Philosophy Montessori

â€Å"A child’s different inner sensibilities enable him to choose from his complex environment what is suitable and necessary for his growth. They make the child sensitive to some things, but leave him indifferent to others. When a particular sensitiveness is aroused in a child, it is like a light shines on some objects but not others, making of them his whole world. † The Secret of Childhood, p. 42, Chap 7 . Define the terms of sensitive periods and explain how the teacher’s knowledge and understanding of these periods determines his/her preparation and custodianship of the prepared environment A child is a unique human being who possesses countless potentialities since his early age. He is endowed through abilities to develop both physical and psychic constructions by himself. The development and growth for physical or external area is visible. Yet, the inner mechanism is still imperfectly understood. There are two studies are contained in these inner mechanis m. The glands and secretion connected with physical growth, the other is an understanding of child’s mental growth which is called â€Å"sensitive period†. It is a period of child where he can manifest his certain ability in perfectly manner. During these periods, a child has maximum sensitivity towards a particular knowledge or skill. This sensitivity lasts in certain period of child’s life and does not reoccur in other child’s age. Once the child concentrates with one aspect of skill, he will exclude others. He does the repetition to practice his ability with passion, love and even his inner force, and it continues until he feels satisfied and serene. Since, this is the best moment when the child develops his inner mental growth, a teacher should notice the indication from his appearance then enhance his ability by aiding him a right kind of stimuli through prepared environment and encourage him in special time of learning. Therefore, it can optimize the child’s new ability. As one of internal aid for child’s psychic development, the sensitive periods can achieve a child’s personal construction with two conditions. Firstly, the child needs a prepared environment, both things and the people surroundings, which is suitable and necessary for his growth. Secondly, the child requires freedom. Let the child chooses his own rhythm and law of development to explore and fulfill his need, this will put him into happiness, joyful and peace. If the teacher, as an adult cannot create these two conditions, he will not reach his potential and his personal development will be stunted. And his opportunity to master in those abilities as a human will be lost evermore. The sensitive periods are categorized in six terms, the order with environment, the sensory impression, the ability to use language, the development of walking and movement, the interest of small objects, and the spirit to be involved with social life. †A very important and mysterious period is the one which makes a child extremely sensitive to order. This sensitiveness appears in a child’s first year and continues on through the second. It may seem slightly fantastic that children should have a sensitive period with respect to external order, since it is a common opinion that children are disorderly by their very nature. (The Secret of Childhood, p. 49, Chap 8) Sensibility to order of child, it is truly shown since the first month of age. However, as an adult, parent often doesn’t notice this sensitiveness manifestation. The judgment that a child doesn’t have the ability to respect and react of external order become a common opinion. Montessori had observe d for some situations which showed the enthusiasm of child to have blissful and tranquil moment, in seeing things in organized arrangement. The tantrums and uncomfortable feelings that occasionally experienced by the child, is perhaps that he finds the obstacles when he tries to fulfill his needs. A story in Maria book: †In one such instance the principal character was a little girl about six months old. One day she saw a woman enter the room where she happened to be and placed her parasol upon the table. The child became agitated, not at the woman but at the umbrella, since after looking it for some times she became to cry. The woman thinking that she wanted the parasol picked it up and brought it to her with a pleasant smile. But the infant pushed it away and continues to scream. Efforts were made to calm the child, but to no avail. She only became more agitated. What could be done to solve the tantrum? Suddenly the mother of the child through some psychological insight took the umbrella from the table and carried it into another room. The child immediately grew calm. The cause of her disturbance was the umbrella on the table. An object out of place had violently upset the little girl’s pattern of memory as to how objects should be arranged. † (The Secret of Childhood, p. 50, Chap 8) A child has a twofold sense of order. First is his perception of relationship to the environment. Second is his inner awareness of different parts of his body to have relationship with the objects. With those two senses, a child can experience the order based on precise and determined environment. So that, he can categorize his perception and build conceptual work, then he can deal with his world. The second sensitivity will appear is sensory impression through five senses. They are visual/seeing, auditory/hearing, olfactory/smell, tactile/touch, and gustatory/taste. By those senses, a child who has highly curiosity of every new thing will be able to explore and experience the environment. Smelling and gustatory sensibilities also can be learned from practical life activities, such as differentiate the herbs smell and sweet, salt, sour and bitter tastes. Afterward, in order to be able distinguish variation of sounds, a child is introduced with human voice, music also the source of the sound has been made. The visual sense is interpreted by the eyes. The functional of these eyes can be exercised with identifying the size, shape, color of materials. While the visual sensitivity is being developed, the tactile ability is also developing. Without touching the materials which are existed in his environment, a child will not stimuli his brain and practices his motor function. In order to develop his mind throughout these sensibilities, a child needs to hear, see, touch, smell and taste. He initially observes the object with the eyes, he understands the form, size, and color also by hands. Then, he perceives the name of the object when the adult teach him. By hearing the voice, he’s not only imitating the sound, this young human will use his knowledge and memory, and thus he can speak the object name with his tongue. All of this process definitely will develop his intelligence in nature way, molding his character, and directed his ego to organize his movement. The more trials moments that a child experienced with his senses, the more skills he can apply to accomplish his works in confident and orderly. Introducing to language for child is as good as possible in the early age. During this sensitive period, a child can absorb and imitate the sound of human that he hears. Although the baby doesn’t look like understand when an adult is talking with him, but his brain as absorbent mind is developing and radually achieves under his unconscious mind. In fact, he can distinguish some types of sounds, which are produced by animals, instrument or human. He only imitate to the human words, not to the other sounds. If he can notice as many as words in his sensitivity period, he will enrich his vocabularies which useful in the future. Between the age of year and two, a child has the sensitivity to be more active. He starts to walk, run, climb, even jump in every type of environment, he surely move with his own purpose, unlike the adult. An infant, on the other hand, walks to perfect his own proper function, and consequently his goal is something creative within himself. † (The Secret of Childhood, p. 78, Chap 11) While doing the walking practicing, he still doesn’t have any pattern, rhythm also reason for any movement he makes. He barely walks toward something that attracted him in one point of position. An adult can assist him to develop his ability, by keeping in mind to give up all adult’s pace and goal. But, follow the child’s need as long as he can finalize his one passage of walk. It is important to know that an infant is only able to develop his ability to walk, when he passes all the processes of walking from the beginning. The first step that he makes, tries to figure out how to balance when changing one foot to another to stand, stands and walks with two feet perfectly. Alongside he develops his physical strength, his psychic life also improved. The