Fred Stern & Company, Inc.

Fred Stern & Company, Inc. was a rubber importer based out of New York City during the 1920s. This capital-intensive business was in high demand for numerous industries at the time. As such, Fred Stern & Co. relied heavily on lenders to finance its daily operations. In 1924, Fred Stern & Co. approached a finance company named Ultramares Corporation for a loan of $100,000. Before accepting the terms, Ultramares Corp. requested an audited balance sheet to serve as support for the loan.A well-respected accounting firm named Touche, Niven & Co.  had provided assurance for their statement a few months earlier, which allowed the deal to go through. The following year, in January 1925, Fred Stern & Co. filed for bankruptcy and Ultramares Corporation found itself suing Touche, Niven & Co. for fraud & negligence to recover $165,000 lost in the agreement. When reviewing the case thoroughly, there are various red flags, overlooked by Touche Niven that should have been clear indicators of frau dulent reporting by Fred Stern Co. Firstly, when commencing the audit in February, Touches’ auditor Siess had to complete the general ledger & trial balance himself.It had not been posted since the prior April. This resulted in him reviewing some of his own work. Following this event, Stern’s accountant booked an additional entry debiting receivables and crediting sales in the amount of $700,000, more than doubling the accounts receivables account. As an explanation, he claimed that the entry represented December sales omitted from the accounting records. Additionally, while auditing inventory, Touches’ auditor discovered several errors, which caused the inventory record to be overstated by more than $300,000, an overstatement of 90%.Also, while auditing payables, more errors appeared and the auditor discovered that the company had improperly pledged the same assets as collateral for several bank loans. We should also consider the absence of a strong regulatory system at the time as well as the old acquaintance and good relationship between the firm and the client as red flags, which may have led the auditing firm to under-evaluate the risks of the audit. This case led to a long legal battle between the defendant Touche Niven & Co. , and the plaintiff Ultramares Corporation.In the first ruling, the jury found the audit to be negligent but not fraudulent; however, the judge set this finding aside based on the doctrine of privity, which protects auditors from third party suits. Essentially, this ruling states that in common law, only parties of the contract or relationship in place should be allowed to sue and claim damages. Other parties that used the information in the audit report to make decisions did not have an explicit contractual agreement with the auditors. Therefore, a third party could not sue the auditor for damages if the audit report was misleading and caused the third party to lose money.The SEC of 1933 did not hold auditors l egally responsible to these third parties. As we can see, auditing rules have changed quite substantially from the 1920s to today. Following this ruling, the plaintiff appealed the ruling where an intermediate appellate court reinstated the negligence verdict stating that by offering an unqualified report, Touche Niven & Co. had an obligation to Ultramares since they relied on this information to base their decision of lending money to Fred Stern & Co. Finally, Touche Niven appealed the ruling which as a result brought the case to the New York Court of Appeals where a final decision was established.In a unanimous decision, the court, led by Judge Benjamin Cardozo ruled the defendant not guilty based on the same conclusion from the first ruling. He stated that the law should not admit â€Å"to a liability in an indeterminate amount for an indeterminate time to an indeterminate class. † He believed that Touche, Niven was not guilty to third parties because its relationship was with Fred Stern & Co. period. It is important to mention that judge Cardozo went on to criticize the accounting firm for its audit of the Fred Stern Co.financials and that had they sued on basis of gross negligence, they would have been successful. Distinction being the fact that blindly giving assent is as bad as committing fraud. To reiterate, the difference between negligence (which they sued for) itself and gross negligence is in fact a relationship that exist between the parties in dealing. This case established that an auditor could be sued by a primary beneficiary for damages from negligence. A primary beneficiary is a party that has a direct benefit from the audit.Non-privity parties could also sue for gross negligence. This increased the auditor’s legal exposure to third parties. The SEC of 1934 reflected these changes and many others; one significant change was that auditor’s had a much higher litigation risk due to their new responsibility to third parties. The audit report in the 1920’s was very basic. The audit report was titled the â€Å"Certificate of Auditors† and said that the auditors had examined only the balance sheet accounts and these accounts were in line with the explanations and information given to the auditors.It then said that the statement presented a true and correct view of the financial condition of the company. This is very different from the audit report used today. Today, the audit report is much more detailed to help auditors avoid liability. Instead of simply examining the balance sheet, now we audited the balance sheet, income statement, statement of retained earnings and cash flows. Beyond just simply stating that the accounts are in line with the explanations and information received, auditors state that we conduct the audit in line with Generally Accepted Auditing Standards and explain what this means.In the 1920’s, where the audit report would have said that the statements present a t rue and correct view of the financial condition of the company, the report now state that the statements present fairly, in all material respects the financial position of the company, and that the operations and cash flows are in line with Generally Accepted Accounting Principles. Many changes in the auditing profession have required these changes to avoid confusion from financial statement users.The decision of extending the liability of auditors to third parties had impacts on all parties involved in an audit (accounting firms, audit clients and third-party financial statement users). The question of whether the auditors are responsible for â€Å"socializing investment losses† became important. â€Å"Socializing investment losses and privatizing profits† can be defined as † how businesses and individuals can successfully benefit from any and all profits related to their line of business, but avoid losses by having those losses paid for by society.Privatizing p rofits and socializing losses suggests that when large losses occur for speculators or businesses, they are able to successfully lobby government