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Poverty Is A Grave Issue - 837 Words

Poverty is a grave issue that many people face worldwide that is caused by political and economic instability, discrimination, war, and a history of colonialism. Poverty is a social and economic problem characterized by a lack of income and therefore lack of access to adequate resources like food, housing, and services. This problem is widespread and is fatal; the malnutrition and disease that comes along with poverty kills millions of people. Especially in developing countries, diseases, such as HIV/AIDS, tuberculosis, and malaria are diseases that tend to infect those in poverty, yet they also perpetuate poverty because the medicines can be expensive or hard to come by. Even without the influence of diseases, poverty is usually perpetual, making it had for children who grow up impoverished to get out of poverty. For example in the United States, the perpetual cycle begins with poor housing conditions and leads to low property taxes, which would pay for an education. The lack of acc ess to a quality education contributes to job scarcity, and in turn lower income. Income and economics are not the only problem caused by poverty. Crime rates and substance abuse problems are high in impoverished areas, contributing to the social problem. Additionally, the criminal justice system tends to be biased towards the poor because of high legal fees and institutionalized discrimination. Poverty is not just a problem to those who are impoverished because with less people able toShow MoreRelatedThe Issue Of Child Marriage Essay1266 Words   |  6 Pagesare still subject to grave injustice in many societies and such societies also suffer from underdevelopment for minimal role of women in their development. Nepal is a country where women suffer from the issue of ‘Child or Early Marriages’. This is a century’s long practice in Nepal and unfortunately nothing significant has appeared in form of tangible indicators that indicate the improvement in this grave scenario. 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Early in America’s history, interactions between white settlers and Native Americans shaped the future of our country (Dwyer, 2014, p. 32). Shortly after arrival, European

Royal Ahold’s Case Write Up Free Essays

Executive Summary The case discusses the Royal Ahold’s the major events that led to the demise of a great European company. The case presents some of the key issues in the areas of leadership, strategy, audit and accounting fraud that resulted in their disaster. The case identifies the problems made by the management in selecting the improper growth strategy and incentive plan that encouraged unethical behaviour from the senior management. We will write a custom essay sample on Royal Ahold’s Case Write Up or any similar topic only for you Order Now The events presented touch and highlight management and governance issues, which are so important in managing global companies. After analysis of the cases and financial statements, I have come with questions and concerns on the management and financial statements that could have caught this earlier on. Questions to be asked and process of approving budgets, corporate strategy, risk controls would have raised concerns on the management style. Some of the other recommended actions for board and its various committees would have discouraged the improper management practices. Some of these questions might have surfaced real issues and / or encouraged the right practice. I found various accounting standards, challenges of global audit process; in this case it was led by Deliotte. The CEO’s and leadership growth strategy was the reward and recognition was improper. The number of acquisitions made during the 90s and continuous pressure was put on all subsidiaries to grow the sales by 15% were bad decisions. This alone led to many other problems within the company. The CEO’s growth strategy and desire to quickly grow the company put immense pressure on all other companies and senior management to somehow meet the CEO’s expectation. It all resulted into fraudulent activities and ultimately disaster of great company. I recommend adopting changes to incentive plans, non-financial factors be part of success criteria. In measuring financial success, working capital ratio, inventory days, receivable and payable targets should be part of incentives. Above all, I recommend changes to the board committees and ensuring their work is independent was also important, i. e. audit committee, establishment of HR committee to raise issues and improve the overall organization culture. The case also highlights the issue of multiple accounting standards being practiced in very country. A standard corporate wide accounting standard in Royal Ahold must have been used. Both external and internal auditors must have report ed numbers in a consistent approach. I recommend that auditors had direct reporting to board and should have empowered and trained to look for documentation and management structures in their audit process. Had they