growth of muscles which connect between cells and tissues will not be optimal if a child is not involved in such physical activities. When his physical condition is in health condition, he also creates his spirit, courage and self-confidence. â€Å"From the beginning of its second year a child is no longer carried away by gaudy objects and brilliant colors with that transport of joy so characteristic of the sensitive periods, but becomes interested in tiny objects that escape our notice. † (The Secret of Childhood, p. 64, Chap 9) His concentration towards a specific thing in one object, somehow the adult have no attention or even invisible on it. Yet, a child who likes to be an observer is be able to focus on these small things. He can spend a lot of minutes to only watch and look a painting that contain many details in pictures, color, and shapes. Or perhaps to pay attention on the shapes of stones, the forms of flies or plants. His sensibility in this period can increase his focus and concentration to higher level. The last part from child’s sensitive period is his spirit to be engaged in social environment. He begins to recognize the rules of his environment, his rights and responsibilities. How he serves the surroundings with a proper manner as well as himself. He learns to have a friendship and starts to be united in a group. If all the conditions can occur in a harmony, a peace community among the children can be established. To stimuli this child’s sensitive periods thus can reveal his potentialities, Montessori has her method that can help a child’s live successful and happily in this world. We have to fully understand her philosophy and kept in mind that this method only can be perfectly done if it is considered in open minded, instead of fixed one. There are two components which support the child’s development with environment, including materials and exercises also the teacher who prepares the environment. This is because a prepared environment is the place to nourish the child. He needs it to enhance his self-construction, so he can reveal his own personality growth in such natural approach. On the other hand, the teacher should learn the theory, observes the child and try to recognize the obstacles that can hinder the child development, and remove them from his environment. The first component of this method is prepared environment. As a teacher, she must knowledge and understands what kind of environment that she can prepare to help the child’s life development. The criteria which are should be applied in Montessori classroom are concept of freedom, structure and order, reality and nature, beauty and atmosphere, Montessori materials and the development of community life. Through freedom a child can have the opportunity to reveal himself. To aid the child’s psychic development, a teacher can secretly observe the child while he is doing the works. Also, through freedom, a child can possess himself with his own pattern of development, by using his inner guidance to improve his growth. Besides freedom, the environment should have the structure and order. The aim of this structure and order is due to a child needs to build his own perception and intelligence, from predetermine and precise environment. From that condition, the confidentiality from child to deal towards his life will incarnate. Since a child love to something in order, in this creative moment, as teacher orderly has to take care the materials in the classroom. They should be arranged in sequence and classified as per difficulty level of materials. Then, if the child accomplish one activity, he knows that he has to return back the apparatus in the right place as same as he has taken before. â€Å"The child must have the opportunity to internalize the limits of nature and reality if he is to be freed from his fantasies and illusions, both physical and psychological. † (A Modern Approach, p. 57, Chap 3) The child must deal with nature and reality. We live in this world where the natural things exist. For example a tree, a child can practice his sensibility of five senses. From nature, a teacher can inform the child that the nature is the thing that serves us during our lifetime, so that as human beings we can still alive and survive. In this world, also he will face the reality condition. By understanding from his every action he made, he will have the consequences. In Montessori, the child will learn how to do the housework with the real utensils. A child will use a real knife to cut the vegetables or pouring the water from a real glass jug. A child also learns if there is a condition that doesn’t happen as he expects, he has to accept it gracefully, instead of being upset or angry. The child comes to see that he must respect the work of others, not because someone has said he must, but because this is a reality that he meets in his daily experience. † (The Absorbent Mind, p. 223, Chap 22) The fourth part of prepared environment is beauty and atmosphere. Montessori felt that the environment should be simple, bright color, cheerful and ha rmoniously arranged. It makes the environment feel so relaxing, warm and conducive for the children activities. The other important element is Montessori materials itself. They should have a purpose for the child’s development. The difficulty or error of each material that could be figured out by the child must be isolated in a single piece of material. The designs of materials must be gradually composed from simple to complex. Also they are able to use for future learning. The last thing of prepared environment is development of community life. It has three key elements that contains of sense of ownership and responsibility, responsibility the children begin to feel for each other and the inclusion of children of different ages in class. A person, who intends to be a Montessori teacher, must prepare herself. She has to think that a teacher is not the person, who has to teach or control all over the activities in class and to be followed by the students. But, she has to understand the children that they have their own manner to accomplish their works in the class. A teacher must refrain herself to interfere the child when he is in the processing his physic and psychic area through the materials, otherwise one of trait which being developed at that moment will be vanished or done improperly. As a teacher, must look in each child as one unique individual, that one to another might have different type of characteristics. So that, she has to devote her energy to help the child step by step, thus he can attain his aim in order to deal with his environment independently. She usually does by obtaining three aspects. Firstly, her responsibility to custodian and keep the environment to be the component that can attract the child’s attention, thus he can fulfill his needs in freedom and without any distraction from others. When the teacher can design a harmony situation where the child takes place during his working times, so the aim of this method will be achieved in proper way. It includes the previous explanation regarding the prepared environment. Secondly, once the environment has prepared properly the other thing that must be considered is the teacher’s action during the class. Before the child manifests his first period, she can show when she is taking care the child with hearten, lovely and warmth manner. Once the child feel comfortable, he will trust the teacher, and it is easy for the teacher, if she need to interfere the child when it is necessary. The last, when a child begins to attract by something, usually the teacher can introduce the practical life area as an initial exercised. Because, the child will meet those activities in his home every day, so that it will easier to be taught. When the child is interest to one material, the teacher explains to him, and he starts to work with it, the teacher must not interrupt him in any ways and anytime until he can finish it by his own laws. The steps will start from slow into exam, and the teacher must understand this pattern of development. These sensitive creative moments, will happen only once in child’s life time. Not only the child who has to observe and practice to be able reveal his hidden potentialities, but the teacher also has to observe and thinking every moment when the child manifests his interest of some new things or show some disorder behavior that might be caused by the environment or his inner problems. If this process goes in natural and proper way, the child can have concentration, build his confident and will feel satisfied when the can conquer one conquest. Then, a success human being with good personalities will be created, because he has the opportunities to explore and manifests his potentialities during his sensitive period.