for aide rather than face the consequences of said losses. â€Å"1 In other words, when losses are occurred by the investors or creditors of an audit client, the auditors would be as liable to them as the audit client itself to compensate for the losses occurred due to misrepresentations on the financial statements or in case of fraud. This is basically what extending the liability of auditors did.The changes in the SEC of 1934 and the new laws that arrived after that, forced certain changes to the way the auditors had to approach their work. It is now their responsibility to ensure that the work being done is enough to provide a high level of assurance to all the users of financial statements. This means ensuring that they do their due diligence, in case that there is misrepresentations in the financial statements audited or fraud and th at they are being sued for gross negligence. The auditors would have to prove that they did the work necessary to provide that high level of assurance.The auditors would also have to be more careful when choosing their audit clients as they cannot chose anyone they are already doing consulting for (remain independent). However, the fact that the consulting firms and auditing firms are now separate for the same client eliminates the â€Å"lowballing† of audit fees. The change to the liability of auditors also impacted the audit clients because they are no longer the only one responsible in case of misrepresentations if the financial statements. However, since the auditing firms no longer â€Å"lowball† their fees, the clients will now have to pay more for the same audit.The change also impacted the third-party financial statement users. They now have more peace of mind when it comes to the information they are reading since they know the auditors know that they have to keep them in mind when doing their audit. This fact is enforced by the idea that the third-parties now have insurance from the auditors that if any misrepresentations occur in the financial statements that incurred losses for the investors or creditors of the audit client, they can now recover some (or all) of it by suing the auditors for gross negligence.The decision of extending the liability of auditors to third-parties was made by courts. This brought up the question: Who should have the authority to chose who should socialize the investment losses? Since the accounting profession is supposed to be self-governing, this question is valid. The Canadian Institute of Chartered Accountants (CICA) is the association responsible of their members when they break the code of conduct in Canada. It hands penalties to the members but also sets guidelines as to what is ethically expected of them. However, they do not have the authority to serve as a court because they are not considered impa rtial.An argument can be made to say that the government should protect the investments. The government can do such a thing by developing laws that will help the courts make their decisions. An example of the government making a law to help determine who is responsible in case of fraud would be Bill C198 (the equivalent of Sarbanes-Oxley for Canada). Since it is the courts' duty to â€Å"uphold the rule of law (†¦) and enforce laws in a fair and rational manner†2, it is their responsibilities as impartial party to determine who is responsible for the losses occurred in cases of fraud.When conducting an audit, auditors must ensure always ensure that any and all information influencing third party user’s decisions is included in the financial statements and/or attached notes. To ensure this, the auditor must determine these users. Knowing and understanding the third party users will inform the auditor of management’s desired results and will therefore enable the auditor to conduct the audit more efficiently.For example, a company who is looking to secure new loans will want to minimize the current debt on their balance sheet as well as show a high working capital ratio to ensure their creditors will loan them the desired financing. Contrary to this example would be companies entering the stock market. With the launch of an IPO, companies want to show profitable results as well as increasing growth to ensure a high stock price. This is especially true for companies whose loans are secured by their stock (i. e. Enron with its stock trigger).This stage of the audit planning must be completed/updated every year since management’s goals may vary from year to year. The auditor will then use management’s biases to organize the audit. More experienced auditors will work on the â€Å"riskier† accounts, whereas newer employees will work on the â€Å"less risky† accounts; thus explaining why the junior accountant will b e responsible for auditing the cash section while the senior auditor might work on deferred revenues for a company receiving all of its revenues through exterior funding.Knowing and understanding the third parties’ needs will ensure a more efficient audit. However, even with all improvements made to the accounting world, cases like these still happen today. In a recent case involving a very reputable accounting firm, Ernst & Young, audited fraudulent financial statements of Sino-Forest made their way to the public. Evidently, this led to many losses, specifically for Sino-Forest’s shareholders who investment decision was based on the company’s financial statements.During their audit, Ernst & Young failed to discover that management â€Å"materially overstated the size and value of its forestry assets†. 3 Ernst & Young had to pay a $117M settlement of a shareholder class-action lawsuit. 4 Due to cases like these, changes are continuingly made to auditing s tandards to adopt when new issues surface. The case brought up a possible change: the inclusion of the third party users in the audit report. Evidently, clients would be resistant to this change as it would limit their options.If a client discovers later on in the year a shortage of cash but did not mention a creditor in the audit report, creditors might not want to finance their activities solely on that basis. Furthermore, due to the importance and the quantity of users relying on the financial statements, enumerating all of them in the audit report would be impractical and unnecessary. Auditors need to remain diligent when conducting their work and limiting their responsibilities’ to a specific number of individuals would not benefit the public.We would not want another case like this one to enable an auditor to conduct a negligent audit without suffering the necessary repercussions. In conclusion, the accounting world is an ever evolving practice. New rules and regulation s are approved every year when loopholes are discovered and abused. The accounting profession has surely matured since the 1920s. Who knows what other changes will be made in the future. Maybe auditors will need to disclose a summary of all unadjusted misstatements or even need to create a different audit report for every different user.

