Lee, Inc.

                          Houston, Texas

                             With commendations for good performance

Skills

                             Customer Service

                            Knowledge of Office Machines and Computer Applications

/resume 6

Curriculum vitae

Name:                                Paul Clarke

Address:                            San Antonio, Texas

Education:                        BS Accountancy

                                              Cum Laude

Experience:                       Audit supervisor & Management Analysis

                                              KPMG Consulting, Dallas, Texas

Skills:                                   Keyboarding

                                              All MS Office Applications

                                              JDE audit software

                                              Knowledge of JDE enterprise package

Resume 7

Curriculum vitae

NAME:                      Jaime Thomas

ADDRESS:               Houston Texas,

Education:                BS Accounting

                                  Masters in Business Administration

Experience:              Audit supervisor and Management Assistant

                                  Edwards & Cheney Consulting

Skills:                         Keyboarding

                                  Communication skills

                                  Office applications

Others                       Willing to be trained for the job

Resume 8

Curriculum Vitae

Name:                       MARY NATHALIE STANFORD

                                  Forth Worth, Texas

Education:                BS Accountancy

                                  Certified Public Accountant

                                  Certified Management Accountant

Skills:                         Keyboarding

                                  Windows/Office Applications/ERP (JDE AND SAP)

Experience:              Management Accountant

                                  Samsung Electronics, USA

                                  Management Accountant

                                  Dallas Technologies, Inc.

                                  Management Accountant – Mfg Division

                                  Home Depot Texas

Resume 9

CURRICULUM VITAE

NAME………………….KEVIN CHARLES

ADDRESS…………….Dallas, Texas

Education……………..BS Accountancy with Honors

                                     A Certified Public Accountant

Skills…………………. All Office Applications

                                     A fast learner

Experience…………..None

Resume 10

CURRICULUM VITAE

Name…………………….SHERRYL CRUZ

Address………………….Forth Worth, Texas

Education……………….BS ACCOUNTANCY

Licenses …………  Certified Public Accountant

Experience…………….Management Accountant

                                    Siemens Home & Office Communications LLC – Credit Division

Prepares all management reports for managers   periodically; with consistent excellent performance.

Skills………………………..All types of office machines

                                       JDE AND SAP ERPS

                                             Audit Software

Others…………………Willing to start immediately

I am of the opinion that there are fewer CPAs in the existing industries which makes it hard to business professionals to be able to meet the needs of their clientele. On the other hand, the major challenges faced in the accounting world can be directly tied to lack of business professionals not treating the issue of CPA professionalism with the seriousness it deserves. My experience license has not been signed because since the supervisor I chose refutes that she supervised me yet I was answerable to her just like other professionals in the accounting department at Douglas Emmett and Co.

There is need to ensure that there are clear directions as to what pertains the accounting experience and the process of licensing. On the other hand, there is also need to ensure that more CPAs are encouraged to join and stay in the field since there are fewer industries and organizations dealing with CPA. During my work experience I noted with concern that there are very few CPAs with most companies and businesses opting to promote account managers not because they have done CPA but under the basis of long service to the company.

Such makes it a major challenge for upcoming CPAs to seek employment since there are not enough CPA industries and companies. The above is in line with the president of California CPA Society, Mr. John Samore III assertion that the problem with less CPAs professions is not about hiring but retention of CPA professionals in the accounting field. The role of CPA can not be underestimated in both the corporate and in the rest of the business world. There are various challenges revolving around acceptable business undertaking and more especially when it comes to handling public finances.

In the above light, organizational staffs at all levels have to ensure their self development to be able to meet the expectations of their prospective employers. CPA is fully equipped to help business professionals be able to meet with the daily and upcoming demands in the business world. On the other hand, CPA ensures that professionalism is upheld in business undertakings hence ensuring that business professionals uphold higher levels of integrity.

From my work experience, I learned that, there are not many CPA’s perhaps due to the requirements involving CPA professionalism or lack of accountability of some companies and business organizations. In some serious accounting scandals, billions of monies have been lost to scrupulous business men who did not have the required business ethics to handle public funds. Studies show that, CPA professionalism not only encourages competency but also enhances ethics in business professionals.

This paper is written to present to the certified Public Accountant Qualifications Committee my work experience at Douglas Emmett and Co as qualified for General Experience Licensing requirement. Background information I completed my CPA examination approximately a year ago. Since then, I have worked under two CPAs in my past work experience. My first accounting experience was a year and half ago while undertaking my CPA study and the experience was at the financial reporting department at Castle & Cooke. The CPA signer worked under a non CPA manager.

The non CPA manager took a 5 month maternity leave for 5 months and I was asked by the consulting firm I worked for to temporarily fill in the empty vacancy. I worked together with the CPA signer for the five months and gained a wealth of accounting experience not limited to financial reporting. My next accounting experience was under Ms. Rita Silver at Douglas Emmett and Co. however, for some reasons, I had previously made various attempts to reach Ms. Rita to sign my accounting experience certificate but she never even responded to my mails to her. Concurrently, Ms.