Learning Check

Chapter 14 Auditing the Revenue Cycle |Learning Check | The revenue cycle includes the activities involved in the exchange of goods and services with customers and the realization of the revenue in cash. The classes of transactions in this cycle for a merchandising company are sales, sales adjustments, and cash receipts. The primary accounts affected by these transactions are sales, accounts receivable, cost of sales, inventory, cash, sales discounts, sales returns and allowances, bad debts expense, and allowance for uncollectable accountsSpecific audit objectives for the revenue cycle are derived from the five categories of management's financial statement assertions. b. Specific audit objectives for credit sales transactions include the following: |Specific Audit Objectives | |Transaction Objectives | |Occurrence. Recorded sales transactions represent goods shipped or services provided during the period. |Recorded cash receipt transactions represent cash received during the period. | |Recorded sales adjustment transactions during the period represent authorized discounts, returns and allowances, and | |uncollectable accounts. | |Completeness. All sales cash receipts and sales adjustments made during the period were recorded. | |Accuracy. All sales and cash receipts and sales adjustments are accurately valued using GAAP and correctly | |journalized, summarized and posted. | |Cutoff.All sales, cash receipts and sales adjustments have been recorded in the correct accounting period. | |Classification. All sales, cash receipts, and sales adjustments have been recorded in the proper accounts. | |Balance Objectives | |Existence. Accounts receivable representing amounts owed by customers exists at the balance sheet date. | |Completeness. Accounts receivable include all claims on customers at the balance sheet date. |Rights and Obligations. Accounts receivable at the balance sheet date represent legal claims of the entity on | |customers for payment. | |Valuation and Allocation. Accounts receivable represents gross claims on customers at the balance sheet date and | |agrees with the sum of the accounts receivable subsidiary ledger. The allowance for uncollectable accounts | |represents a reasonable estimate of the difference between gross receivables and their net realizable value. |Disclosure Objectives | |Occurrence and Rights and Obligations. Disclosed revenue cycle events and transactions have occurred and pertain to | |the entity. | |Completeness. All revenue cycle disclosures that should have been included in the financial statements have been | |included. | |Understandability. Revenue cycle information is appropriately presented and information in disclosures is | |understandable to users. |b | 14-3. Following are a few examples of differences between how the auditor might use the knowledge of the entity and its environment for a computer company v. a hotel. a. Certain balance sheet accounts like accounts receivable and inventories are go ing to be very significant for the computer manufacturer, but relatively immaterial for the hotel. The computer company is also likely to have a higher ratio of sales to fixed assets, or sale to total assets, than the hotel. b.The computer company auditor will have significant issues associated with the risk of misstatement with respect to the existence of receivables and inventories that are not present for the hotel. The computer company auditor will also have to address valuation and allocation issues associated with the collectability of receivables and lower of cost or market of inventories that are insignificant for the hotel. The hotel will have a potential risk of material misstatement in terms of how it accounts for revenues from properties that it manages for others, as opposed to properties that it owns. 14-4.Factors that might motivate management to deliberately misstate revenue cycle assertions include: †¢ Pressures to overstate revenues in order to report achievin g announced revenue or profitability targets or industry norms that were not achieved in reality owing to such factors as global, national, or regional economic conditions, the impact of technological developments on the entity's competitiveness, or poor management. †¢ Pressures to overstate cash and gross receivables or understate the allowance for doubtful accounts in order to report a higher level of working capital in the face of liquidity problems or going concern doubts.Factors that might contribute to unintentional misstatements in revenue cycle assertions include: †¢ The volume of sales, cash receipts, and sales adjustments transactions is often high, resulting in numerous opportunities for errors to occur. †¢ The timing and amount of revenue to be recognized may be contentious owing to factors such as ambiguous accounting standards, the need to make estimates, the complexity of the calculations involved, and purchasers' rights of return. 14-5. a. Following ar e example analytical procedures that the auditor might use to estimate total revenue for a household appliance manufacturer and for an airline. Industry |Possible Analytical Procedures | |Household Appliance Mfg. |Use past ratio of net sales to capacity with adjustments for capacity | | |changes. | | |Use a combination of past ratios of market share with adjustments of | | |current changes in market share. Requires knowledge of the total market | | |size in the industry. |Airline |Estimate net revenues using information on utilization of capacity | | |(airline seat miles) and average revenue per seat. | b. Two analytical procedures that the auditor might use to estimate gross margin for company might include. |Analytic Procedure |Audit Significance | |Compare historical trends in market share and |Companies with commanding market shares often are able to obtain larger | |gross margin with current unaudited data. gross margins. | |Evaluate the percentage of revenues coming from |Comp anies with a high proportion of revenues from new products may earn | |new products. |premium gross margins due to the ability to innovate. | c. Two analytical procedures that the auditor might use to estimate net receivables and the allowance for doubtful accounts for company might include. |Analytic Procedure |Audit Significance | |Accounts receivable turn days |Understanding a company’s history of accounts and sales volume can assist| | the auditor in evaluating net receivables and the adequacy of the | | |allowance for doubtful accounts. | |Evaluate the entities history of uncollectable |This procedure is primarily related to the adequacy of the allowance for | |accounts expense to net credit sales, with |uncollectable accounts. The above history of accounts receivable turn | |adjustment for economic conditions |days would be most useful for evaluating estimating gross receivables | | |given sales. 