dig deep on all areas of concerns of material significance they might have found side letters. I have also highlighted other recommendations including the controls in the accounting standards and in preparing financial papers. Incentive plans and corporate strategy be realistic to avoid unwanted behaviors. Tone of the top management including the board’s, assignment of responsibilities be clearly stated and periodically measured. Student id: 250712690 1 Management Accounting Exam Problem Identification: The case depicts another case of fail of governance and business ethics. This appears to be a fraud and not just accounting mistakes. By 2003, the time of the case, Enron, WorldCom and few others had already identified the need of business ethics and corporate governance. Royal Ahold series of events happened mainly due to greed and unethical behaviour but what really underlies is the objective setting, growth strategy and, rewards recognition criteria set by management. The case also presents issues of cost accounting, in terms of, when to apply the manufacturing rebates. Consolidation of subsidiaries and joint ventures also played a role in this fraud. It also shows bad governance, flaws in external audit, failure of internal audit functions and to some degree their competency. Leadership strategy: Royal Ahold’s CEO’s strategy of 15% growth year-over-year was very aggressive. The reward and recognition structure around the sales number was improper as it led management of all subsidiaries and other business units to increase the revenue and meet the targets. CEO kept communicating to board and shareholders the expectation around the sales strategy and likelihood of meeting these targets. Consequently, it created a culture whereby senior management were under pressure to meet the sales objective. The senior management and head of subsidiaries must have felt that missing the sales targets is not even an option. Accounting Fraud: The case presents few big issues of accounting. Firstly, the issue is of the incorrect accounting treatment of manufacturing rebates and promotional allowances. My opinion is that rebates cannot decrease the cost of goods unless there is a certainty of getting the rebates. If the rebates are uncertain they cannot decrease the cost of goods incorrectly. From the case, it appears that management ordered more quantity of goods then they could have sold. They booked the rebates at time of goods received and decrease the cost of goods prematurely. (Assumption: It is not very clear from the case, if these rebates were booked as income or adjusted against the cost of goods i. . decrease in cost of item. I have assumed that Royal Ahold accountants decreased the costs (prematurely as per above paragraph). If these were booked as income, then it is even a bigger fraud and not an accounting error) Second accounting fraud problem is the accountants preparation of Royal Ahold’s parent company financial statements. They consolidated the financial statements including some of the joint ventures when Royal didn’t even had control over them. Royal Ahold did not own more than 50% of these Joint Ventures and did not have the control of the decision making. They created fraudulent paper work to show they had control on these join venture companies. This is a pure fraud as they created agreements to satisfy auditors and try to hide the real facts. Audit: Both external auditors and internal auditors (and audit committee) failed to detect any of the accounting issues. It could have been missed as accounting standards in many countries is different. External auditors, even though they may all be of Deloite, of one country only audits that country statements, so they may not be familiar what might be happening in other parts of the company. However, the Royal Ahold parent company auditors are responsible to have an oversight of companywide audit and should be held responsible for over -looking these fraudulent transactions. Internal audit and board’s audit committee failed to detect any of the misrepresentation either. On top of that in Netherlands there were two boards (Governing Board and Supervisory Board) and both boards weren’t able to detect or raise red flag on any of these problems and misrepresentations. Management having two sets of paper work with JV (Joint Ventures) without coming under the investigation shows incompetency of audit functions. Governance / Audit Structure The way the governance and audit structure was laid out at Royal Ahold, there were five different committees and entities were responsible to review accounting and financial controls and practices that could have asked questions and raise concerns (red flags). They were: The governance board, supervisory board, the audit committee, internal audit department and the external auditors. Each should have independently reviewed management controls and financial statements and raise concerns and issues. Raising Red Flags In my opinion, the governance structure and audit committees and external auditors were sufficient enough to handle or uncover such fraudulent