Rita finally responded to the California Board of Accountancy regarding my request arguing that she was not my supervisor. The CPA board gave me two options regarding my license application and I have decided to go for the first option which is to appear before the certified Public Accountant Qualifications Committee and counter argue Ms. Silver’s comments on my experience. At the time I worked in Douglas Emmett and Co. , Ms. Rita Silver was the overall controller at the accounting department and that meant she oversaw the accounting department activities of the company.

Ms. Rita Silver alleges that she was not my supervisor and that I was supervised by Mr. Kurt Lietz who is not a licensed CPA. According to the CPA handbook, an applicant in a non public accounting experience, “general accounting experience obtained by the licensee must be verified by the licensee holding a valid active license in the United States to practice public in a non public accountancy who supervises the applicant and by a second person with a higher level of responsibility of business/ agency.

The second signer is not required to hold a license to practice public accountancy. If the licensee supervising the experience is the owner of the business, a second signature is not required” (pg. 25). During my period of work in Emmett and Co. , I submitted all the processed residential and commercial move-outs profiles to her for final reviews and she signed on the refund security deposit checks as well as on the move-outs profiles. Consequently before she signed on the refund checks, she needed to review my work so that she could have a final review of what I had done.

On the other hand, once in a while, incase she needed clarification about a particular profile, so she called me in her office for the purpose of further clarifications. The above is evidence that Ms. Rita Silver is a certified licensee and at the same time acted as my supervisor during my work experience with the Douglas Emmett and Co. Mr Kurt Lietz on the other hand, was working and reporting directly to her, while most of my undertakings were under Ms. Rita Silver. Consequently, Ms. Rita Silver also alleges that she is not aware that I have any financial reporting experience.

With utmost respect, I would kindly like to put into light that the accounting board has not clearly specified what kind of work one has to complete to fulfill general accounting experience. I am of the opinion that, the accounting board should be more specific on the kind of work which should be covered for the accounting experience. In that manner, the whole accounting experience will be specific, measurable, accountable, realistic and time bound for the licensee and the one seeking the CPA license.

However it is imperative to note, at Douglas Emmett and Co. I was involved in various financial reporting experiences as stated above in this paper. For example I handled and processed residential and commercial move-outs profiles to Ms. Rita Silver for final reviews and she signed on the refund security deposit checks as well as on the move-outs profiles. It can be argued that, if there was something wrong in such financial reporting she would not have signed them or would have asked me to make corrections.

All in all I want the board to know that I have a lot of respect and regard to Ms. Rita and her work and wonder why as my supervisor she would let me work under her, yet at the same time not direct me towards the kind of accounting experience she thought right. Ms. Rita Silver had already made a commitment to sign my accounting experience and I worked under her as my supervisor. CPA as stated by literature and its code of ethics is about accountability, honesty, competency and higher levels of integrity.

When I first joined Emmett and Co. , I secured an exclusive interview to Mr Kurts Lietz who gave me a detailed explanation of what my functions would be at the accounting department of the Company which were beyond posting of cash receipts. Mr Kurt Lietz further introduced me to Ms. Rita Silver during the interview as a supervisor who has a higher authority. I also had an interview with Ms. Rita Silver whose CPA license hang on the wall and when I questioned if she was a CPA she confirmed to me positively that she is a CPA.

When I expressed my interest to her of wanting to prepare CPA examination and finally become a CPA she said she would be happy to sign my experience certificate when I completed my CPA Examination. I made my decision to accept the job offer with Emmett and Co. , under the impression that Ms. Rita Silver was a CPA and would sign my experience certificate upon my completion of the experience. At the Emmett and Co. , Ms. Rita Silver, was a figure of authority since she set the tone of the accounting department and that meant that she supervised every employee under the accounting department.

I also noted that Ms. Rita Silver and Mr. Kurtz Lietz held a 15 minute accounting meeting each and every morning. During the meetings, both or either of them would talk about pertinent issues related to our work in the accounting department. At one time, I was faced with a certain incidence with one of the senior accountants. The senior accountant gave me some verbal instructions on a task which I humbly carried out. With utmost respect I carried out all the instructions as given and completed the task but the results did not match the expected standards.

The senior accountant insisted I did not follow the instructions given since she had said I do the opposite of what I had done and that explained the unexpected results. At one meeting, the senior accountant brought up the subject and I thought it would be wise for her to write the instructions on a piece of paper for reference so that future inconveniences would be avoided. However, Ms. Rita objected to my request and asserted that verbal instructions would be enough. That incidence shows that the Ms. Rita was the overall supervisor of the accounting department.

With utmost respect I carried all the chores expected by the CPA board but my experience certificate has not been signed. CPA as studies state, was formulated so that the level of accountability in handling public resources would be increased and that would also lead to more trust between accounting professionals and the public at large (AICPA, p2). The above also shows that there should be accountability and transparency in the process of signing the experience certificates of would be CPAs like me. I followed all the procedures and instructions as required by the board in ensuring that Ms.