14-6. Several control environment factors and their applicability to reven ue cycle assertions are: †¢ Integrity and ethical values – reduction of risk of overstatement of revenues and receivables by eliminating incentives to dishonest reporting. †¢ Commitment to competence – by chief financial officers and accounting personnel. †¢ Management's philosophy and operating style – conservatism in developing such accounting estimates as the allowance for uncollectable accounts and allowance for sales returns. Human resource policies and practices – bonding of employees who handle cash 7. The following table summarizes the functions that apply to credit sales transactions, the department that performs the functions, and the principal documents or records produced in performing the function. | |Department that performs function |Principal documents and records produced in performing the | |Function | |function. |Initiating credit sales |Sales department |Documents | | | |Customer Order | | |Credit department |Sales Order | | | | | | | Computer Files and Records | | | |Customer Master File (with credit information) and Accounts | | | |Receivable Master File. | | |Perpetual Inventory | | | |Authorized Price List | | | |Open Order File | |Delivering good and |Warehousing and shipping department for |Documents | |services |goods. Shipping documents | | | |Reports of unfilled orders and back orders | | |Line operating departments for services. | | | |Computer Files and Records | | | |Open Order File | | | |Perpetual Inventory | | | |Shipping File | |Recording sales |Accounting (Billing) |Documents | | | |Sales Invoice | | | |Sales Reports and Sales Journal | | | |Various Exception Reports | | | |Monthly Customer Statements | | | | | | |Computer Files and Records | | | |Sales Transaction File | | | |Accounts Receivable Master File | 14-8. In order to assess control risk as low based on programmed control procedures the auditor should test the following. |Control |Importance to Control Risk Assessment | | Programmed control procedures |If a programmed control procedure in critical to a low control risk assessment then| | |the auditor should directly test the control procedure. |Computer general control procedures |In order to obtain assurance that the programmed control procedure functions | | |effectively throughout the period the auditor also needs to these the effectiveness| | |of computer general control procedures. | |Manual follow-up procedures. |Programmed controls usually report exceptions noted when performing the control. | | |As a result auditors also need to test the effectiveness of manual controls that | | |follow-up on reported exceptions. | 14-9. The following tables describes programmed controls for a typical manufacturing company. |Potential Misstatement |Programmed Control |CAATs (Assuming Test Data) | |a. |Sales invoices may not be |The computer compares entries in the sales |Submit test data for a transaction that has | | |recorded. |journal with underlying shipp ing information. |shipping information, both with and without a | | | |All shipping documents must be matched with a|supporting sales invoice. | | | |sales invoice. | | |b. |Sales invoice may be recorded |The computer compares dates on the sales |Submit test data with dates on sales invoices | | |in the wrong accounting period. invoice with dates on shipping documents. |that both do and do not match with dates on | | | | |related shipping files. | |c. |A fictitious sales invoice, or |The computer will not prepare a sale invoice |Submit test data with sales invoice information | | |a sales transaction for which |without underlying information on shipping |that both is and is not supported by underlying | | |revenue should not be |files. |shipping information. | | |recognized, is recorded. | | | |d. Sales are made without credit |The computer searches a field for appropriate|Submit test data for sales orders that both are | | |approval. |credit authorization before an order is |and ar e not supported by appropriate credit | | | |placed on an open order file. |authorization. | |e. |A sales invoice has incorrect |The computer matches quantities on a sales |Submit test data for sales invoices that both do | | |quantities or prices. |invoices with underlying shipping information|and do not match underlying shipping information | | | |and matches prices with an authorized price |and authorized price lists. | | | |list. | |f. |Sales invoices may not be |The computer checks run-to-run totals of |Submit test data for batches that with complete | | |posted or may not be |beginning accounts receivable balances, plus |and incomplete data sets in terms of completed | | |journalized |sales transactions, with the ending |transactions. | | | |receivable balances. | | |g. |Sales invoices may be posted to|The computer matches customer information on |Submit test data with underlying information that| | |the wrong customer’s accounts. the sales invoice with the master custo mer |both does and does not match with information on | | | |file, the sales order, and the shipping |previously created sales order and shipping | | | |documents. |files. | 14-10. A common management control involves having managers with responsibility for sales to review daily or weekly sales reports to assess the reasonableness of recorded sales. Further management responsible for warehousing and shipping should review daily or weekly sales and inventory movement reports to assess the reasonableness of recorded sales and inventory removed from the perpetual inventory. 14-11. The sub-functions involved in cash receipts include (1) receiving cash receipts, (2) depositing cash in bank, and (3) recording the cash receipts. 14-12. a.Two important controls pertaining to cash sales and the transaction class audit objectives to which they relate are: †¢ The customer's expectation of a printed receipt and supervisory surveillance of over the counter sales transactions helps to ensure that all cash sales are processed through the cash registers or terminals – completeness. †¢ Independent check by supervisor on the accuracy of cash count sheets, and verification of agreement of cash on hand with totals printed by a cash register or terminal – existence or occurrence and valuation or allocation. b. Two important controls pertaining to the initial handling of mail receipts are (1) immediate restrictive endorsement of checks received and (2) preparation of a multi-copy listing (prelist) of mail receipts. 14-13. a.A lockbox is a post office box that is controlled by the company's bank. The bank picks up the mail daily, credits the company for the cash, and sends the remittance advices to the company for use in updating accounts receivable. This system eliminates the risk of diversion of the receipts by company employees and failure to record the receipts. b. Depositing receipts intact daily means that all receipts are deposited; that is, cash disbu rsements should not be made out of undeposited receipts. This control reduces the risk that receipts will not be recorded (completeness), and the resulting bank deposit record establishes the existence or occurrence of the transactions. 