Corporations

Here is the report that was requested by Mr. Bill Wilkinson, our lecturer of the subject, Accounting For Managers (subject code: TBS901). In this report, I will explain what I have considered to be the principal areas of judgment contained in the Annual Report 2001 of Fountain Set (Holdings) Limited. Next, I will try to analysis and study its financial situation in 2001 base on the data provided in the Annual Report by using some ratio analysis, measure and comment upon profitability, asset utilization, liquidity, and debt utilization. Finally, I will provide a short overall analysis for shareholders on whether they should maintain, increase or reduce their investment.

I would like to use this opportunity to thank you Mr Alpha Choy, the financial reporter of Next Media, who gave me advice and financial data for completing this report. Also, I would like to express my thanks to Mr Bill Wilkinson the lecturer of Master of Business Administration of University of Wollongong, for providing their professional advice. Hope this report can help you understand more about the financial policy & situation of Fountain Set (Holdings) Limited.

Fountain Set (Holdings) Limited is an organization providing piece goods dyeing and fabric finishing services to the textile industry. In this report, we will try to study and analyze the Year 2001 financial situation of Fountain Set. As the financial statements published in the annual report have involved several area of accounting judgment of the organization, the following section will explain and describe what kind of judgment that Fountain Set has involved in the preparation of these statements.

Besides, we will try to use Ratio analysis for studying the financial status of Fountain Set by comparing the ratio result of Year 2000 and 2001. After several comparisons, we found that Fountain Set is a healthy organization. In Year 2001, the weakness in the US economy was a big affection on the Fountain Set business. Although it had facing a difficult financial situation, it still can have a good financial performance in Year 2001. Therefore, refer to our analysis, we would like to highly recommend Fountain Set (Holdings) Limited to the shareholders or investors.

Introduction

When we try to analysis the financial situation of an organization base on the data provided by its own Annual Report, we should not just grant on this information and expect that the data included is prepared on a purely objective basis. As the author of the Annual Report has set several principal areas of judgment before preparing the report, we must find out what principal areas of judgment contained in the report and use some ratio analysis for measuring & commenting upon profitability, asset utilization, liquidity & debt utilization.

In order to analysis and study the financial situation of Fountain Set (Holdings) Limited for the year 2001, we will try to use the methods mentioned in the above and finally we will make recommendation base on the our finding to the shareholders on whether they should maintain, increase or reduce their investment. Fountain Set (Holdings) Limited was setup in 1969 providing piece goods dyeing and fabric finishing services to the textile industry. Fountain Set currently has several lines of business including the original dyeing and finishing operations, yarn trading, garment sales, and knitting services. Well over half the company’s customers are located in Hong Kong, more than a quarter in Asia, and the remainder split between the United State of America and Europe. (www.quamnet.com, 5 August 2002)

Principal Area of Judgment Some unsophisticated readers may think that, as the information provided from annual report has been audited by external audit, information should be subjective and corrective. Actually speaking, there is some amount of judgment involved in the preparation of such statements. The decision that an organization made between these different accounting practices could have a significant impact on the balance-sheet valuation of its assets and liabilities and upon its report profit.

Therefore reader should attentively study the annual report. The principal areas of such judgment are related to fixed assets, stocks, debtors, creditors, and goodwill. In the following sections, we will try to identify these judgments fro m the information provided by Fountain Set annual report. Historic-cost basis of accounting According to the Accounting policies of Fountain Set, the financial statements have been prepared under the historical cost convention, as modified for the revaluation of certain properties.

INTRODUCTION
Countrywide Financial Corporation, one of the largest real estate mortgage companies was formed by Angelo Mozilla and David Loeb in 1969. The first very branch of the company was opened in 1974 and the company was in such a great phase of growth that within 6 years in had 40 offices in the United States of America. The growth of the company was although dramatic it was only based on the U.S market which just proved to be a bubble.

From 1974 to 2006 the company never looked back and continued its journey of growth an expansion. As a result by the end of 2006 the company had 661 branches in 48 different states of US. It was such a safe bet for investment that the Bank of America invested $4 billion to take over the company.