activities had they been critical, created the right controls, empowered the internal auditors and obviously asked the right questions while reviewing the financial statements and other management documentation. As part of board, I would have asked questions following questions, or have acted when seen abnormalities. This would have helped me in identifying issues, concerns and in raising red flags on the Royal Ahold 1999-2001 financial statements. Also some of them are related to mid 90’s management attitude and strategy. Strategy and Growth Approach: The target of meeting 15% year-over-year in sales, especially in US in 2000-01 when economy was in recession should have alarmed the board and internal auditors. They should have investigated how the sales targets are being achieved. It is not easy to meet 15% sales in US food industries under this economic climate. This may have led the management behaviour in meeting the targets. As board member, I would have asked CEO to explain the strategy of rewards and recognition, mainly on top line bonus as it is a wrong choice. (I have personally worked at Compaq during 1999-2000 and have seen the issue of top line bonus and commission on sales. This led to Compaq’s continued crises and eventually it was bought by HP in 2003). I would tried to influence the board and hence the CEO to consider a more comprehensive rewards strategy. From my experience bonus strategy plays a big role in company culture. The other important factor that develops the management attitude is what CEO likes to hear. It seems Royal Ahold’s CEO, Cees van der Hooven, wanted to hear from all his subsidiaries and Joint Ventures that sales targets are being met every quarter. I would have influence the management style and company culture to be protected by changing (or diluting) this approach. CEO’s attitude and leadership style was one of the leading cause of Royal Ahold demise. His aggressive acquisition approach would have resulted in integration issues within the company. As board member, I would have asked the management plans on integration and how culture of the organization would not be negatively impacted. I would have created the board HR committee to influence management not to allow the negative impacts on the organization culture, integration within the organization, rewards and recognition be such that it would not have allowed the culture to deteriorate. The cultural issues, integration issues and above all greed among the management team members was uncontrolled in Royal Ahold’s accounting scandal. The growing number of acquisitions was extremely risky initiative; the corporate strategy was carrying high risks at all operational levels including controls, integration that may have led to frauds. Also, this had potential to be a reputation risk as well. In my opinion, board should not have approved such an aggressive corporate growth strategy. Consolidated Statements Although Royal Ahold ownership is less than 50% in some Join venture companies, they showed controlling interests in some companies. To me an agreement paper presented by the management is not sufficient. I would have asked the significance of Royal Ahold’s control and ask management which areas of Joint Venture management we have been making decisions on. If we are making decisions, even though we don’t own more than 50%, what are the risks associated with these decisions. As a board member, I would have understood how Royal Ahold has influenced the Joint Venture management. I would have also asked audit committee to understand the management structure of Joint Ventures. Taking a step further, assuming that 20% share would have given Royal Ahold right to appoint a board member on Joint Venture’s Board, I would have understood from the Joint Venture board member (through Royal Ahold appointed director) how the joint ventures decision making process really works. By asking such questions and efforts in trying to understand from the board and management of Joint ventures how the organization is actually structured and working. If Royal Ahold does not have a controlling authority on the acquired company, the company financial statements cannot be consolidated. Royal’s accounting practice o f consolidation will first bump up the revenue numbers. This was purposely done to beef up the revenue figures. This may have resulted bigger bonus for the senior management. Also, the balance sheet would be more attractive to the shareholders (and potential shareholders). To explain this here is simple illustration: Parent Current Assets Assets Total Assets Current Liabilities Liabilit ies Total Liabilities Shareholder’s Equity Debt to Equity Ratio Subsidiary Consolidated 3 7 10 1 3 4 4 10 14 4 1 5 3 7 0. 5 1. 5 3. 5 8. 5 3 2. 5 5. 5 2. 3 0. 6 1. 5 As illustrated in the hypothetical example above example, by consolidat ion the debt looks more attractive then it would have looked otherwise in the parent company. The debt to equity shows debt-to-equity of ($1. 5:$1) when consolidated, and ($2. 