14-14.Four controls that can aid in preventing or detecting errors or irregularities in recording cash receipts are summarized below along with potential tests of controls: |Control |Test of Control | |Independent check of agreement of validated deposit slip |Inspect a sample of daily cash summaries and examine evidence of | |with daily cash summary. |agreement with validated deposit slip by responsible employee. | |Computer check of information included in the cash receipts |Use CAATs to test computer matching of information from cash receipts | |journal with information from prelist. journal with electronic prelist. Also follow-up on how exceptions are | | |reported and examine evidence or correction of errors reported on | | |exception reports. | |Preparation of periodic independent bank reconciliations. |Examine a sample of periodic bank reconciliations. Make inquiries about | | |bank reconciliation procedures and test accuracy on a sample basis. | |Mailing of monthly statements to customers. |Observe the mailing of monthly statements to customers.Make inquiries | | |about procedures to follow-up on issues raised by customers, and examine | | |reports or other evidence of follow-up. | 14-15. a. The functions pertaining to sales adjustments transactions are: granting cash discounts; granting sales returns and allowances; and determining uncollectable accounts. b. The following three types of controls pertaining to sales adjustments transactions have as their common focus establishing the validity, or existence of occurrence, of such transactions: †¢ Proper authorization of all sales adjustments transactions. The use of appropriate documents and records, particularly the use of an approved credit memo for granting credit for returned or damaged goods, and an approved write-off authorization memo for writing off uncollectable customer accounts. †¢ Segregation of duties for authorizing sales adjustment transactions and handling and recording cash receipts. 14-16. a. The accounts receivable balance is a function of the transactions that are posted to the account, namely credit sales, cash receipts, and sales adjustments. A sound system of internal controls over these three transaction cycles that ensure the completeness and accuracy of these transactions, should also ensure the completeness and accuracy of account receivable. b.The primary control over the balance involves sending monthly statements to customers and having an independent function to receive and follow-up on any issues raised by customers. c. The rights and obligations assertion for accounts receivable involves selling, or factoring, cash receipts. If an entity sells its receivables, it should keep a documentary record of the rece ivables that have been sold or pledged, and have a process for following up on collection of those receivables and the reduction of the related liability to the factoring agent. These records should be compared with monthly statements received from a bank or factoring agent. d.Public companies normally control establish controls over the presentation and disclosure assertion and related audit objectives through an effective and independent disclosure committee. The disclosure committee should have individuals who are knowledgeable about GAAP and the transactions being processed. 14-17. The following table provides example controls and tests of controls for each assertion (and transaction level audit objective) related to credit sales and cash receipts. Examples emphasize programmed control procedures where appropriate. Student should note that tests of controls should also emphasize testing computer general controls, observing exception reports, and testing manual follow-up of items that appear on exception reports. Credit Sales Assertion (Audit Objective) |Control |Test of Controls | |Existence and Occurrence (Occurrence) |Computer matches sales invoice information |Submit test data where invoice data does not match | | |with underlying shipping information. |with underlying shipping information. | |Completeness (Completeness) |Computer prints a report of all goods |Submit test data with shipments that have not been | | |shipped but not billed. |billed to test accuracy of report of all good shipped | | | |but not billed. |Existence and Occurrence / Completeness |Comparison of invoice date with the |Submit test data with shipments in one period and | |(Cutoff) |accounting period when goods were shipped. |billing in the subsequent period. | |Valuation and Allocation (Accuracy) |Computer matches sales prices with |Submit test data with invoice prices that do not match| | |authorized price list and sales order. |the authorized price list or sales order. | |Presen tation and Disclosure |Computer matches customer number on sales |Submit test data the customer information on the sales| |(Classification) |invoice with customer number on sales |invoice does not match the underlying sales order. | | |order. | |Rights and Obligations |If an entity sells its receivables, it |Observe and reperform procedures for documenting | | |should keep a documentary record of the |receivables that have been factored or sold. | | |receivables that have been sold and it | | | |should compare that record with monthly | | | |statements received from a factoring | | | |company. | | Cash Receipts Assertion (Audit Objective) |Control |Test of Controls | |Existence and Occurrence (Occurrence) |Independent check of agreement of cash and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. |independent check of the prelist with the cash | | | |receipts journal. | |Completeness (Completeness) |Independent check of agreement of cas h and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. independent check of the prelist with the cash | | | |receipts journal. | |Existence and Occurrence / Completeness |Preparation of periodic independent bank |Observe and test the accuracy of independent bank | |(Cutoff) |reconciliations. |reconciliations. | |Valuation and Allocation (Accuracy) |Independent check of agreement of cash and |Observe and reperform manual controls to check | | |checks with cash count sheets and prelist. |independent check of the prelist with the cash | | | |receipts journal. |Presentation and Disclosure |Mailing of statements to customers. |Make inquiries about mailing of monthly statements to | |(Classification) | |customers. Observe notes and procedures used to | | | |follow-up upon questions raised by customers. | |Rights and Obligations |If an entity sells its receivables, it |Observe and reperform procedures for documenting | | |should keep a documen tary record of the |receivables that have been factored or sold. | |receivables that have been sold and it | | | |should compare that record with monthly | | | |statements received from a factoring | | | |company. | | 14-18. a. The transaction classes that should be considered in assessing control risk for accounts receivable assertions are: credit sales, cash receipts, and sales adjustments. b.In assessing control risk for the existence or occurrence account balance assertion for accounts receivable, the following transaction class control risk assessments should be considered: †¢ Existence or occurrence for sales transactions that increase accounts receivable. †¢ Completeness for cash receipts and sales adjustments transactions that decrease accounts receivable. c. A revised acceptable level of detection risk for tests of details and a revised level of substantive tests must be determined for an assertion when the relevant final or actual inherent risk assessments, contr ol risk assessments, and analytical procedure risk assessments, differ from the planned assessed levels. 