The phase of the remarkable success and growth continued till 2007 when the whole world realized that most of the deals or the mortgages which were made by the company were not appropriate rather were all very risky and were all expected to default in some time. The crisis in 2008 was due to the failure of the capital market as well as the mortgage business in US and the major contributor to such fall was Countrywide Financial Corporation, being one of the largest mortgage companies in the country.

SWOT ANALYSIS OF COUNTYSIDE FINANCIAL CORPORATION

The SWOT analysis of the company enables its management and the executives to make the right decision on a timely basis and to formulate the strategies for the better performance and the working of the company. It also helps the company to forecast the opportunities it will have in future or the threats it will going to face.

Strengths

Like any other mortgage company the strengths of Countrywide Financial Corporation was the big name of the company. The company had the opportunity to start its new line of business with its name. The new business started should be of such a type which can hedge the negative impacts of the downfall in the housing market of US. Moreover, strength of the company was that it was in the business of mortgage. It could take over the house mortgaged by it and have sold them so that it can recover its amount of advance given.

Weaknesses

One of the weaknesses of the company was its strategy and its risk management department. It was the strategy according to which the company went for such an aggressive approach while advancing loans and mortgages. The aggressive approach made its employees to pass loan for every class of the people which were later unable to pay off their loans and the company was collapsed. Another weakness of the company was its risk management department which was not working effectively. If the risk management company had been effectively the company would not have advanced any mounts to those who were likely to default or may be the number of the defaulters would have been decreased remarkably.

Opportunities

The credit based economy of the company leads many opportunities for the company. It was the credit oriented nation due to which the people have this mind set of buying everything on credit. If the company had gone for proper risk analysis and management before granting any loans it would have not collapsed as various opportunities were available to it. The trend of buying everything on credit in US provided the company with the opportunity of extending its product line and moving from house mortgage to other forms of business.

Threats

There were two threats to the existence and working of the company. One of the two threats was the dynamism in this world. The world now is so fast changing that what is true for today doesn’t remain true tomorrow. Those customers of the company who were not risky at the time they were given the loan turned out to be risky after sometime and later defaulted. Moreover, the competitors of the company were also a threat to its performance. The more the competitors the more the customers were to be divided between the competitors. Thus, in order to increase its market share the company went for aggressive approach and gave loans to almost everybody without considering their long term strength to pay back the amount amount and the interest due.

PROBLEMS FACED BY THE COMPANY

The problems of the company were inbuilt in its business. As the company was growing so rapidly the world ignore the problems which were always there. The biggest problem of the company was that it was not able to overcome its weaknesses and failed to foresee that which of its customers will be able to remain good in future and how many of them would turn bad. Moreover, the company was a very high risk taker. It kept on putting the investment of its share holders at risk unless all that invest was wasted.

REASONS FOR THE FAILURE OF COUNTRYWIDE FINANCIAL CORPORATION

As the process of the failure was spread over a long period of time, many factors kept on contributing to the failure of this giant from time to time. Following are some of the reasons due to which the company collapsed:

1.      Management Strategies

The management strategies of the company played a vital role in the whole major fall and the loss of many. The strategies of the company were not effective and it seems that the management was not updating their strategies with the passage of time and was not keeping them up to date with the changing needs of this world. It will not be wrong to say that the failure was caused due to the negligence of the management.

2.      Regulatory Lapses

Not only the management but the regulatory bodies also have contributed to this collapse. If the management was not updating its policies on timely basis and was giving loan to almost everyone while following its aggressive approach, it was the duty of the regulatory bodies to interfere. If they had formed proper regulations and rules especially for the listed companies involved in the mortgage business the investment of so many people would not have been wasted. In fact the whole country would have been saved from the major economic turmoil.

1.      Debt Factoring

Another big factor involved in this failure of the company was that the company was involved in the sale of its debts to the factoring companies. The company used to advance amounts to the customers for against the mortgage of the houses they used to buy. After advancing the loans the company instead of recording the debts as assets and showing their aging analysis in the accounts in the form of substandard, doubtful or bad debt it used to sell the debts in the form of the financial assets to the factoring companies. As a result Countrywide Financial Corporation never fell short of the amounts and kept on advancing the amount earned from the sale of those assets. Therefore, the company never had to show that so many of its debts were not paying back even the principal amounts. Hence, the company kept on succeeding and the world did not come to know what was actually going on.