Social psychology as it applies in education

Social psychology as it applies in education Social Psychology In any given setting, individuals manifest different behaviors. Variations are observed in the individuals’ abilities to interact with the others, participate in various group discussions, or form intimate relations. The behaviors of some individuals are characterized by high levels of hostility and chauvinism whereas others exercise empathy and tolerance.Advertising We will write a custom essay sample on Social psychology as it applies in education specifically for you for only $16.05 $11/page Learn More Social psychology is concerned with an analysis of the different behaviors that are witnessed in different individuals. The social psychologists focus on moral issues like â€Å"stereotyping and discrimination, conformity, obedience, interpersonal relations, judgment and decision-making’ (Samuels Casebeer, 2005, p.73). Of interests are these behaviors that deviate from the expected and morally acceptable behaviors in the so ciety. A social psychologist is mainly concerned with the mysterious behaviors and the factors that contribute to such behaviors. The factors can be within the personality of an individuals as well as the environment from which the individual comes. Social Psychology As It Applies In Education Social psychology applies in the learning institutions as individuals spend much of their early life in such institutions. Some differences in social behavior between males and females are evidenced at the pre-school ages (Barbu, Cabanes, Maner-Idrissi, 2011, p.1). However, many literatures are available that focus on schools as a basis for the development of the human behavior. The learning institutions are typical of a contemporary society in a cosmopolitan setting. The students are often from different cultures, religions, and ethnic communities and the influence of such factors are best evidenced in these settings. A social psychologist will be interested in the kind of interaction among the students of different cultures, gender, ethnic or racial groups. The abilities of a student to participate in teamwork and socialize with the others are observed in the learning institutions. Racial, ethnic, and gender-based discrimination among the individuals can be witnessed in these institutions. Abilities like leadership skills are also identifiable here. In order to identify and explain the different behaviors, the social psychologists must the personality of the individuals and the environment in which they are brought up. It has been observed that our thinking as human beings is greatly affected by our ecosystem (Samuels Casebeer, 2005, p.82). A student’s innate characters like attitude towards the others and his life objectives can explain some of their behaviors. Similarly, the cultural values and norms also affect the reasoning and subsequent unique and mysterious behavior of an individual in a setting that comprises different cultures.Advertising Look ing for essay on psychology? Let's see if we can help you! Get your first paper with 15% OFF Learn More It has been noted that the educators turned social psychologists should focus more on morality when attempting to develop good behavior in the students (Samuels Casebeer, 2005, p.85). The principles of morality can be used as a starting point to examine the factors that can hinder development of ethical behavior in the individuals. It has been stated that the situations surrounding an individual contributes significantly to the behaviors developed by such people. An analysis of the potential influence of such situations may help in managing the situations (Samuels Casebeer, 2005, p.85). Social psychology enables the educators to identify the different abilities in their students in order to provide the best resolution. The different abilities range from gifted students to the special needs students. These individuals need to be handled differently. Much attention should be provided to the students with special needs like the emotionally disturbed. On the other hand, the talents in the gifted individuals should also be cultivated to its fullest. Gifted individuals can be identified through intelligence tests, academic achievements, the student’s creativity, or other observable talents (Cross Cross, 2005, para.4). The special needs students can be identified in a similar manner. References Barbu, S., Cabanes, G and Maner-Idrissi, G. (2011). Boys and Girls on the Playground: Sex Differences in Social Development Are Not Stable across Early Childhood. Sex differences in social development, 6(1). Web. Cross, J and Cross, T. (2005). Social Dominance, Moral Politics, and Gifted Education. Roeper Review, 28(1). Web. Samuels, S. and Casebeer, W. (2005). A social psychological view of morality: Why knowledge of situational influences on behavior can improve character development practices. Journal of Moral Education, 34(1), pp. 73–87. Web.Advertising We will write a custom essay sample on Social psychology as it applies in education specifically for you for only $16.05 $11/page Learn More