3:$1) when not consolidated. Similarly, other financial ratios would have looked good with consolidation of financial statements. The consolidation resulted in better financial statements; hence Royal Ahold used this approach. In actual, this should not have used consolidated method. As per the accounting text, Parent when owns an investee company’s 20%-50% should use the equity method of accounting. The equity method would have mainly impacted the earnings on the Income statements. The net income, however, would result the same earnings without changing the revenue numbers. On the balance sheet side, the equity method would only show true â€Å"Assets† number, as per the investments made in the JV by Royal Ahold. The financial ratios (e. . debt to equity or quick ratio etc. ) will not be as appealing as it started to sound with consolidated statement. Risk Controls: As board member, I would have influenced the entire board not to approve the corporate strategy as a budget was too aggressive and unrealistic. As pointed out above, realistic targets are extremely important. If strategy is too aggres sive and corporate culture is to share good news with the CEO the unrealistic budgets targets may lead to malpractice and improper (fraudulent) activities. In my opinion it is supervisory board obligation to approve only realistic targets. The corporate strategy in the growth years of mid ‘90s was too aggressive. This has done part of the damage in the culture and mind-set of the senior management that 15% growth is not unrealistic and has created an attitude to meet these targets in any way possible. This encouraged the wrong doings and possible frauds that started to take place in 1999-2001. Although it is not very clear from the case, were there any wrong doing (or activities) in 199798, but in the hind-sight, it appears that some of the issues must have started or existed in that time as well. The board and senior management should actively work on identifying risks to the organization and work on strategies that mitigates the risks. A key here is to have a formal risk assessment process on an annual basis. The assessment is under supervision of the board and results are reviewed by the board. Inventory 2001 balance sheet shows 20% rise in inventory, I would have raises some concerns that might have uncovered the management improper decision to order such high quantity of stocks to get the manufacturing rebates. Accounts Receivable In 2001, accounts receivable increased by Euros 605M i. e. 21. 2%. I would have asked questions around the assumptions and likelihood receiving the Account Receivable. More importantly, who owes this receivable to Royal Ahold. This may have been due to the manufacturing rebates included in the accounts receivable. If so, it would have led to the whole issue of management aggressive behaviour on ordering stocks to get rebates. It might have opened up the entire incorrect accounting treatment of manufacturing allowances and rebates. General Reserve Royal Ahold is showing consistently on their balance sheet a general reserve item that is over 5 to 6 Billion euros (approx). This appears to be high, I would have asked on what assumptions these provisions are made. It might have uncovered some of the assumptions that are being made by management. This general reserve is in addition to the 1. 5B euros in other provisions. This is should have been a red flag. Other Recommended Preventive Measures Besides the concerns and red flags mentioned above, I would have raised based on what I would have seen. I would have also taken following measures to prevent this from happening. Incentive (Bonus) Structure: The bonus structure cannot solely be based on financial goals. The bonus structure has to base on non-financial goals as well. Within financial goals all aspects to kept in mind when designing the appropriate incentive program. The increase in working capital (inventory, receivables, payables etc. ) is kept at minimum or in line with the net income. The increase or decrease in working capital beyond the realistic proportion to earnings should be discouraged through the incentive program as well. Audit Committee Structure: The case presents the audit committee and internal audit department weaknesses and signs of some of their inefficient processes and competency issues. Besides reviewing the audit committee performance, monitoring and control issues were also been found. I would have influence the audit committee to have a metrics of internal audit department. This may have encouraged more objectivity of audit functions and may have aligned management controls to the overall governance issues. It is the responsibility of audit committee that internal and external auditors have an open communication. Besides audit of the current financial statements, and review of controls and structures, the auditors must identify areas of improvement in controls and work on action plan in improving the organization controls and monitoring process. HR Committee As mentioned above, I would have asked board to create HR committee that takes an active role in setting the controls in the organization. The committee should take an