Auditors Role in Enron - 2533 Words

MANAGERIAL ACCOUNTING ASSIGNMENT NO1 STUDENT:0705080/1 QUESTION 1 (B) Evaluate the auditors role in the certification of the financial statements and conclude whether its work is effective in preventing major scandals on the lines of Enron and Worldcom. 1.0 ABSTRACT 2.0 ENRON-CORPORATE FIASCOS 3.0 HOW DID THE AUDITORS FAIL TO CATCH PROBLEMS AT ENRON? 4.0 HOW TO PREVENT RECURRENCE OF ENRON? 5.0 NEW RESPONSIBILITIES OF AUDITORS ACCORDING TO SARBANES-OXLEY ACT 2002 6.0 CONCLUSION 7.0 REFERENCES 1.0 ABSTRACT The responsibility of an auditor is to express an opinion on the financial statements based on his audit which means verification or check in accordance with International Standards on Auditing. These standards require†¦show more content†¦First, auditors may either fail to detect a material error or misstatement, or, having detected an error, fail to recognize it, because they have carried out a substandard audit – i.e. the auditors are incompetent. Second, auditors may identify an error or misstatement and fail to report it or get the directors to put it right – i.e. the auditors lack independence. Third, directors may deliberately deceive auditors. In cases of deliberate deception, auditors may not be held responsible for failure to detect a problem. Andersen’s audit failed due to unconscious bias which is the propensity to interpret data in accordance with our desires. Biased judgments, rather than criminal collusion between auditors and management often cause audit failures. The so called â€Å"integrated audit† that Andersen employed at Enron where it sought to combine its role as external auditor with internal auditing, the process whereby an enterprise checks its own books. Internal audits seek to ensure that an enterprise follows its procedures, safeguards its assets, and operates efficiently. Management has historically selected the accounting principles that an enterprise uses to prepare its financial statements. An audit essentially endorses or rejects the accounting choices that management has made. The auditors have a large part of responsibility while endorsing or rejecting the accounting principles. 4.0 HOW TO PREVENT RECURRENCE OF ENRON? Implementation ofShow MoreRelatedThe Enron Scandal Of Enron1052 Words   |  5 PagesPublic accounting firms have long played a role in convincing the public the authenticity of the corporates’ financial statements. However, the public started to become skeptical about accountants’ reliability when the Enron scandal occurred. In October 2001, SEC started an investigation against Enron for improper accounting practice. According Sherron S. Watkins, the former vice president for corporate development, Enron failed to disclose complicated deals with its partnerships to inflate the stockRead MoreCase 4.1 Enron and Arthur Anderson LLP1090 Words   |  5 Pagesï » ¿Enron Corporation and Andersen, LLP Accounting Fraud and Auditor Legal Liability 1 - What were the business risks Enron faced, and how did those risks increase the likelihood of material misstatements in Enron’s financial statements? The business risks that Enron faced included foreign currency risks and price instability, which is common for the energy industry. In addition, Enron faced pressure to perform well so that the stock price would rise. These risks increasedRead MoreImportance of External Auditors1110 Words   |  5 Pagesof this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality ofRead MoreEnron : The Collapse Of Enron1644 Words   |  7 PagesEnron was once one of the world s leading energy companies by reshaping the way natural gas and electricity were bought and sold. They filed the largest corporate bankruptcy in American history in 2001. Enron Corporation was an energy company running out of Texas that was started when two companies, Houston Natural Gas and InterNort h, merged together in 1985. By 1992, Enron became the largest seller of natural gas in North America and began to offer other services like wholesaler trading and riskRead MoreEnron Scandal: Who Are Responsible for Enron ¡Ã‚ ¦S Bankruptcy847 Words   |  4 PagesEnron was once one of the worlds leading electricity, natural gas, pulp, paper and communications companies. However, in December 2, 2001, Enron suddenly filed for bankruptcy. During the ten years before Enron ¡Ã‚ ¦s went bankrupt, Enron ¡Ã‚ ¦s management had started transferring Enron ¡Ã‚ ¦s funding to personal accounts and made fake balance sheets, which provided investors information about how this company goes. (Gibney, 2005) These illegal actions, performed by certain individuals, finally led Enron toRead MoreEnron And The Enron Scandal847 Words   |  4 PagesThe Enron scandal, discovered in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based mostly in Hou ston, Texas, and also the dissolution of Arthur Andersen, that was one amongst the 5 largest audit and accounting partnerships within the world. Additionally, to being the most important bankruptcy reorganization in American history at that point, Enron without doubt is the biggest audit failure. it s ever the foremost notable company within theRead MoreAuditor’s Role: The Importance to Overcome Ethical Dilemmas Essay example1030 Words   |  5 Pagessubjects of further review to understand that an auditor might encounter ethical dilemmas, if independence and objectivity are not part of the audit process. An auditor should keep objectivity at all times. Maire Loughran, a Certified Public Accountant and University Professor, explains â€Å"objectivity means the ability to look at facts the client presents, and reviews them with no preconceived notions or prejudices† (52). In other words an auditor has to exercise his ability to review informationRead MoreTaking a Look at the Enron Scandal1270 Words   |  5 Pagesreal cash flow had not come to the company yet. Moreover, cause when Enron come to the long term contract, they would assumed that there were long term declines in spot prices (Page 6, journal of economics), there would be the risk of loss if there were the increase in the price of gas in the future and it does not recognize in the financial statement; therefore, to make the income statement made more sense in economics term, Enron had created an accounting structure that help the company to stableRead MoreAccountant Independence Essay example767 Words   |  4 Pagesaccountant independence is very similar to being an independent auditor. When it comes to auditor independence, it refers to the independence of the internal auditor or the external auditor from parties that may have a financial interest in the business being audited. The initial concept of auditor independence was developed in the 19th century, which primarily originated with the British. In that era, British investors didn’t allow auditors to work in the bus inesses that they audited. The initial conceptRead MoreEnron Scandal Of Enron Corporation Essay1145 Words   |  5 PagesIntroduction Enron scandal which aroused in 2001 was one of the most famous events in the area of fraud audit. As the auditor company of Enron, Arthur Andersen failed to prepare true and fair auditing reports. They both suffered lethal loss at that time. The following paragraphs will discuss this fraud event, including the organization history, the organization’s event, the fraud issue in the event, the consequence of the main stakeholders, auditors in the event and their roles, and the current situation