SUGGESTED MANAGEMENT STRATEGIES FOR THE COMPANY

As above discussed the major reasons for the collapse of the company were that the company was not able to deal with its strengths, weaknesses, opportunities and threats. Few strategies are given below which could have helped the company survive if the company had adopted at the right time.

2.      Hedging

As the business of the company has this inherent risk of default by the customers the company should have adopted the strategies of hedging its losses. Under the strategy of hedging the losses it should have invested in some other business which would grow in case the housing market of the country falls. Thus the loss generated from the housing market would have been recovered from the other business.

3.      Conservative Approach

The company should have adopted the conservative approach when it comes to the selection of the customers for the approval of their loans. If the loans are provided only to few selected people were given the loan on the basis of their background and financial stability the chances of default and loss to the company are reduced.

4.      Effective Risk Management

The risk management department should be formed in the company which not only analyses the risk currently involved in providing loan to any customer but it should also forecast the ability of the customer to pay back the principal amount and the interest due in future.

5.      Different Product Lines

The inherent risk in the nature of the business of the company suggests that the company should not restrict itself to one type of products. It should form a diversified product portfolio which means that along with the housing mortgage t should also deal with car loans, personal loans etc.

The above mentioned strategies are those which if adopted appropriately at the right time could have saved the company from the expedient collapse.

6.      Adopting 5 C’s of Credit

The rule of 5 C’s which stands for character, capacity, collateral, conditions and capital should be followed before giving loan to any customer. The companies which apply this rule objectively are able to avoid numerous bad debts and losses.

EFFECTS OF THE FAILURE OF THE COMPANY

The failure of the company had a multiplier effect which was not restricted to the country and hit the whole world as a big economic turmoil. As a result of the failure of the factoring company of Countrywide Financial Corporation the whole world was given this big surprise of the actually condition of the company. Within few months the company which was earning millions till 2006 sustained a loss of millions in 2007. It was when the factoring company collapsed the stock market showed a declining trend. This was the time when everything started becoming clear to the world and not only Countryside Financial Corporation but many other banks and similar financial institutions collapsed. After this phase of failures, as the New York Stock exchange hit down, all the stock exchanges in the world started showing the decline trend. As a result the capital markets all over the world sustained a great loss. Due to the fall in the value of almost all the scripts, loss of millions was borne by all the investment companies. In fact many of the scripts were impaired. Not only the capital market but the monetary market also experienced a fall in the value of many of the financial instruments like term finance certificates etc. Thus the chain continued and the whole world was hit by a financial crunch from which it is still recovering.

CONCLUSION

The company which was one known as the largest mortgage company of US was collapsed only because of few reasons. The failure of the company was not only because of the company but many other factors including the regulatory bodies also had a role in it. The company might have survived if it had adopted the above mentioned strategies.

Bibliography
Thompson, G. a. (2nd Edition). Essentials of Strategic Management.

Ans1. The acquisition of Royal’s linerboard mill and box plant by Atlantic Corporation sounds strategic move. Atlantic Corporation purchased 150,000 tons of linerboard each year from its competitors for production. Also, 70% of the Atlantic Corporation operating profits came from their forest products. The sales of the forest products were directly linked to the interest rate fluctuations, whereas the linerboard industry sales tended to respond less quickly and less directly to the overall economy.

Thus acquiring Royal’s linerboard mill and box plants will reduce Atlantic Corporation’s reliance on the economy growth and will mitigate its overall risk. Therefore purchasing an existing linerboard mill, made more economical sense. Since Royal’s Monticello mill was ranked as the fourth best in the country and also produced 661,000 tons of linerboard (which was way above the capacity of 150,000 tons required by the Atlantic Corporation for production), it would help Atlantic Corporation to achieve its strategic goal by increasing its firm-wide linerboard capacity.