Rita Silver was a certified CPA who had the authority to supervise me and eventually sign my experience papers. I believe that the CPA board is serious with its mission which states that “The mission of the California Board of Accountancy (Board) is to protect the public welfare, particularly consumers, by ensuring that only qualified persons and firms are licensed to practice public accountancy and that appropriate standards of competency and practice, including ethics, objectivity, and independence are established and enforced” (Department of consumer affairs, p. 1).

I believe that, I have what it takes to be a successful CPA under the mentorship of Ms. Rita Silver, since I have worked hand in hand with her and Mr. Kurt Lietz. On the other hand, due to the increase in market capture and globalization economy, there is still need for more CPAs not to mention new talent which will bring major developments to the field of CPA. The CPA handbook also states that “By regulation, prescribes, amends, or repeals the rules of professional conduct appropriate to the establishment and maintenance of a high standard of integrity and competency in the profession.

 There is need for companies to realize the importance of CPAs in the success of their companies. I have worked for various high profile companies and the top managements do not realize the importance of CPA. Even at my current employer, a 100 years American public company, my manager and vice president are not CPAs. The VP has worked for 30 years, and the manager has worked there for almost 9 years. They are both senior figures at the company and have worked the longest time in my department.

I am not saying every manager has to be CPA; but the benefits that come with CPA training cannot be overlooked in the running and success of any business and company. But at least I have been employed by the company so the company has one CPA. I also worked at the Warner Bros Company as a contractor. The director was an AA degree holder, but she worked there for more than 20 years, and got promoted. Later, she promoted another senior accountant, who is another AA degree holder to manager. The whole home video division has no CPAs.

I got an interview at Warner Bros Corporate accounting side, which is separate from Home Video division; the interviewer (director) told me that there were no CPAs in the whole corporate accounting groups that could certify me. During my work experience, I have noted that there are various challenges facing CPA in America currently. For example, the American accounting fraternity just like other accounting bodies has faced various challenges for example, scandals and other irregularities due to lack of accountability of business professionals.

Such incidences have led to taking various measures to ensure that integrity and accountability is enhanced in accounting functions for instance employment of CPAs by business professionals. While CPA professionals are highly regarded because of their higher levels of competence, some organizations and business don’t seem to recognize CPAs. The current president of California CPA Society, Mr. John Samore III understands that, despite the records there are not many CPAs in business companies and industries.

I have worked for several large companies including Warner Bros Home Video Division. Intriguingly, there were no CPAs in my accounting group or other accounting groups. A lot of managers just got promoted through working there for many years. With utmost respect I can confidently argue that some business professionals are overlooking the role and impact of CPA professionalism in the accounting world. While employing qualified CPAs can guarantee improvement of quality of work, some companies just overlook such important aspects.

Perhaps its is the higher time policy makers in the accounting field found means and ways of retaining CPAs in the accounting field through offering conducive working environment and incentives. The most obvious solution to the current crisis is to encourage self improvement of accounting professionals. Self improvement in terms of the accounting profession not only calls for the use of time but also requires the commitment of significant financial resources. Accounting companies and industries have to be willing to spend financial resources to enhance self development of CPA professionalism of their staff.

However the major challenge comes as a job seeker, since it becomes such a big challenge to gain access to CPA employment to work for and sustain one self as there are not many CPAs in industries. It is the high time that the factual and statistical data currently held on CPA critically got analyzed so that new ways of ensuring that more business professionals undertake CPA trainings and are retained are undertaken. Some business organizations prefer to retain their current employees regardless of whether they have done CPAs or not.

There are various reasons which may result to the above, with one key ingredient being that business organizations are cutting on job training costs of their employees. In this manner, business professionals within an organization are promoted and given pay increments instead of incurring costs through employing CPA professionals. The time taken for accounting experience could also be another challenge which needs to be addressed by the CPA board to ensure that CPA professionalism gains root in current business organizations and companies.

The problem with the above, is that loopholes are created whereby public funds are mishandled and level of accounting scandals keep on increasing. For example, the current President Obama regime is faced with many challenges for instance the most current AIG scandal whereby tax payer money has been misappropriated (CNN. com news). I am of the opinion that the reason why most financial institutions fail in America is because they have internal audit departments but they don’t take those departments seriously since they are used as support departments or expense departments, and not as departments which can bring in money for the company.

In other words, if the internal audit department found something wrong, in their prospective companies and industries, they would not have many options to act since they have limited powers. If there were more concrete accountability and decisive strategies of sealing all loopholes that may enhance misappropriation of public funds in the US, financial institutions in the US would not be faced with the current challenges they are facing.

I am of the opinion that CPA professionals would be a key ingredient to helping Americans and the president of the US create lasting strategies which would ensure that financial institutions undertakings are not compromised by any loopholes that may lead to mishandling of public resources. CPA professionalism has been employed for many decades because of the role it plays in encouraging honesty and accountability in business undertakings (Department of consumer affairs, p. 1).

CPA is about professionalism, and improving the way business professionals handle changing needs of the accounting world and also how they address emergencies in the business world. The fact that CPAs are few in the available business industries stands in the way of the development of CPA professionalism. For example, other CPAs like me are bound to have challenges in finding employment in CPA industries since they are few. On the other hand, perhaps the CPA board should be able to place a major emphasis on the role of CPAs in business organizations and companies.