261 Junot Diaz and Drown Professor Ramos Blog

261 Junot Diaz and Drown Masculinity vs Toxic Masculinity Quick Write You are at your funeral, or the funeral of a man you respect. They say, â€Å"He was a good man.† What does that mean? Write for a couple of minutes on what it means to be a good man. What words come to mind? Masculinity vs Toxic Masculinity What is the difference? Junot Dà ­az (1968) Junot Dà ­az is a Dominican-American writer, creative writing professor at the Massachusetts Institute of Technology, and fiction editor at Boston Review. He has won numerous writing awards, including the 2008 Pulitzer Prize for Fiction for his novel The Brief Wondrous Life of Oscar Wao. Drown (1996)

Absolute Beginner English Personal Information

Absolute Beginner English Personal Information Once English students can spell and count, they can also begin giving personal information such as their address and telephone number. This activity also helps students learn to answer common personal information questions that may be asked in job interviews or when filling out forms.   Personal Information Questions Here are some of the most common personal information questions that students might be asked. Start simple with the verb be  and target simple answers which are shown below.  Its a good idea to write each question and answer pair on the board, or, if possible, create a class handout for reference. What is your telephone number?   -  My telephone number is 567-9087. What is your cell phone number? -  My cell phone / smart phone number is 897-5498. What is your address?- My address is / I live at 5687 NW 23rd St. What is your email address? -  My email address is   Where are you from? -  I am from Iraq / China / Saudi Arabia. How old are you? -  I am 34 years old. / I am thirty-four. What is your marital status? / Are you married? -  I am married / single / divorced / in a relationship.   Once students have gained confidence with simple answers, move on to more general questions about daily life with the present simple  do. Continue with  do you like  questions for  hobbies, likes and dislikes: Who do you live with? -  I live alone / with my family / with a roommate. What do you do? -  I am a teacher / student / electrician. Where do you work? -  I work at a bank / in an office / in a factory. What are your hobbies? -  I like playing tennis. / I like movies.   Finally, ask questions with  can  so that students can practice speaking about abilities: Can you drive? -  Yes, I can / No, I cant  drive. Can you use a computer? -  Yes, I can / No, I cant  use a computer. Can you speak Spanish? -  Yes, I can / No, I cant  speak Spanish. Starting Off Classroom Conversations   What is Your Phone Number? Practice personal information questions by using this simple technique to help students both answer and ask questions.Begin by asking for a students telephone number. Once youve begin, ask the student to continue by asking another student. Before you begin, model the target question and answer:   Teacher:  What is your telephone number? My telephone number is 586-0259. Next, have students participate by asking one of your best students about their phone number. Instruct that student to ask another student. Continue until all students have asked and answered. Teacher:  Susan, hi, how are you? Student: Hi, Im fine. Teacher: What is your telephone number? Student:   My telephone number is 587-8945. Student:   Susan, ask Paolo. Susan:   Hi Paolo, how are you? Paolo:  Hi, Im fine. Susan:  What is your telephone number? Paolo:  My telephone number is 786-4561. What is Your Address? Once students are comfortable giving their telephone number, they should focus on their address. This might cause a problem due to the pronunciation of street names. Before you begin, write an address on the board. Ask students to write their own addresses on a piece of paper. Go around the room and help students with individual pronunciation issues so they feel more comfortable before beginning the exercise. Once again, begin by modeling the correct question and response: Teacher:   What is your address? My address is 45 Green Street.   