The Different Roles Of The Accounting Profession - 1305 Words

The Different Roles of the Accounting Profession Module by: Link-Systems International, Inc.. E-mail the author Summary: Demo/Sample Learning Object in Accounting Note: You are viewing an old style version of this document. The new style version is available here. Links [hide links] Supplemental links Weakly related linkThe Salvation Army Weakly related linkAmazon.com Weakly related linkGoogle Weakly related linkTwitter Weakly related linkVerizon Weakly related linkJPMorgan Chase Bank Weakly related linkFASB Weakly related linkSarbanes-Oxley Act Weakly related linkPCAOB Weakly related linkKPMG Peat Marwick Weakly related linkGrant Thornton†¦show more content†¦The bank uses the information to learn about the health of an organization. Is the organization profitable? Does the organization make enough money to repay the loan? Are bills paid on time? Organizations provide external financial information in two main reports: an annual report and the Form 10-K. The annual report is a summary of an organization’s financial results for the year with its current financial condition and future plans. The annual report is available from the website of most businesses. The Form 10-K is an annual report form businesses file with the Securities and Exchange Commission (SEC) agency of the US Government. Financial reports in the US must be completed according to generally accepted accounting principles (GAAP) as determined by the Financial Accounting Standards Board (FASB). In addition, the US Government passed the Sarbanes-Oxley Act and established the Public Company Accounting Oversight Board (PCAOB) in the aftermath of unethical accounting practices at large corporations, such as Enron and WorldCom. The Sarbanes-Oxley Act created additional accounting regulations for large companies and the PCAOB overseas the American Institute of CertifiedShow MoreRelatedEffects of Technology on Accounting Essay713 Words   |  3 PagesEffects Of technology On the Accounting Profession The accounting profession has experienced many different changes and as well as a tremendous amount of growth over the past century. (Schaefer, 1998) Its unfortunate that due to unethical accounting practices there has been an increased need for advanced technology of accounting systems in order to better monitor what is going on with organizations. The need for real time reports and financial information at the click of a button seemsRead MoreThe Role Of Accounting And Possible Future Of Accountancy Profession992 Words   |  4 PagesIntroduction Traditionally, accounting has a role to play in preparing financial reports, and tax preparation manually (Zodage, 2015). 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Inflation Price Level - Free Essay Example

Sample details Pages: 7 Words: 2016 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? When we consider inflation, which describes the general increase in the aggregate price level, we usually associate this with a monetary policy as the remedial measure. In the past governments were usually the sole body that were in charge of maintaining a sustained inflation rate. However, over the past 50 years there seems to have been a movement in most western countries towards fashioning anti-inflationary policy to an independent central bank. Don’t waste time! Our writers will create an original "Inflation Price Level" essay for you Create order This results in the central bank being able to use interest rates to maintain the level of inflation in the economy without any political interference. Countries such as Germany Switzerland have adopted this path and have given their central banks the full independence to control inflation and whilst the UK has adopted this methodology, they have not fully reached the level independence in their structure. We will discuss further the implications of this switchover and how it may enhance the credibility of the monetary policy, we use monetary policy as good target in our discussion because the policy attribute we care about cannot directly measure credibility but maps directly into a policy outcome we can measure, inflation which seems to give a good indication on credibility. Firstly, it is necessary for us to consider what inflation is and why it may be a problem for governments or an economy? Inflation measures the annual rate of change of the general price level in the economy . Inflation is a sustained increase in the average price level of goods and services. We focus here on the overall level of prices throughout the economy rather than prices in one particular market or industry. The stem of the problem can have negative implications for the economy as a whole. If inflation is low, the effects may be small. But in periods of high inflation, known as hyperinflation, the negative effects will cripple an economy, a common problem associated is uncertainty this occurs when future prices are unknown, making it difficult to plan investment and consumption decisions. The problem of inflation can be limited by the effective use of monetary policy which involves changing the base rate of interest to influence the rate of growth of aggregate demand, the money supply and ultimately price inflation. Monetarist economists advocate that monetary policy is a more powerful weapon than fiscal policy in controlling inflation. So who should take the responsibility of implementing and maintaining a low inflation? The government is good candidate for the role as they have a general prediction of where the economy is heading and therefore is able to set targets which coincides with other economic objectives. However, handing the monetary policy to an independent central bank will give the entity the responsibility of maintaining the stability of the national currency and money supply. The idea of