This is because as long as CEOs of companies don’t appreciate the importance of CPAs then they will not pave way for employment, self-development of current staffs and retention of CPA professionals. The accounting world is changing and in order to gain a competitive edge there is need for accounting and business professionals to ensure that they uphold higher standards of competency and integrity (AICPA, p1). I am of the opinion that, CPA is a key ingredient in ensuring that companies and other business organizations gain a competitive edge against competitors since their performance is transparent, honest and competent.

The business arena in the world today is characterized by competition and global economy which calls for the employment of strategic management and self development of employees and staffs of all levels. Though the CPA board has brought significant changes in the American business world, there is need for more research in the CPA world so that lasting solutions can be found among loopholes which may encourage mishandling of public resources. In that manner, a conducive environment will also be created for CPA seekers and holders so that business organizations can be assured of successful performance meant to increase public trust.

Consequently, there is need to advocate on the roles of CPA in business organizations and companies. I am of the opinion that, most of the challenges faced in the accounting world are as a result of business professionals overlooking the role of CPA companies and industries. CPA companies and industries could be a source of employment of both new and existing CPA professionals so that they can play a major role in bring significant developments in the accounting world as well as handling public finance. Accountability in business activities has already taken a major role in the development of accounting activities.

For example studies show that part, of the accountability process is not limited to acts like Sarbanes-Oxley Act of 2002 due to demands in ensuring proper and accountable governance (AICPA, p3). With the above in mind, it should be noted that CPA professionalism is just not about academic qualifications but the ability to integrate learned theory with practice. For example, during my accounting experience I learned that CPA is also about understanding the accounting model, financing and internal controls (AICPA, p4).

The above can be incorporated with technological advancements to ensure that higher levels of accuracy are maintained in the course of handling public resources. The accounting experience has also taught me to be disciplined in my undertakings of accounting processes and procedures. Studies show that, discipline in CPA makes CPA professionals exemplary in their undertakings and that is a key ingredient of market performance indicator (AICPA, p4). On the other hand, the training of CPA in America is such that it meets the needs of diverse clientele to ensure that the needs of all clients are met sufficiently.

Studies done show that, those persons who qualify for the CPA exams are not only intellectually bit technically capable such that they can be able to find lasting solutions to eminent problems in the process of accounting (AICPA, p4). I learned a lot from my CPA training which also ensured that I gained the expected CPA professional ethics and values. Under my accounting experience under the supervision of Ms. Rita Silver I was able to meet diverse and varied clients; I was also put in challenging situations which I was able to find authentic solutions for.

That shows that the academic theory learned was able to be put in practice during my accounting experience. I do not in any way intent to challenge the arguments of Ms. Rita Silver with maliciousness. My aim is to try and reason out through her arguments and find the root cause of the challenges standing in the way of her signing my accounting experience. I value integrity and transparency in my undertakings as a trained CPA and will stand to defend the same. I am also honored by the fact that Ms.

Rita Silver gave me the chance to have my accounting experience under her supervision which is primarily in the accounting department. At Douglas Emmett, Ms. Rita Silver was a CPA and the chief of the accounting department, and should take responsibility of supervising and developing everyone under her. From my report it is intriguing to find that there are not enough CPA industries and hence the need to ensure that CPA professionalism is taken to higher level so that accounting processes can be enhanced in our businesses, companies and industries.

Reference

1. American Institute of Certified Public Accountants. (2007). Code of Proffesional Conduct Inc. , New York, New York. AICPA (2005).
2. CPAs as CFOs: Why You Should Have a CPA in Your C-Suite. White Paper. Retrieved on 16th March 2009 from file http://fmcenter. aicpa. org/NR/rdonlyres/758F06B3-F415-4185-8AFE-FFFB7D71C743/0/CPA_as_CFO_White_Paper_July_2005. pdf CNN. com television world news 19th March, 2009
3. Department of consumer affairs. (2007). CPA Licensee Handbook. Carlifornian board of Accountancy Department of consumer affairs. (2007). CPA Applicant Handbook.

Contemporary Auditing is the examination and assertion of any accounts and of other official papers that support certain accounts. Such a system of checking an individual financial matter against established standards has been used, particularly in global marketing field. In some other countries, the development in the field of commerce and accountancy expanded the taxes of every auditor; however, auditing style in marketing field or in any International business firm has become unusual, as there is the presence of business expansion worldwide.

Nowadays, various business firms continue to grow. Special privileges are normally being given in a premise upon which the fulfillment of an agreement depends and/or in which certified experts manage a formal examination of an organization’s or individual’s accounts or financial situation. Such a methodical examination and review is valuable to the owners, executives, creditors, receivers etc. In addition, the final report of an audit plays a pivotal role for the sellers, owners, recipients, governmental agencies and donors to certain groups or organizations.

Therefore, audit categorizes every sort of inquiries that pertains to the institution’s account information. It is necessary for an audit to distinguish every asset and liability, and evaluate whether each of these has been incurred, valued and/or recorded in an accurate manner. Statement of accounts needs to be completed through the amount, which remains when use or need is satisfied; the excess of a corporation’s net worth over the par or stated value of its stock must be recorded.