The outlook for the linerboard industry was very profitable. The demand for the linerboard and boxes was dependent on the total amount of goods being shipped in the nation. Thus it was dependent on the changes in the level of the industrial production. However it is less directly and less quickly proportional to the shifts in economic growth. The linerboard sales were predicted to rise by nearly 7%, as the industrial production increased.

The current capacity of linerboard industry would only increase by 1-2% and the increasing demand for the linerboard would result in a 16% (as compared to year 1985) price hike for the linerboard products. The projected linerboard prices for the year 1986 were $420 which would result in high profitable sales, because of the fixed operating costs involved in the linerboard industry. The boxes market scenario in the year 1984 projected an increase in demand of the linerboard and boxes.

Thus the limited number of linerboard mills and high level of fixed costs in the linerboard industry ensured high profits for the linerboard industry. Atlantic Corporation is classified as one the nation’s largest “forest products” firm which responded pretty quickly to changes in the overall economy mainly the interest rate fluctuations. On the contrary, linerboard industry’s performance is also tied to that of economy but less directly to economic shifts; and Atlantic Corp. also had its operations in this industry but not quite dominating and strong. Hence, if Atlantic Corp.

is able to take over the Royal Board’s Monticello paper mill, it will increase it linerboard capacity which would turn out to be lucrative for the firm since it was expected that 1984 would be a healthy year for the linerboard industry where in the industry would operate at nearly 100% utilization because of the strong demand and limited supply. The linerboard and box sales were predicted to rise 7% as real GNP and consequently industrial production was strengthening with this prediction. The existing linerboard mill of Atlantic produced 780 tons per day of linerboard that represented only 1.

8% of domestic capacity and also Atlantic was the only major paper producer that was a net buyer of linerboard. In a market which was too tight, linerboard could become unavailable or extremely expensive, and in such a scenario it was required by Atlantic to remedy its linerboard shortage else the raw material prices could mitigate its box division’s profits. And Monticello being the fourth best paper mill in the country could help Atlantic greatly in boosting its linerboard capacity and subsequent market performance. The industry then seemed to be fraught with the dearth of sufficient linerboard production.

And Royal paper’s profit then had been growing consistently and the conversion of Monticello to 100% linerboard production bettered its prospects. Royal’s chairman had announced a master plan to modernize the Monticello Mill which would increase its linerboard capacity from 661,000 tons per annum to 747,000 tons per year. In such a situation, if Atlantic could buy Monticello and 16 box plants(located all over US when combined Royal’s box plants), the chances become high that it could do better than the industry average by strengthening its linerboard production and marking its presence in most major US markets.

WHIRLPOOL CORPORATION GLOBAL PROCUREMENT |
Cost Analysis |

Whirlpool is the world’s largest producer and marketer of small and large home appliances such as mixers, food processors, washing machines, refrigerators, air conditioners, etc. Whirlpool also has a long standing relationship with Sears, which sells Whirlpool products under the brand name Kenmore. In addition to its North American presence (both manufacturing and sales), Whirlpool also has a strong presence in Mexico, and Europe. Being the largest producer in the world has helped Whirlpool to compete on lower costs through economies of scale and through its Global Procurement Organization (GPO).

In addition, its large networks also help in distribution, marketing, and ultimately in its sales. Another key factor how it competes is through its relationships with customers such as Sears. Our cost model was based on the “Principles of Cost Modeling” from the article Competitive Cost-Analysis: Cost-Driver Framework by Timothy Laseter, et al. Based on the article, we continuously pondered over not only the cost elements, but also the cost drivers, so as to get a better picture and to arrive at a more accurate analysis.

To capture all the elements, we constructed our own template, so that we could customize it to Whirlpool, so as to capture as many cost drivers as possible. In addition, to ensure that we accounted for all parts contributing to the actual cost, we thought about total cost of ownership and considers drivers such as transportation, taxes, duties, etc. Initially, we just dived in to the data and made the process very complicated, thereby making very little progress, so we stepped back and reconstructed our entire process with some basic cost drivers, upon which we continued to add layers. Under the cost-driver framework, cost elements are categorized into Design, Facility, Geography and Operations. We believe that there are multi-level cost-drivers under each…

A multinational corporation (MNC) or multinational enterprise (MNE)[1] is a corporation enterprise that manages production or deliversservices in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined[citation needed] an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries.