the changeover is to enhance the social implications and trustworthiness of the monetary policy this changeover would result in a better move for society. We will show some of the benefits of having an independent central bank in charge of the monetary policy. The main purpose of central bank independence is primarily to protect interest rate choices from interference from the government in the belief that, due to imperfections in the electoral process, governments face incentives to choose interest rates that are lower than would be consistent with the inflation target. Governments are interested in being popular and low rates are always more popular then high rates. It is often assumed that governments have a shorter time horizon than the society they serve. Therefore, they might be tempted to hold down interest rates to stimulate spending ahead of an election, disregarding the longer-term potential consequence of inflation. Another incentive for governments to lower inflation is that inflation helps the governments budget. When price levels rise, the demand to hold currency also rises, so inflation provides governments with extra seigneurage (the income from issuing currency). Inflation also reduces the real value of government debts. But for this to be beneficiary, inflation expectations must be low when the government borrows by selling its fixed-interest long-term bonds. On the other hand if high inflation was expected, long-term interest rates would also be higher to reflect this. Thus the ideal short-term behavior f or a government that wishes to finance its debts most cheaply is to induce the belief that there will be low inflation so that it can borrow cheaply, then to cheat by allowing some inflation to write down the real value of its debts. This incentive is strong for those governments with large national debts, for whom debt interest forms a substantial part of expenditure. A further justification for central bank independence is that it is supposed to give credibility to monetary policy. People know about the incentives that the government faces, so if the government is responsible for day-to-day interest rate decisions, there is the suspicion that it will be tempted to set them too low. If there is high inflation, people will expect high inflation to continue and they will doubt any promises by the government that it will strive for low inflation. However, if there is an independent central bank that is immune to the incentives that tempt the government, people will believe that it will genuinely try to meet its inflation target. On the other hand, Muscatelli notes, some problems may arise when monetary policy is delegated to an independent central bank, especially when the central banks preferences are uncertain. Two conclusions emerge from his theoretical analysis: First, in countries where there is a low degree of agreement over the relative merits of maintaining low inflation as opposed to stabilising output and employment, the central bank may have very different preferences from those of the average voter. This means that an unelected central bank may have different aims from those of an elected government. The result is a degree of inflation control and output stabilisation that is unacceptable from societys point of view. A natural implication is that central bank independence cannot be imposed when there are sharp divisions in society over the relative merits of low inflation and stabilisation policy. This explains why independent central banks have emerged in countries where there is a stronger consensus on the costs of inflation (such as Germany and the United States). The second key conclusion is that, when an independent central bank does turn out to be desirable from societys point of view, mechanisms have to be put in place to make the central bank accountable. Examples include setting specific inflation targets for the central bank to meet, and the use of contracts where central banks are penalised for poor performance. But uncertainty in the central banks desired economic objectives means that it is difficult to design such targets and contracts. There is also the argument that full central bank independence has the disadvantage of severing co-ordination between monetary and fiscal policy. The government can engage in expansionary fiscal policy without regard for the inflationary consequences because the central bank is responsible for inflation control and can take the blame. Muscatelli argues a mechanism to reduce the distortion from the existence of uncertain central bank preferences is to grant the independent central bank goal independence: the central bank should be allowed to set and announce its own inflation targets. He shows that the central bank has an incentive to reveal its preferences through setting the inflation target. Accountability may then be achieved through full independence. Arguably, economies where the central bank has operational independence but not goal independence (such as the UK, Canada and New Zealand) may not be reaping the full benefits of central bank independence. We can illustrate this using the diagram below which shows the corresponding countries independent bank plotted against the average inflation for the period 1955 to 1988. We can mathematically show that high levels of independence can lead to lower levels of inflation. This would therefore lead to a more credible entity controlling the monetary policy. Firstly, we start with the gov ernment and give them the sole responsibility of implementing the monetary policy; We represent the government loss function as follows: Lg = ?2t + Bg(yt -y*)2with respect ?, where yt = ?t ?et + ?t The term ?t represents a white noise error term which is normally distributed with a zero mean and a constant variance. The terms ?t and ?et represent the inflation rate and the