Eventually, such a process of examination or evaluation of certain account information enacts a check, which is not subject to control by others. This is the self-sufficient identity showing ownership or indicating payment made on an approach toward overdrawing assets and understating probabilities. It becomes quite easy for every individual taking the function of an auditor to work on their field of expertise despite the fact that all functions belong to an auditor have been extended to a more complete and broad analysis of the whole management within the bounds of the financial and accounting field.

Therefore, it is necessary for an auditor to have an extensive knowledge and comprehensive learning with regard to commerce and accounting, and other business firms’ etiquettes. This particular conduct is being acknowledged as one who is skilled in the practice of accounting or who is in charged of public or private accounts, records the facts or any business entities and/or various statements of account. Moreover, it is necessary for an auditor to distinguish whether a certain statement of account has been made or recorded in an appropriate manner.

However, as an analysis of the contemporary issues with regard to any business firms or accounting concerns, numerous countries acknowledge the appropriate functions of an auditor. It is common for certified public accountants in the United States of America to adhere to the terms of private audits; the General Accounting Office, which has been founded in 1921, manages examination or evaluation of the federal government’s account information (Bavishi, 1989). The Internal Revenue Service frequently examines or evaluates tax returns, which have been formed into an association and endowed by law with the rights and liabilities of an individual.

In addition, the Public Company Oversight Board, which has been established in 2002, records a variety of auditors or accountants and accounting firms that correspond to the real functions of an auditor. For a better comprehension with regard to the entire view of such a contemporary auditing, the case is shown from the real world of commerce and accountancy. The Lincoln Savings and Loan Association was a well-known financial institution amid the Keating Five scandal in the 1980s Savings and Loan crisis at Irvine, California.

Lincoln has become a progressive economic or business organization with nearly half its entire property of association, corporation, or estate applicable or subject to the payment of debts, particularly in home loans and there were only a quarter of its whole properties viewed with certain risks. It has encountered a variety of difficulties within the organization—experiencing slow contribution to the business profits for several years before reaching a large amount of income. Lincoln has become under control by Charles Keating, who has taken the chairperson’s position at the American Continental Corporation, a builder’s company.

Keating acquired this company for an approximately $50 million in the second month of 1984, as he has driven the management out of the company believing that the former administration would be improved when changes take place along the way. With luck in the business firm, he was able to reach a large amount of income, as the company’s profits have increased from more or less $1 billion to approximately $6 billion through four years of running his new owned business (“Contemporary Auditing: Real Issues and Cases,” 2008).

Hence, savings and loan associations have been through the process of removing all the restrictions and regulations in the late 1980, which has given every business transaction a permission to acknowledge dangerous outlay of money usually for income or profit along with the depositors’ money. This has become the right time for Keating to take all the benefits that would yield him lifelong productivities through the running the Lincoln.

Nevertheless, an American economist and the Chairman of the Federal Reserve of the United States, Alan Greenp sent a special business letter to the officers of the Federal Home Loan Bank (FHLB) of San Francisco. The letter contained a special message to give an aid for an absolving petition for Lincoln to a bank board rule, which prohibits excessive amounts of some forms of the outlay of money usually for income or profit that took place within the company (“Contemporary Auditing: Real Issues and Cases,” 2008).

Consequently, American Continental Corporation (parent of Lincoln Savings and Loan Association) went bankrupt; thus, approximately 20,000 major and important investors have lost their life savings account. Such a cooperative association organized to hold savings of members in the form of dividend-bearing shares and to invest chiefly in home mortgage loans —called also savings and loan has obviously faced a serious problem in the industry.

Moreover, the federal government of United States of America overlaid almost $3 billion of losses within the Lincoln Savings and Loan Association, as the company has been confiscated. A number of creditors tried to determine liabilities and apportion assets toward discharging indebtedness through the corresponding Resolution Trust Corporation. As a result, Keating would be imprisoned for the sort of fraud he has done with the company. Conclusion

I have learned substantially from the said experience and it impelled me to seek various means to improve my process of critical thinking and perception with regard to real issues and cases on the contemporary auditing. Through comprehending the entire view of such a situation in which the owner who manages a certain company committed fraudulent acts and deeds within his own company, a number of people would have been affected, indeed. This only signifies that prior to making decisions or establishing beliefs, an individual must be acquainted of getting in the way of arriving at an accurate perception and wise decision.

For a better comprehension with regard to this view, an example concerning Arthur Young in Contemporary Auditing: Real Issues and Cases, substance-over-form acknowledges the economic substance of every circumstance or issue despite the fact that its legal form could yield a diversified outcome. The acceptance of large, high-risk audit clients for relatively high audit fees may threaten an audit firm’s de facto and perceived independence through analytical reviews on the global contemporary issues.

Every transaction within the business should be acknowledged as non-arms length transactions; revenue on the financial statements should be recorded on the balance sheet.