Some multinational corporations are very big, with budgets that exceed some nations’ gross domestic products (GDPs). Multinational corporations can have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalization. Apple Inc. formerly Apple Computer, Inc. is an American multinational corporation that designs and sells consumer electronics, computer software, and personal computers. The company’s best-known hardware products are the Macintosh line of computers, the iPod, the iPhone and the iPad.

Its software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; Logic Studio, a suite of music production tools; the Safari web browser; and iOS, a mobile operating system. As of July 2011, Apple has 357 retail stores in ten countries, and an online store.

It has been the largest publicly traded company in the world by market capitalization, swapping spots with ExxonMobil, and the largest technology company in the world by revenue and profit.  As of September 24, 2011, the company had 60,400 permanent full-time employees and 2,900 temporary full-time employees worldwide; its worldwide annual sales totalled $65. 23 billion, growing to $108. 249 billion in 2011. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world from 2008 to 2011. However, the company has received widespread criticism for its contractors’ labor, and for its environmental and business practices. Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977,[16] the company was named Apple Computer, Inc. for its first 30 years. The word “Computer” was removed from its name on January 9, 2007, as its traditional focus on personal computers shifted towards consumer electronics. 1976–1980: The early years

Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, to sell the Apple I personal computer kit. They were hand-built by Wozniak and first shown to the public at the Homebrew Computer Club. The Apple I was sold as a motherboard (with CPU,RAM, and basic textual-video chips)—less than what is today considered a complete personal computer. The Apple I went on sale in July 1976 and was market-priced at $666. 66 Apple was incorporated January 3, 1977 without Wayne, who sold his share of the company back to Jobs and Wozniak for $800.

Multi-millionaire Mike Markkula provided essential business expertise and funding of $250,000 during the incorporation of Apple. By the end of the 1970s, Apple had a staff of computer designers and a production line. The company introduced the ill-fated Apple III in May 1980 in an attempt to compete with IBM and Microsoft in the business and corporate computing market.  Jobs and several Apple employees including Jef Raskin visited Xerox PARC in December 1979 to see the Xerox Alto.

Xerox granted Apple engineers three days of access to the PARC facilities in return for the option to buy 100,000 shares (800,000 split-adjusted shares) of Apple at the pre-IPO price of $10 a share. Jobs was immediately convinced that all future computers would use a graphical user interface (GUI), and development of a GUI began for the Apple Lisa. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 and instantly created more millionaires (about 300) than any company in history. In 1984, Apple next launched the Macintosh.

Its debut was announced by the now famous $1. 5 milliontelevision commercial “1984”. It was directed by Ridley Scott, aired during the third quarter of Super Bowl XVIIIon January 22, 1984, and is now considered a watershed event for Apple’s success and a “masterpiece”. In 1985 a power struggle developed between Jobs and CEO John Sculley, who had been hired two years earlier. The Apple board of directors instructed Sculley to “contain” Jobs and limit his ability to launch expensive forays into untested products.

Jobs resigned from Apple and founded NeXT Inc. the same year. 1986–1993: Rise and fall Having learned several painful lessons after introducing the bulky Macintosh Portable in 1989, Apple introduced the PowerBook in 1991. The Macintosh Portable was designed to be just as powerful as a desktop Macintosh, but weighed 7. 5 kilograms (17 lb) with a 12-hour battery life. The same year, Apple introduced System 7, a major upgrade to the operating system, which added color to the interface and introduced new networking capabilities.