active role in reviewing the annual compensation and objective setting. Committee should have taken an independent review of key hiring decisions and management capability on integration and organization culture. Some key decisions in this area should only made by committee after consulting with the management, audit and board’s general direction. IT System: I would have asked internal audit committee to ensure all IT systems are audited to ensure proper controls are in place. Usually, in fraud IT systems controls could have loop holes or management may have the ability to bypass some of the checks and balances and/ or segregation of duties. Consistency in financial Statements Royal Ahold had companies in four different continents and in many countries. Financial statements presentation and laws across the globe are not consistent. US GAPP, Netherlands GAAP, IFSA and others are not standard across all countries where the Royal Aholds companies are in operation. While the fact makes a challenge for the board, it doesn’t give them an excuse of letting things slip. The board should have worked out with internal and external auditors in creating a minimum corporate standard across the group of companies. It is the flaw in governance and leadership to over-look this fundamental point. How to cite Royal Ahold’s Case Write Up, Essay examples

Eudaimonia Aristotle Essay Example For Students

Eudaimonia Aristotle Essay ?In Contrast to Plato Unlike Plato, Aristotle believed that sensory perceptions in the human soul are reflections ofobjects, and thoughts in consciousness are based on what we have already seen. He believed that humanshave the innate power of reason, and the innate faculty of organizing things into categories and classes,but no innate ideas. No Innate IdeasPlato believed that the idea chicken came before the sensory worlds chicken, but Aristotle refusedthis theory. The form of chicken is eternal, but every chicken flows, meaning it cant live forever. Theform chicken is made up of a chickens characteristics, such as cackling and laying eggs. Therefore the formcan not exist on its own, and can not be separated from any chicken. According to Aristotle, reality consists of separate things that constitute a unity of form andsubstance, which is what the object is made of. A chickens substance, for example, would be its feathers,flesh, beak, etc. Unlike form, substance still remains when a creature dies, and it as well has the potentialto realize a specific form. Every change in nature is transformation from potential to the actual. For eggsample, a chickensegg has the potentiality to become a chicken, or to realise its form. In the case of nonliving organisms, anexample to think about is that a stones form is to fall to the ground. The Final Cause Aristotle believed that there were four causes for the occurrences of life: the material cause, theefficient cause, the formal cause, and the final cause. When rain falls, the material cause is that themoisture is there when the air is cooling. The efficient cause is that moisture cools, the formal cause is theform of water is to fall, and the final cause is that so that plants can grow. Natures ScaleE.g. Cats: LivingPlantsCreaturesAnimals HumansIn Aristotles mind, there were no sharp boundaries in the natural world. His scale ranked livingorganisms from plants and simple animals to complicated animals, with man at the top of the scale,because man can grow and absorb food like plants and animals can, but also has specific human traits (i.e.,he can think rationally). WomenAnother difference between Plato and Aristotle was that Aristotle believed that women wereunfinished versions of man, and that children inherited solely the males characteristics because males areactive in reproduction and females are passive. Aristotle believed that females were like the soil for thehuman seed to grow inthat man provided form, and woman substance. Unfortunately, Aristotlesviews held sway during the Middle Ages, which was a major reason for the sexism of the time. EthicsThe only way to achieve happiness in Aristotles mind was to use all of ones capabilities. Therewere three forms of happiness:1) A life of pleasure and enjoyment. 2) A life as a free and responsible citizen. 3) A life as a thinker and a philosopher. Aristotle rejected an imbalance of these, and said that one must have all three to be truly happy. He alsoinsisted that this sort of balance was important in human relationships, and advocated what he called theGolden Mean. This meant finding a middle ground for everything; for example, not to be cowardly orrash, but courageous. PoliticsAristotle claimed that man was a political animal, and that there were three good forms ofconstitution: monarchy (one head of state), aristocracy (a larger or smaller group of leaders), and polity(democracy). However, there were conditions with each of these suggestions: a monarchy must not becometyranny, where the leader governs to his own advantage; an aristocracy must not become anoligarchy, where a select few are in charge; and a democracy must not become a mob rule.