References Bavishi, V. B. (1989). International Accounting and Auditing Trends. The Columbia Encyclopedia, Sixth Edition Copyright© 2004, Columbia University Press. Licensed from Lernout ; Hauspie Speech Products N. V. Knapp, M. C. (2008). Contemporary Auditing: Real Issues and Cases. South-Western College Pub; 7th Edition, ISBN-10: 0324658052 ISBN-13: 978-0324658057, 526pp

Facts

Viccio & Martin, an accounting firm tangled up in an audit discrepancy problem with its largest client, Models. Inc. Jane Ashley a newly hired staff accountant of Viccio & Martin, on her first assignment of auditing the client company’s Accounts Payable Cut-Off, discovered an audit-related issue involving her senior accountant, Frankie Small. During the year-end date inventory count, Frankie Small together with a coop-student did not exercise correct auditing procedures. The two audit staffs were only present to observe inventory count in one of the company’s three warehouses, and instead based audits on the other two remaining warehouses in an statistical samples provided by the company, without even reviewing the accuracy of the company’s inventory management system.

Further, Jane, on her review of the company’s financial reports found out that the company’s inventory documents were messy and disorganized, and the inventory section of the reports were hard to interpret. While conducting audit on the client company’s accounts payable records, she had found out that many of its invoices were unrecorded on its accounts payable master ledger. After auditing both recorded and unrecorded invoices, she reported an estimated $400,000 cut-off problem. When she brought this problem to Frankie and Mr. Viccio, the firm engaged in many discussions with Mrs, Hyst, the head manager and 50% shareholder of Models, Inc.

While the re-audit is going on, the auditors reported a loss of $150,000, in contrast to a reported healthy profit of $150,000 prior to the controversy. As a response, Models Inc, under representation of Mrs. Hyst, give suspicious claims to the auditors. Mrs. Hyst submitted a new listing to the auditors showing inventories amounting to $200,000 stored in other locations which she claimed left-out of count during the year-end date inventory count. After investigating the list, the auditors found no concrete evidences for the claim.

Mrs. Hyst again showed and explained that their suppliers would not extend them more credit, and their bank loan of $1 million would be called if such loss will be reported. After series of discussions, Mr. Viccio decided that to solve the case, they must help the client. An amount of $150,000 would be added back to inventory, and be subtracted from the cost of goods sold. Jane knowing the real value of the audit, was astonished with the decision, and is determined to perform adequate measures to give justice to the case.

Relevant Issues

Based on thorough analysis of the case, and of conducting reviews on relevant accounting standards from the American Institute of Certified Public Accountants online site and other auditing guidelines, these issues must be given utmost attention.

Frankie Small’s auditing procedure is questionable under the Auditing Standards (AU) Section 331, titled “Inventories”. Based on Frankie’s statement, he confirmed that audit staffs were only present to observe the inventory count in the Windsor warehouse. No audit staffs were present in Toronto warehouse and Michigan drop-off point, but instead based his audit reports on statistical sampling provided by the company for the two locations. Under the circumstances described, utilizing the company’s statistical sampling of previous inventories is not in accordance to the paragraph 10 of AU Section 331.

The paragraph permits the use of “statistical sampling” provided that the auditor satisfies himself that the client’s procedures or methods are sufficiently reliable, and in case required, the auditor must be present to observe the count to ensure the effectiveness of the counting procedures used (The American Institute of Certified Public Accountants (AICPA), 2008, AU Section 331, p. 10).

The absense of audit staffs during the inventory count in Toronto warehouse and michigan drop off point is a contributing factor to the controversy. If audit staffs had been responsible with their works, the discrepancy would have been discovered earlier.

After series of discussions with the client, Mr. Viccio’s decided to help the company and cover up the discrepancy. Mr. Viccio will hide the identified losses by adding the amount of $150,000 back to inventory. However, the auditors failed to verify the actual existence of the said inventory after conducting investigations with the locations found on the list provided by the client. Therefore it would be unjustifiable to add the amount back to inventory.

The act would fail to comply the “Ingredients of Reliability“ of SFAC 2, titled “Qualitative characteristics of Accounting Information” which says, that accounting information should be able to represent what it purport to represent (CPA Class Website). Since no actual evidences can be found on the said amount of inventory, the decision to add it back to inventory is generally unacceptable.

Further, the decision would breach of the Auditing Standards (AU) section 110, titled the “Responsibilities and Functions of the Independent Auditor”. The section’s first paragraph requires preparation of financial reports by independent auditors to observe fairness, and conformity with the generally accepted accounting principles:

“The objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles…  (The American Institute of Certified Public Accountants (AICPA), 2008, Section 110, p. 1).“

Its second paragraph further places the responsibility of ensuring that financial statements are free of material misstatement whether caused by error or fraud to the independent auditor (The American Institute of Certified Public Accountants (AICPA), 2008, Section 110, p. 2).

The decision would also breach the Auditing Standards (AU) Section 220 titled “Independence”. Its first paragraph says: “The auditor must maintain independence in mental attitude in all matters relating to the audit (The American Institute of Certified Public Accountants (AICPA), 2008, AU 220, p. 1)”

The standard requires the auditor to be independent, and free from bias to keep the impartiality which dictates the dependability of his findings as an obligation not only to management and owners of the business, but also to its creditors and to those who rely on auditor’s report (p. 2), and to maintain the confidence of the general public to the profession (The American Institute of Certified Public Accountants (AICPA), 2008, AU 220, p.3.)