It remained the architectural basis for Mac OS until 2001. During this time Apple experimented with a number of other failed consumer targeted products including digital cameras, portable CD audio players, speakers, video consoles, and TV appliances. Enormous resources were also invested in the problem-plagued Newton divisionbased on John Sculley’s unrealistic market forecasts. [citation needed] Ultimately, all of this proved too-little-too-late for Apple as their market share and stock prices continued to slide. [citation needed] 1994–1997: Attempts at reinvention

In 1996, Michael Spindler was replaced by Gil Amelio as CEO. Gil Amelio made many changes at Apple, including extensive layoffs. After multiple failed attempts to improve Mac OS, first with the Taligent project, then later with Copland and Gershwin, Amelio chose to purchase NeXT and its NeXTSTEP operating system, bringing Steve Jobs back to Apple as an advisor. On July 9, 1997, Gil Amelio was ousted by the board of directors after overseeing a three-year record-low stock price and crippling financial losses.

Jobs became the interim CEO and began restructuring the company’s product line. 1998–2005: Return to profitability On August 15, 1998, Apple introduced a new all-in-one computer reminiscent of the Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive, who would later design the iPod and the iPhone. The iMac featured modern technology and a unique design, and sold almost 800,000 units in its first five months. On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia and California. 69]Later on July 9 they bought Spruce Technologies, a DVD authoring company. On October 23 of the same year, Apple announced the iPod portable digital audio player, and started selling it on November 10. The product was phenomenally successful — over 100 million units were sold within six years.

2007–2011: iPhone, iPod Touch and iPad Delivering his keynote speech at the Macworld Expo on January 9, 2007, Jobs announced that Apple Computer, Inc. would from that point on be known as Apple Inc. because computers were no longer the main focus of the company, which had shifted its emphasis to mobile electronic devices. The event also saw the announcement of the iPhone and the Apple TV. The following day, Apple shares hit $97. 80, an all-time high at that point. In May, Apple’s share price passed the $100 mark.  In October 2010, Apple shares hit an all-time high, eclipsing $300. Additionally, on October 20, Apple updated their MacBook Air laptop,iLife suite of applications, and unveiled Mac OS X Lion, the latest installment in their Mac OS X operating system. On January 6, 2011, the company opened their Mac App Store, a digital software distribution platform, similar to the existing iOS App Store.

Apple was featured in the documentary Something Ventured which premiered in 2011. 2011–present: Post–Steve Jobs era On January 17, 2011, Jobs announced in an internal Apple memo that he would take another medical leave of absence, for an indefinite period, to allow him to focus on his health. Chief operating officer Tim Cook took up Jobs’ day-to-day operations at Apple, although Jobs would still remain “involved in major strategic decisions for the company. Apple became the most valuable consumer-facing brand in the world. On October 4, 2011, Apple announced the iPhone 4S, which includes an improved camera with 1080p video recording, a dual core A5 chip capable of 7 times faster graphics than the A4, an “intelligent software assistant” named Siri, and cloud-sourced data with iCloud. One day later, on October 5, 2011, Apple announced that Jobs had died, marking the end of an era for Apple Inc.

Apple was one of several highly successful companies founded in the 1970s that bucked the traditional notions of what a corporate cultureshould look like in organizational hierarchy (flat versus tall, casual versus formal attire, etc. ). Other highly successful firms with similar cultural aspects from the same period include Southwest Airlines and Microsoft. Originally, the company stood in opposition to staid competitors like IBM by default, thanks to the influence of its founders; Steve Jobs often walked around the office barefoot even after Apple was a Fortune 500 company.

By the time of the “1984” TV ad, this trait had become a key way the company attempted to differentiate itself from its competitors. Users Apple’s brand’s loyalty is considered unusual for any product. At one time, Apple evangelists were actively engaged by the company, but this was after the phenomenon was already firmly established. Apple evangelist Guy Kawasaki has called the brand fanaticism “something that was stumbled upon”. Apple has, however, supported the continuing existence of a network of Mac User Groups in most major and many minor centers of population where Mac computers are available.

Mac users would meet at the European Apple Expo and the San Francisco Macworld Conference & Expo trade shows where Apple traditionally introduced new products each year to the industry and public until Apple pulled out of both events. While the conferences continue, Apple does not have official representation there. Mac developers, in turn, continue to gather at the annual AppleWorldwide Developers Conference.