expected inflation, respectively. The term y* is a time-invariant output target whilst (yt -y*) represents the output gap. The parameter Bg characterises the government preference regarding the tradeoffs between inflation and output. Private actors know their long term contractual decisions and particularly their inflation targets will be built into these decisions, this will affect government inflation policies subsequently. They know, in particular, that the government will solve for the inflation outcome that is minimisation of equation (1); After taking expectations, solving for expected inflation and substituting the expression for expected inflation back into (3) the problem yields the following; ?t = BGY* ? BgY* is the inflationary bias which is the amount of extra inflation generated by the inability of the government to credibly commit to its announced inflation policy. We now do the same but designate the central bank in charge of the monetary policy. In order to do this we generate the central banks loss function which is as follows; Lcb = (1 +) ?2t + Cb(yt -y*)2 The central bank will choose ?t that will minimise the social loss equation (5) subject to the output constraint equation (2) taking ?e as given. Under rational expectations; ()Y* ()ut ()Y* measures the inflationary bias Therefore, ()Y* BgY* (this assumes that ? 0 and ? 0) From this we can conclude that inflationary bias from an independent central bank will be smaller than the inflationary bias produced by the government. Meaning the extra inflation produced by the central bank will be smaller than the inflation produced by the government. In conclusion the argument follows whether or not central banks should be designated the role of the monetary policy one suggestion is that the central bank may not pursue the necessary targets and therefore will not act in favour of the public. However, this arrangement does seem to have worked in achieving and maintaining low inflation in developed Western economies. Germany and Switzerland are believed to have had the most independent central banks since the last war and also the best records of inflation control. The evidence also suggests that inflation is negatively correlated with independence which has be come widely accepted as the norm, which further cements our thoughts that credibility can be enhanced by delegating the central bank in charge of the monetary policy. Bibliography Mankiw, N., Macroeconomics (5th ed.), Worth Publishers, 2003, ISBN: 0-7167-5237-9 Alesina, A., Summers, L. â€Å" Central Bank Independence and Macroeconomic Performance†. Journal of Money, Credit and Banking(1993): 151-162. Panagiotidis, Theodore, and Afroditi Triampella. Central Bank Independence and Inflation: the Case of Greece. (2002). Haan, Jakob, Helge Berger, and Erik Fraassen. How to Reduce Inflation: an Independent Central Bank or Currency Board? the Evidence of Baltic Countries. Emerging Markets Review (2001): 218-243. Hayo, Beranard, and Voigt, Stefan. â€Å"Inflation, Central Bank Independence and the Legal System†(2004). Maloney, John. â€Å"Let the Bank of England chose the inflation Target.† Economic Journal (2003). Stasavage, David and Keefer, P hilip. â€Å"The limits of delegation : veto players, central bank independence, and the credibility of monetary policy.† American political science review, 97 (3) (2003): 407-423. Fawcett, Nick. British and European Union Inflation. Tutor2u. 01 Dec. 2007 https://www.tutor2u.net/economics/content/topics/inflation/uk_inflation_record.htm. King, Mervyn. How Should Central Banks Reduce Inflation? Conceptual Issues. Federal Reserve Bank of Kansas City (1996). What are the Main Difficulties the Central Bank Might Encounter in Attempting to Reduce the Rate of Inflation? Economics Help. 2 Dec. 2007 https://www.economicshelp.org/macroeconomics/macroessays/difficulties-controlling-inflation.html. Thoma, Mark. Limits to Central Bank Independence. Economists View. 19 Nov. 2005. 02 Dec. 2007 https://economistsview.typepad.com/economistsview/2005/11/limits_to_centr.html. Rogoff, Kenneth. The Myth of Central Banks and Inflation. FT.Com. 29 Aug. 2006. 01 Dec. 2007 https://www .ft.com/cms/s/0/ff05c5b6-3783-11db-bc01-0000779e2340.html?nclick_check=1.

An Ideal Holiday. Free Essays

After a long period of working, person decides to have an ideal holiday, which needs little arrangement. About myself I have different ways to decide how to spend my holiday. First of all, I will try to travel with my family abroad to any country. We will write a custom essay sample on An Ideal Holiday. or any similar topic only for you Order Now A country that we haven’t traveled to before. Another thing I should put in mind is to look for a country that has a nice cold weather. And most important, I will be looking for a country which is safe and secure to me and my family. Second, I will try to spend my holiday inside the other cities in my country. I will try to choose different places in the UAE, such as Al-Ain, Khorfakan, Hatta, Fujairah, Sharjah and Ras Al-Khaimah. I will try to spend three to four days in each place, where I can visit the most attractive parks, beaches, museums, mountains and restaurants. Thirdly, if I couldn’t travel abroad or I couldn’t spend it in other places outside my city I will plan to spend my holiday in the same city I am living in. This is by looking in the news papers, internet or Television about the different activities and events held in the different places in my city to be able to reach them easily. Finally, I believe if everyone tried to think in this way to choose his/her holiday, they will be successful in choosing the ideal holiday and therefore it will be the most interesting moments in life. This is because you will be spending your holiday in something that is arranged and at the same time interesting. How to cite An Ideal Holiday., Papers