Models Inc.’s discrepancy in Record Keeping and Accounting Procedure

Models Inc.’s manner of recording its accounts payables invoices are not in accordance to the Accounts Payable Recognition rules. According to Section A3.2.2, recognition of accounts payables are made when goods or services are invoiced or received (Northern Territory Government Australia, 2006). During the auditing procedure, many invoices were found unrecorded for unknown reasons.

Further, the manner of recording its inventories is unsystematic. Even though, the company is using the periodic inventory system, under such condition, the company is still required to keep working papers properly organized, and ensure inventory management policies are well observed during the in and out of inventories. Under this circumstances, the complexity of auditing inventories has been intensified due to the company’s poor inventory system.

Under such condition, the company failed to ensure that every information of particular value to their operation must be “useful for decision making” stated under SFAC 2, titled “Qualitative characteristics of Accounting Information” which requires that submitted information be “Relevance and Reliable” for it to be able to make a difference in decision making (CPA Class Website).

Mrs. Hyst Fraudulent Claims

According to US GAAP, Inventory refers to tangible properties  (CPA Class Website), and is having significant value for proper determination of operating income (CPA Class Website). The Auditors found that Mrs. Hyst’s claims pertaining to the amount of inventories which according to her were left-out of count during the year-end date is impossible to trace. No evidence were found on goods in transit, also in goods stored in other locations, therefore, based on GAAP definitions, those items can’t be included in inventory. If the claimed amount of $150,000 are added back to inventory, it can be considered a fraudulent act.

Fraudulent Financial Reports

The Syrbanes-Oxley Act of 2002 Section 7421 requires that financial reports be free from false statements or omitted facts necessary to fairly present the financial condition and results of operation of the issuer (Securities and Exchange Commission, 2008). Fraudulent financial reporting is a violation of Section 17(b) of Securities Act. The paragraph prohibits the obtainment of money or property through false or misleading statements  (The University of Cincinnati College of Law).

For the welfare of the company’s creditors and investors, auditors should ensure every information appearing on the company’s financial reports after the audit are free from errors and is not bias. The company as a going concern always requires sufficient funds to conduct its operation. It is understood in the case, that the company’s bank is already questioning its operating loan, for it was observed that the amount was increasing.

And also, its suppliers are also having hesitations of extending them more credit. It is very apparent that the management of Models Inc. are aware of their financial position. The loss figure of $150,000 will have significant value for the company’s investors and creditors. It may indicate that the business could no longer afford to pay its debt if it should incur further debts. Or it may also dictate that it already needs to liquidate its assets to pay its creditors.

The purpose of full disclosure act in accounting is to foster investor’s confidence, inhibit fraud in public offering, trading, voting, and tendering of securities  (Securities and Exchange Commission). Therefore, it is entrusted to the auditors of the client company to observe full disclosure for its financial reports. Investors, suppliers and the bank extending credit or funds to the company are entitled to know its real financial position. The audited financial report, if religiously based on all accounting standards will be very useful in decision making purposes for all of its creditors and investors.

Alternative Courses of Action

The case tackles legal issues and therefore, in any case, can be further understood in the presence of legal counsel. During consultation with an expert, it is of utmost importance not to disclose any confidential information about the client. The consultation can be generalized to cover up all related cases. After the consultation, Jane needs to schedule a meeting involving the client, Mr. Viccio, and Frankie to discuss the legal issues present in the case.

The case doesn’t call for superiority status, but of integrity of profession. It would be unlawful to pursue the decision. Based on the auditing standards stated above, manipulating the financial report to cover the client’s discrepancies can place both the firm and the client in a serious situation. First, the firm places its integrity at stake and can be in danger of losing the general public’s confidence.

Second, the client can further place itself in an unhealthy situation in case it’ll fail to cover up the problems challenging its operation. If the client can hide its real condition and further extend credits from suppliers and acquire additional loan from the bank, it would further put their liquidity at risk. Creditors will in turn found out in the near future about the problem and blame the firm for releasing fraudulent audit reports.

Best Course of Action

Under the circumstances stated in the case, to free both parties from further risks, the situation can be further understood by seeking a legal counsel. To cover up the discrepancy by creative accounting practice, as according to the initial decision of Mr. Viccio, would place both parties in serious situations in the end. Sticking with the Auditing standards is of utmost importance in all auditing issues.

Auditing Standards section 110 requires auditors to observe generally accepted accounting procedures at all times (The American Institute of Certified Public Accountants (AICPA), 2008, AU section 110, p. 1). This also preserves the independence of the auditor in conducting audit works to maintain the confidence of the general public to the profession (The American Institute of Certified Public Accountants (AICPA), 2008, AU 220, p.3).