14-19. The following table explains some example preliminary audit strategies for each financial statement assertion in the context of the audit risk model. Assertion |Inherent Risk |Control Risk |Analytic Procedures Risk |Test of Details Risk | |Existence and |Maximum due to revenue|Low if internal |Moderate to high depending on|Moderate which will allow for smaller sample sizes| |Occurrence |recognition problems. |controls over the |reliability of expectation |and changing the timing of confirmations of | | | |occurrence of sales are|model. |receivables. It will also reduce the extent of | | | |strong. | |cutoff tests. | |Completeness |Moderate.Not a |Low if internal |Moderate to high depending on|Moderate to high which will allow for smaller | | |significant inherent |controls over the |reliability of expectation |sample sizes and changing the timing of | | |risk. |occurrence of sales are|model. |confirmations of receivables. It will also reduce| | | |strong. | |the extent of cutoff tests. | |Rights and Obligations|Moderate to high |Moderate to high |Moderate to high depending on|Low: Consider confirming with factoring agent and| | |depending on the |depending on internal |reliability of expectation |search for large unusual cash receipts. | | |entity’s ability to |controls. However, |model. | | |generate operating |control are more | | | | |cash flow. |nonroutine than | | | | | |routine. | | | |Valuation and |High or maximum due to|Moderate to high |Moderate to high depending on|The auditor can test the accuracy of receivables | |Allocation |subjective nature of |depending on internal |reliability of expectation |at gross value with confirmation. The auditor | | |allowance. |controls over |model. should consider extensive tests of the allowance | | | |collection of | |after year-end. | | | |receivables. | | | |Presentation and |Inherent risk is | Moderate to high |Maximum: Analytical |Maximum to High. It is often cost effective to | |Disclosure |usually high or |depending on internal |procedures are not directed |substantively test disclosures which are not | | |maximum. controls over |at testing disclosures. |complex for receivables. | | | |disclosures. | | | 14-20. In vouching recorded accounts receivable transactions to supporting documentation, a sample of debits to customers' accounts is compared to data on supporting sales invoices and matching shipping documents, sales orders, and customer orders. The evidence obtained pertains primarily to specific audit objectives derived from the existence or occurrence, rights and obligations, and valuation or allocation assertions for accounts receivable. 14-21.Both the sales cutoff test and the cash receipts cutoff test pertain to accounts receivable. The sales cutoff test involves: †¢ Examining shipping documents for several days before and after the cutoff date to determi ne the date and terms of shipment. †¢ Tracing shipping documents to sales and inventory records to establish that the entries were made in the correct accounting period. †¢ Inspecting invoices for a period of time before and after the cutoff date to ascertain the validity and propriety of the shipments and corresponding entries. †¢ Inquiring of management about any direct shipments by outside suppliers to customers and determining the appropriateness of related entries.In performing a cash receipts cutoff test, the auditor may be present at the balance sheet date to personally observe the promptness of the cutoff. In particular, the auditor determines that all collections received prior to the close of business are included in cash on hand or in deposits in transit and are credited to accounts receivable. Alternatively, the auditor may review the daily cash summary and validated deposit slip for the last day of the year. Both cutoff tests relate to the occurrence and completeness audit objectives for accounts receivable. 14-22. a. It may not be necessary to confirm accounts receivable when: †¢ The balance is immaterial to the financial statements. †¢ The use of confirmations would be ineffective as an audit procedure. The auditor's combined assessment of inherent risk and control risk is low, and that assessment, made in conjunction with the evidence expected to be provided by analytical procedures or other substantive tests of details, is sufficient to reduce audit risk to an acceptably low level for the applicable financial statement assertions. b. Factors to be considered in choosing the form of confirmation request are (1) the acceptable level of detection risk and (2) the composition of the customer balances. The positive form is used when detection risk is low or individual customer balances are relatively large. The negative form should be used only when all three of the following conditions apply: †¢ The acceptable level o f detection risk for the related assertions is moderate or high. A large number of small balances is involved. †¢ The auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration. c. When no response is received after the second or third positive confirmation request to a customer, the auditor should apply such alternative procedures as (1) examining subsequent collections and (2) vouching open invoices comprising the customer's balance. Alternate procedures may be omitted when both of the following conditions apply: †¢ There are no unusual qualitative factors or systematic characteristics related to the nonresponses, such as that all nonresponses pertain to year-end transactions. The nonresponses, projected as 100% misstatements to the population and added to the sum of all other unadjusted differences, would not affect the auditor's decision about whether the financial statements are materially misstated 14-23. a. The aged trial balance is used primarily in assessing the adequacy of the allowance for uncollectable accounts. b. Procedures applied to the aged trial balance include (1) footing and crossfooting the aged trial balance and comparing the total to the general ledger balance for accounts receivable and (2) testing the aging of the amounts shown in the aging categories by examining supporting documentation such as dated sales invoices. c.After testing the accuracy of the aged trial balance the auditor should perform the following procedures to draw a conclusion about the fair presentation of the allowance for doubtful accounts. †¢ Examine past due accounts for evidence of collectability such as correspondence with customers and outside collection agencies, credit reports, and customers’ financial statements. †¢ Discuss collectability of accounts with appropriate management personnel. †¢ Evaluated management’s process for estimated the allowance for doubtful accounts using hindsight. †¢ Evaluate the adequacy of the allowance given information about industry trends, aging trends, and collection history for specific customers. d.Hindsight allows auditors to evaluate the reasonableness of management’s process for estimating the allowance for doubtful accounts. The reliability of management’s process for developing this accounting estimate can be gauged by evaluating estimates in prior periods and the degree to which those estimates accurately estimated subsequent uncollectable accounts. 14-24. GAAP disclosure for accounts receivable include: †¢ Disclosure of receivables from employees, officers, affiliated companies and other related parties. †¢ Appropriate classification of material credit balances. †¢ Appropriate classification of current and noncurrent receivables. †¢ Disclosure of pledging, assigning, or factoring receivables.