Corporate affairs

During the Mac’s early history Apple generally refused to adopt prevailing industry standards for hardware, instead creating their own. This trend was largely reversed in the late 1990s beginning with Apple’s adoption of the PCI bus in the 7500/8500/9500 Power Macs. Apple has since adopted USB, AGP, HyperTransport, Wi-Fi, and other industry standards in its computers and was in some cases a leader in the adoption of standards such as USB. FireWire is an Apple-originated standard that has seen widespread industry adoption after it was standardized as IEEE 1394. Headquarters Apple Inc. s world corporate headquarters are located in the middle of Silicon Valley, at 1-6 Infinite Loop, Cupertino, California. This Apple campus has six buildings that total 850,000 square feet (79,000 m2) and was built in 1993 by Sobrato Development Cos.

Finance In its fiscal year ending in September 2011, Apple Inc. hit new heights financially with $108 billion in revenues increased significantly from $65 billion in 2010 and nearly $82 billion available in cash reserve, but the market share decreased to 15 percent from 16. 6 percent.

Kimberly Clark Corporation was started in the year 1872. There were various founders who came up and decided to have Kimberly Corporation. They include John Kimberly, Frank Shattuck and Havilah Babcock. Initially the entire business was running paper mills. (Hanke, and Reitsch, 1992) Later on the Company developed to producing cellu-cotton. Six years later the Company introduced Kotex, which is disposable after use. This Company continued to expand and opened up other plants in United Kingdom, Germany and Mexico.

Currently Kimberly Clark Corporation manufactures various products. They include Kleenex which is a facial tissue paper, Kotex, Cottonelle, Huggies, Pull ups and goodnights. According to the research manager in Kimberly Clark Corporation, the methods that were initially used to get information from consumers have become inefficient and unproductive. He says that the atmosphere created by having strangers in a setting that is not familiar at all is not really good.

There are major advancements in technology and in the science sector that are being used to get information from consumers. These technologies actually offer new tools that can are better used to study consumers. This enables Kimberly Clark Corporation’s research team to have greater insight on what the customer wants. (Alreck, 1985) Research on consumer behavior is normally carried out in various ways. They include; Ad tracking Research in Kimberly Clark Corporation reveals that ad tracking is one the ways that is used to carry out research.

This is a continuous and periodic market research. It is normally carried out with the aim of monitoring the brand’s performance. In this the team of researchers find out about the brand preference. This means that they get information from the customers about the preference of the brands. The team of researchers in Kimberly Clark Company also finds out how the products are used amongst the consumers and any problems that they incur when using the products. For instance products like Huggies are evaluated in terms of their degree of absorbency.

1. Related parties make decisions based on information provided through financial statements. It is the auditor’s responsibility to plan and perform audit engagement to offer reasonable assurance that the financial statements are correct and fair.
2. The two main categories of fraud that affect financial reporting include misstatements arising from fraudulent financial reporting and misstatements arising from misappropriation of assets.
3. Factors that auditor’s should consider when assessing the likelihood of material misstatements due to fraud include: whether or not the company has a reason to make something seem consistent (rationalization), whether or not the company or individuals have an incentive or pressure on them, and whether or not the company has the opportunity to commit fraud.
4. Many factors existed during the 1995 to 1997 audits of CUC that created an environment conductive for fraud. For example, CUC’s top management was aggressive to increase their market share due to the pressure put on them to meet analyst expectations.

CUC had been committing the same type of fraud for many years before 1995, so it was rational for them to maintain their consistency. One person even stated that he thought he was only doing his job. The adjustments that were made at the end of each year brought about the opportunity for CUC to also commit fraud.

1. In the Cendant fraud management override occurred when the CUC management recognized deferred revenue as revenue immediately, or delaying recognition of membership cancelations.
2. To further address the risk of management override of internal controls auditors must remain skeptical that management override exists.

Auditors should also become familiar with the company and it’s internal controls upon acceptance.

1. A company may want to hire a member of its external audit team because the auditor is familiar with the company, or management has developed a strong working relationship with the auditor from working on the audit together.
2. If the client has hired former auditors it might affect the independence of the existing external auditors in fact and appearance. Current auditors may rely on the representation made by former co-workers.