Once students have understood. Begin by asking one of your stronger students. They should then ask another student and so on. Teacher:   Susan, hi, how are you? Student:  Hi, Im fine. Teacher:   What is your address? Student:  My address is 32 14th Avenue. Teacher:   Susan, ask Paolo. Susan:   Hi Paolo, how are you? Paolo:Hi, Im fine. Susan:  What is your address? Paolo:  My address is 16 Smith Street. Continuing with  Personal Information - Bringing It All Together The final part should make students proud. Combine the phone number and address into a longer conversation asking about nationality, jobs, and other simple questions from information that students have already studied. Practice these short conversations with all of the questions you provided on your worksheet.  Ask students to continue the activity with partners around the class. Teacher:   Susan, hi, how are you? Student: Hi, Im fine. Teacher:   What is your address? Student:  My address is 32 14th Avenue. Teacher:   What is your telephone number? Student:  My telephone number is 587-8945. Teacher:   Where are you from? Student:  Im from Russia. Teacher:  Are you American? Student:  No, Im not American. Im Russian. Teacher:   What are you? Student: Im a nurse. Teacher:   What are your hobbies? Student:  I like playing tennis. This is just one lesson of a series of  absolute  beginner lessons.  More advanced students can practice speaking on the telephone with these dialogues. You can also help students by going over basic numbers in English during the lesson.

Training skills and implications of an aging workforce Essay

Training skills and implications of an aging workforce - Essay Example Majority of organizations remain imprudent at best in their endeavor to supervise their personnel from retirement suitability to time or cost indispensable to fill an empty position. Such entities lack precious information, which is helpful in guiding and regulating future plans to respond to departing workers. Many baby boomers are likely to exit from organizations in the coming years. Upon their departure, they take away valuable knowledge and experience with them, which negatively impacts the organization (Davidson, Lepeak, & Newman, 2007). The ageing population in Europe and other modern nations and its impacts on the labor market with regards to the balance of labor scarcity or the outflow of personnel and likely costs is more than organization’s concern. The debate is dominating the political arena, with economic viewpoints on possible considerations also up-and-coming in the debate. For illustration, a recent report by the OECD laid out policies and punishments for orga nizations for laying-off elder workers. This course of action may have negative effects as it may lessen hiring rates of older workers. From this policy, commendations are clear as to the best kind of employment protection for ageing workers. That is, to increase their employability and increase the range of employment opportunities more generally. Several fields of action are set out, namely enhancing lifelong learning, the adaptation of training methods to the needs of ageing workers, as well as, the promotion of the delayed retirement of this group of employees. Some of the key barriers that may hinder improvement of older workers employability are; poor working conditions, poor or lack of public services to assist aging workers in their special needs, and their lower participation in training. Inflexible working schedules also hamper training needs to increase employability of ageing workers. Sufficient online services may partially fill of the gaps and offer additional services . A recent study of the Glasgow area holds that the use of ICT and online services provided in a community based course to unemployed people empowers them to accomplish high levels of income and skills for future jobs (Cabrera & Malanowski, 2009). Whenever the subject of the ageing population is mentioned, pointers always go for the baby boom generation, which generally refers to people born in 1946 to 1964. These people are likely to exit employment in the coming years. Ageing population is further compounded by attributes of generations following the baby boomers into the workforce, in relation to their volume, enthusiasm and skills. Subsequent generations following baby boom experienced fairly low birth rates, leading to lesser people entering the workforce to fill the gaps left by exiting workers. In addition, the generation X, Y, and Z are associated with high turnover rates. Indisputably, the ageing labor force will impact organizations in different ways, and the impacts depen d on numerous factors. These are such as the present workforce, demographics and future capacity to attract substitute personnel. A critical examination on the potential impact of the ageing workers can aid organizations to initiate practical human