A New Work Ethic Essay

The following questions are to help us analyze and maybe even understand where business in America is heading, especially with a capitalist society. 1. Describe how typical the attitudes that Sheehy reports appear to be in work environments you have experienced. The attitude described by James Sheehy unfortunately is not uncommon among young employees on these days, therefore is very likely that all of us at some point have come across an employee that has poor work ethics. I have worked in a call center environment for several years and have experienced how my younger coworkers, some of them still attending college, think of their job as a transitional one; they feel they don’t have to excel in their tasks even though they have the ability to do a better performance, because they work in customer service. The problem with younger generations I believe it starts at home and school; parents usually want to give their children what they didn’t have growing up but they’re failing in teaching them appreciation and value f the things they receive, and that sends a message that they deserve something, instead of having to earn something; and at school they learn they can pass their classes by pulling enough extra credit even if they did poor in their tests and assignments, contributing to that get-away-with-it mentality that Sheehy talks about. 2. Explain the implications of the work ethics Sheehy describes for the future of American busi ness. Elizabeth Vallance (1995) reflects that business ethics â€Å"involves articulating a coherent set of values for a business and trying to set decision making within the context of these values† (p. ), but the values described by Sheehy are not the ideal ones that would lead a business to success, subsequently, there must be a change in those values, or a change in the way Americans do business, acknowledging that there is a new business ethics, understanding and adapting to the new generations, but never ignoring the moral values that characterize our society and that have built the business system which is the core of the capital system now. Shaw (2010) advices that as long as these new generations have the â€Å"freedom to influence the nature of their jobs and pursue their lifestyles,† they would be willing to work hard (p. 156), so ignoring the attitude that Sheehy’s co-workers have is not the solution to the problem, instead, delegating responsibility, getting the employees more involved in the decision making process, and accepting positive feedbacks are excellent ways to avoid business failure in the future. Unquestionably there are several factors that contribute to a business failure other than attitude, but definitely this aspect of business will keep our capital society afloat. 3. Explain whether it is more reasonable to expect workers, especially in a capitalist society, to be more devoted to their jobs, more concerned with quality and customer service, than Sheehy’s coworkers were. Adam Smith’s concept of the Invisible Hand explains that human beings are acquisitive creatures and self-motivated, in an economic sense, to gain personal advantage; if we believe this concept is the core of capitalism, we should think it is reasonable to expect workers to be devoted to their jobs. However our reality shows a decline in the commitment people have towards their jobs for many reasons, the one I believe is the most important is the focus on the Short Term, explained by Shaw (2010, p. 54), which tends to make workers â€Å"unimaginative, inflexible, and ultimately uncompetitive,† thinking of ways on how to make big amounts of money in short time without much effort, by investing, by inventing, by becoming an artist, a sport star, etc. unrealistically thinking they can succeed without much effort. Customer service as we know it, might be changing in a near future, we are getting more used to a self-service mentality and that’s why many young people do n’t think is a priority to show devotion on that area. 4. Explain the reasoning behind employee theft. Employee theft is explained by a mix of circumstances that employees experience within our capitalist society. People have profit motive, some employees believe they enjoy certain advantages of working for a specific company, let’s say an employee thinks he or she is entitled to take home office supplies that cost the company a lot of money, only because he knows is within the company’s budget and they feel they aren’t compensated well enough so they can supplement their salaries by stealing. Also most employees that steal do it because they believe they can get away with it, or they have seen other employees doing it without having any consequences, therefore it’s a spread feeling among co-workers that it’s ok to take things from the company when it certainly isn’t. Some other employees that steal do it because they are experiencing truly economic problems and they are not responsible enough to solve them in another way, but stealing from the company to make up for their losses. Whichever the case, is very important to pay attention to this growing tendency, because businesses do lose considerable amount of money from employee theft, and this can affect the future of American business. 5. Explain ways the culture of our capitalists society encourages attitudes like those Sheehy describes . Capitalism have encouraged a lot of people to better themselves by acquiring a good education; is it necessary to have a better education today in order to have a customer service job than the one required many years ago for the same type of position. Consequently it takes more effort and more money invested in education for these young people to find better jobs; this can create the feeling that all the efforts are not worth unless you have a nice, big paying job, without having to start from scratch. Also younger generations have grown up with a lot technological help, compared to older generations, they have the Internet, computers, cell phones, entertaining gadgets, etc. that make tasks easier and the use of those is strongly encouraged by our capitalist society. As a result there is a pressure to have this technology in order to succeed, a pressure of affording the lifestyle that is â€Å"accepted† by their circle. United States is one of the very few countries were people can become rich in a very short timeframe, whether is by an business, artistic, or sports skill; some have invested at the right time and have become successful, and this mentality has stuck on the young people’s head, to the point that anyone could become rich overnight, if they only know how to play the right cards, not necessarily having to work a lifetime to build their capital.

Current Ethical Issues in Managerial Accounting Report Research Paper

Current Ethical Issues in Managerial Accounting Report - Research Paper Example The ethical issues might generate from these activities or functions which perform by the managerial accountants in an organization. The various ethical issues which are currently prevailing in management accounting reports are related to overproduction, cost allocation, replacement of assets and conflicting interests amid the stakeholders (Taicu, n.d.). This paper intends to identify a particular ethical issue that is currently being debated. Moreover, a detailed analysis of the identified ethical issue, recognition of the relevant stakeholders and suitable recommendations as well as rationale to mitigate with the ethical issues will also be depicted in this paper. A Brief Overview of the Recent Ethical Issue A recent ethical issue has been observed in an organization named UBS, a global business firm which offers different financial services to the customers in over 50 nations. It has been viewed that the organization faced substantial financial loss of nearly UK$ 2.3 billion in th e year 2011 due to the involvement of certain ethical issues. The ethical issues which were involved in this case were regarding false accounting and fraudulent activity of misinterpretation of the financial statements which can be related to the process of managerial accounting. In relation to this case, the former trader of UBS named Kweku Adoboli was alleged for the conduct of such ethical issues. False accounting can be considered as one of the major ethical issues as it occurs when the assets or liabilities of an organization are overstated for the motive of making the financial position of the business more stronger. The ethical issue of false accounting generally occurs due to various reasons like hiding losses, inflating the share prices, reporting unrealistic profits and obtaining additional financing from banks. The ethical issue of false accounting was majorly involved with the case of UBS. The former trader of the