References

1. CPA Class Website. (n.d.). Generally Accepted Accounting Principles in the US – Inventory Costs: SFAS no. 151. Retrieved May 11, 2009, from cpaclass.com: http://cpaclass.com/gaap/sfas/gaap-sfas-151.htm
2. CPA Class Website. (n.d.). Generally Accepted Accounting Principles in the US – Qualitative Characteristics
   of Accounting Information: SFAC no. 2. Retrieved May 11, 2009, from cpaclass.com: http://cpaclass.com/gaap/sfac/gaap-sfac-2.htm
3. National Treasurer. (2006, June 26). Treasurer’s Direction – Accounting Liabilities Section A3.2 Accounts Payable and Accrued Expenses. Retrieved May 11, 2009, from NT.gov.au: http://www.nt.gov.au/ntt/treasdir/A3-2-Accounts%20Payable%20and%20Accrued%20Expenses-.pdf
4. Securities and Exchange Commission. (n.d.). Full Disclosure System. Retrieved May 15, 2009, from sec.gov online: http://www.sec.gov/pdf/annrep02/ar02fulldisc.pdf
5. Securities and Exchange Commission. (2008, January 08). Syrbanes-Oxley Act of 2002 – USC Chapter 98 PUBLIC COMPANY ACCOUNTING REFORM AND CORPORATE RESPONSIBILITY. Retrieved May 11, 2009, from SEC online: http://uscode.house.gov/download/pls/15C98.txt
6. The American Institute of Certified Public Accountants (AICPA). (2008, July 16). AU Section 110 Responsibilities and Function of Independent Auditor. Retrieved May 11, 2009, from AICPA.org Online: http://www.aicpa.org/download/members/div/auditstd/AU-00110.PDF
7. The University of Cincinnati College of Law. (n.d.). Securities Act of 1933-Section 17 — Fraudulent Interstate Transactions . Retrieved May 11, 2009, from Securities Lawyer’s Deskbook : http://www.law.uc.edu/CCL/33Act/sec17.html

There are many jobs that require accounting. Yet, accounting has never been thought of as interesting. Accounting is instead thought of as being tedious and even boring. However, what people may not know is that FBI agents must develop a readiness for accounting to be able to fundamentally do their jobs properly.

In addition to accounting, there are many requirements, tests, and processes you must go through to become an FBI agent, which makes it a difficult but worthwhile job nonetheless. FBI agents provide protection to society and also investigate into many different cases, many cases require forensic accountants to analyze and report their findings on specific things such as bank accounts and other information.

In order to become an FBI agent, there are many requirements that must be fulfilled. To start, one must have a 4 year degree from a college or university “accredited by one of the regional or national institutional associations recognized by the United States Secretary of Education” (FBI) and be a United States citizen.

There is also an age requirement to become an agent. One must be at least 23 years old, but younger than the age of 37. This is due to the physical strains of the profession. The strains of the tasks given to FBI agents make it harder as one continues to age to work in the field. FBI agents are typically paid around 60,000 annually. If agents are relocated to a high cost area they are given a one time extra bonus of 22,000 dollars.

In addition to the requirements, there are many tests that you must pass in order to become an FBI agent. There are many steps that need to be fulfilled in order to apply to become an FBI agent. First you must apply online or at a designated FBI branch office. Once you are accepted, you must take a couple of tests during the application process before you can become an FBI agent. The tests are comprised of two phases. The first phase test evaluates and determines if you have the critical skills and abilities that are required to perform and handle tasks of an FBI agent.

The second phase test requires you to be interviewed by a panel of three special agents to determine if you have the necessary skills in order to handle certain situations and be able to communicate as well. There are many other factors that must be looked into when special agents look at applicants, such as the honesty and integrity of the applicant. There is also a writing portion that evaluates your writing skills and ability to judge and record certain situations in detail. The next test that you must take is the physical portion of the test.

You must adhere to the given instructions and also complete a number of physical exercises. In addition to the tests you are required to have a extensive background check done and medical examinations. Before being accepted as an FBI agent you are to “begin your career at the FBI Academy in Quantico, Virginia for approximately 21 weeks of intensive training at one of the world’s finest law enforcement training facilities. During their time at the FBI Academy, trainees live on-campus and participate in a broad range of training activities.” (FBI.gov)

With all the tests and requirements in place, It may not seem as if FBI agents require accounting in the field. But one of the five areas you must qualify for in order to be accepted into a special agent position is accounting. A type of accounting that is most commonly used in an investigation is forensic accounting. Also read My Dream Job Accountant Essay

Forensic accounting “is a branch of accounting that not only requires knowledge of accounting and auditing principles but also the ability to work on investigation and litigation teams to look into illegal financial activity and assist in litigation processes.” (Gina L.). Forensic accounting is increasing in demand currently due to the recent increase of crime. This can be seen in the job postings for forensic accounting

 To become a Forensic Accountant you must have a bachelor’s degree in accounting or a related subject. Most graduates who earn a graduate certificate or master’s degree in forensic accounting can drastically increase their employment and salary outcome. Forensic accountants are also usually required to have their Certified Public Accountant (CPA). They can also become Certified Fraud Examiners or Certified Forensic Accountants after two years of experience.