Utility and Demand Theory Term Paper Example | Topics and Well Written Essays - 1750 words

Utility and Demand Theory - Term Paper Example   Marginal utility is an important concept when analysing the demand theory, marginal utility refers to the additional utility derived from the consumption of one extra unit of a good.  Ã‚  From the above chart and table it is evident that total utility increases but at a decreasing rate, this is because there is a decline in the marginal utility or the additional utility gained from the consumption of one extra unit of a good.The utility theory is based on a number of assumptions and they include the following: I. Consumers aim at maximising their utility level. Consumers will prefer more of a good than less. When we have good Y and X the consumer will prefer X to Y or Y to X.IV. If the consumer prefers Y to X, and that he or she prefers X to K then the customer prefers Y to K.V. The consumers experience diminishing marginal utility when the number of units of a good increases  The number of units of goods consumed will be determined by the level of income, the level of income will determine the maximum number of units that can be purchased and therefore this aids in the development of a budget line. The opportunity cost will also determine the number of units consumed of a good, and finally, the number of units consumed will be determined by the level of utility derived. (Neumann, J, 2000)Given two goods Y and X and given that the price of X = 10 and price of Y = 15, also given that the level of income is 150 then the budget line will be determined as follows.

Import and Export Markets in the United Kingdom Essay

Import and Export Markets in the United Kingdom - Essay Example The UK exports most of its goods to Brazil, India, Russia, and China while most of the imports come from china. The use of higher technology manufactured goods has caused a dramatic increase in both exports and imports. However, the recent financial crisis experienced around the world has led to a decline in imports and exports (Reuvid and Sherlock, 2011). In 2009, UK imports and exports totaled to $1,256 billion, which was equivalent to 4.3 of the world trade. The financial crisis has caused a rise in exchange rates of sterling pound, which has caused an 8.6% decrease in exports and 9.1% decrease in imports (Great Britain, 2009). Over the past ten years, the UK has been a net oil exporter, but production has been decreasing consistently over the past years. The oil industry has recorded an average decrease of 5.3% per year in exports. This has converted the UK from an oil export to an oil import land. Oil production in the region is less than demand, which calls for supplements thro ugh increased imports. Imports of other energy sources such as coal, electricity, and gas have increased over the past five years. In 2010, the importation of liquefied natural gas increased to account for 35% of total gas imports, while gas exports have decreased slightly over the same period. Gas has also been increasingly used for electricity supply with the amount required increasing by 47% (Great Britain, 2010). Changes in the financial sector affect business sentiments and investment decisions, which are linked to global trade. Data service exports at the start of 2007 were about 30 billion pounds while imports were about 33 billion pounds. Mid 2008 recorded the peak imports and exports at 40 billion and 34 billion pounds respectively. The rate of imports and exports of data services decreased consistently since 2008 reaching a low of 32 billion in imports and 29 billion in exports in mid 2009. However, an increase was recorded towards the end of 2010 with imports and exports reaching 41 and 35 billion respectively. The deep drop can be attributed to financial crisis experienced during this period. The dramatic drop experienced in 2009 can be attributed to the collapse of Lehman Brothers Company. Global insurance company AIG received below average ratings and mortgage lender Bradford & Bingley was nationalized. These changes caused the drop experienced in 2009. The UK has recorded an increase in intermediate goods trade, with a 40% increase in 2008 for non-fuel products. Production processes are divided between different countries, which have increased the flow of unfinished goods into and out of the UK. Most manufacturing countries have production firms in countries with low labor costs. Products manufactured in these countries are imported as finished or semi-finished goods. The sterling pound experienced strong depreciation between 2007 and 2008. Reports by the Bank of England (2010) suggest that goods and services exports responded differently to the weakening of sterling. Export of goods has been supported by the weakening because export performance is influenced by price. The service industry reported a decrease in exports due to a reduction in global demand. The fall of financial companies reduced the rate of financial service exports, which caused the reduced export services. According to the World Bank (BCC, 2011), trade in professional and technical services has been more resilient than trade in goods during the financial crisis. Most