company i.e. Kweku Adoboli may perform the ethical issue of false accounting by adopting any one of the aforementioned unethical practices. Consequently, the former trader was arrested due to the conduct of unethical practices in terms of false accounting and fraudulent activity of misinterpretation of the financial statements (Shirbon, 2012). Identification of the Relevant Stakeholders The stakeholders are regarded as individuals or groups upon whom an organization depends for its success. They invest significant amounts of money into an organization and anticipate attaining greater financial return. With regard to the ethical issues, it has been apparently observed that the organization suffered huge financial loss of nearly UK$ 2.3 billion in the year due to the prevalence of significant moral issues. The ethical issues include false accounting practices and fraudulent acts of misinterpretation of financial statements. The relevant stakeholders who were involved with the ethical practices are the company itself and the former trader of UBS named Kweku Adoboli. The potential reason of this stakeholder i.e. Kweku Adoboli to conduct the ethical practice of false accounting was to strengthen his financial position and also to attain significant earnings (Shirbon, 2012). Recommendations and Rationale After acquiring a brief idea about the ethical pract

Londons Millennium Bridge Case Study Example | Topics and Well Written Essays - 2500 words

Londons Millennium Bridge - Case Study Example Seeking to understand the development of London's Millennium Bridge, this research paper will provide a brief description of the history and development of London's Millennium Bridge. Following this, we will provide a survey of the literature on the project, with a particular emphasis on the sustainability of the project today and into the future. A short analysis of the costs, benefits and risks associated with the project will follow and we will conclude with a broad overview of the issues studied with respect to one of the most controversial construction projects in London in recent memory, the building of the Millennium Bridge (Architects, 2000; Steves, 2006). Opening in the summer of 2000, London's Millennium Bridge was welcomed as an architectural wonder but also received its fair share of controversy in the initial days after its unveiling. As a steel suspension bridge which crosses the river Thames, London's Millennium Bridge provides a pedestrian link to the City of London and Backside. Competition for the erection of a major bridge began in earnest four years prior to the unveiling and was the subject of a competition created by the Southwark city council. With a total length of 235 meters, the winning entry was the "Blade of Light" design by architects Arup, Foster and Partners in conjunction with Sir Anthony Caro. This bridge received a fair bit of controversy, when after its unveiling the bridge reportedly rocked back and forth and scared pedestrians who were crossing it. It subsequently was nicknamed the Wobbly Bridge and was closed for two years following this unexpected occurrence. The following will chart the development of t his majestic, yet controversial bridge. Once a decision had been made as to would obtain the contract for London's Millennial Bridge, Blade of Light architects Arup, Foster and Partners in conjunction with Sir Anthony Caro began construction in earnest. While development began earlier, construction started in 1998 and continued up until the official opening on June 2000. This was London's first new Thames crossing in more than a century and London's Millennial Bridge was built to the tune of '18m. Accordingly, nearly half of the funds were donated by the Millennium Commission. The specifications of the bridge included a total length of 330m, a width of 4m, a handrail height of 1.2m and the height above river at high tide standing at 10.8m. Created from concrete and steel piers with cables stretching 120mm of locked coil, the decking was in aluminum while the bridge's handrail was created from bead blast stainless steel (BBC, 2009). Opened by the Queen on June 10, 20001, the Millennial Bridge used "lateral suspension" - an engineering innovation that allows suspension bridges to be built without tall supporting columns. The designers predicted it would be a "blade of light" across the Thames, "an absolute statement of our capabilities at the beginning of the 21st century". Within days they closed it to the public (BBC, 2009). Closed for two years, the modifications undertaken between 2000 and 2002

BUSINESS ORGANISATIONS Essay Example | Topics and Well Written Essays - 1750 words - 1

BUSINESS ORGANISATIONS - Essay Example It may be one essential element of an organization that keeps it together and going. It is a process of getting a task done through people. There have been numerous amounts of theories and assumptions that have varied. Although words about leadership have been written by Egyptian and Greek philosophers about five thousand years ago, but the studies about different approaches to leadership did not commence until after World War 1. Since then, there has been a multitude of perspectives and theories produced. The "Personality approach" emphasizes at the individual attributes of leaders, such as self confidence, risk taking, creativity, and persuasiveness. The "Behavior approach" looks at the actual activity performed by any leader that involves assessing regular tasks and behavioral characteristics of leaders. Lastly, the "Situational approach" focuses on leadership in terms of its relationships with factors such as subordinates, and peers. This approach is also referred to as â€Å"Contingency theory† because the situation determines the role of the leader. First time a scientific research was carried out was in the early part of the twentieth century. These scientists’ works with an assumption that leaders were people who had various attributes and personality traits that include physical characteristics, personality, social background, and ability that distinguished them from the rest. Therefore, this consistent philosophical view came to be known as the "Great Man Theory of Leadership." The theory states that some people are ‘born to be leaders’ and not made. Such people possess a special quality that differentiates them as unique from common individual(s). One may say that the great leaders of the world like Julius Caesar or Napoleon would’ve achieved the same leadership role at anyplace or anytime in history. In the Nineteen twenty’s, some of the leadership researchers started taking this hypothetical theory

What and why do americans need the fda What are all the benefits of Research Paper

What and why do americans need the fda What are all the benefits of the FDA PROs of the fda - Research Paper Example FDA is a federal agency headed by a commissioner who is appointed by the President of the US (Whittaker and Walter, The Purpose par. 1). Its precursor agency was the Food, Drug, and Insecticide Administration which was reorganized from the Bureau of Chemistry in 1927 (Lee and Sprague, History par. 3). In 1930, the name of the agency was changed to Food and Drug Administration (par. 3). It was said to protect not only the interest of the consumers but also the pharmacology industry due to some complexities that it has encountered in the process of regulation (Jacobs and Carson-Dewitt par. 1). The earliest functions of the FDA were set forth in the Food, Drug, and Cosmetic Act of 1938 which was passed after the poisoning of more than a hundred people from a drug sold by a Tennessee-based company (Lee and Sprague, History par. 3). The Act mandated that all drugs should pass the FDA approval before being released into the market (par. 3). Moreover, FDA was required to provide a set of safety standards for food and drugs, and that drugs should contain detailed labels and proper instructions for use (par. 3). Its scope of functions increased with the passage of other laws (e.g. Food Additives Amendment of 1958, Drug Abuse Control Amendments of 1965, 1976 Medical Devices Amendments) (par. 5). One-fourth of all the products in the US market are regulated by FDA as of 2008 (Lee and Sprague, FDA Approvals par. 3). Pharmaceutical firms are allowed by law to advertise their products which may not be accurate since adverts are made to exaggerate in order to convince consumers to buy their products. The FDA has the power to regulate the contents of the advertisements so that only a â€Å"balanced perspective† will be presented to consumers and end-users (DiLascio, FDA Regulations par. 1). Pharmaceuticals firms have also resorted to the DTC strategy in marketing their products. DTC refers to the Direct-to-Consumer approach that tends to reach consumers directly through