Intercultural Communication In Hotel Rwanda - 726 Words

The definition of Intercultural communication is â€Å"a method of communication that aims to share information across different cultures and social groups.† The challenges that may occur during this type of communication come from misunderstanding individual’s communication from a different culture other than their own. Each individual from their respective culture encodes and encodes messages verbally and non-verbally. Many barriers can be put up when trying to initiate intercultural communication. In this paper, I will discuss the film Hotel Rwanda while examining the different intercultural barriers and diversity issues that are presented within the film. Throughout the film, just about all the decisions or action made by a character uses†¦show more content†¦His bravery and poise keeps the refugee’s safe, but Paul was helpless when the United Nations withdrew from protecting the area. He pleaded but could not keep the UN’s presence there, b ut does not give up hope. The privilege and disadvantage dialectic is established throughout the film, providing the main character with hope that he can protect the refugees, but also hopelessness when he is abandoned by allied forces. The second thing that stood out to me was the dialectic of history past, present, and future. These ideal shapes the plot of the movie, creating tensions and civil war between the two battling cultures. The past between the two cultures creates uneasiness, leading to an unbalance of power and eventually civil war where an estimated 800,000 people were killed. Hotel Rwanda describes the history between the two cultures, and how it came to be that the Tutsi had control of the state rather than the Hutu. The struggles for the Tutsi during the genocide were enormous, and due to the little aid from other allied states, the cultures were clashing on their own without help from other states. I believe that this had an effect on the Colonel, although he did not feel this way. At the moment, he was representing his country, and he was ashamed of these beliefs. The best strategy for this barrier, I believe, is becoming other-oriented. If there was any consideration for the people of Rwanda, or if people took the time to emphasize with what was going on, theShow MoreRelatedRole of Media in Tourism9761 Words   |  40 Pages   The   Role   of   Media   Communications   in   Developing   Tourism   Policy   and   Cross†Cultural   Communication   for   Peace,   Security   for   Sustainable  Tourism  Industry  in  Africa               Author:  Wilson  Okaka  Ã‚   Lecturer  (Communications  and  Environment  Programmes)   Kyambogo  University  Kampala†(Uganda)   Telephones:  [Office:  256†414†3771775]  Ã¢â‚¬ Ã‚  [Mobile:  256†078†2588846]   Email:  nupap2000@yahoo.com                  Paper  Presented  at  the  4th  International  Institute  of  Peace  through   Tourism  (IIPT)  African  Conference  on  Peace  through  Tourism  at

3 Common Problems with Internship Programs Free Essays

3 Common Problems with Internship Programs Suggested Solutions Many internships programs are plagued with problems. From not planning correctly to sometimes leaving an intern in the dark, a lot of companies do not take proactive measures to ensure the intern has a meaningful experience. However, this not only makes the internship unfulfilling, it may also leave a bad taste in the intern’s mouth, which could lead to company bashing or deterring others from applying in the future. We will write a custom essay sample on 3 Common Problems with Internship Programs or any similar topic only for you Order Now The good news is that many failing internship programs can be salvaged. Here are three common problems and how to fix them: The internship is one-sided. Many interns commit to an internship with the promise of creating relationships with the members of the organization, as well as establishing contacts through networking. However, some interns find that programs are very one-sided and benefits like having a mentor are almost non-existent. However, the whole point of an internship is to learn from more experienced professionals. So, you may want to think about spending more time mentoring your intern by asking them what you can do to assist them with their goals and helping them grow from intern to young professional. Think about creating an internship plan, meeting with your intern on a regular basis, and keeping them informed on company news. The more feedback you give them, the more your intern learns. Tasks are unrelated or irrelevant. We’ve all heard the internship stereotypes, like coffee runner, cabinet filer, or document copier. While these tasks obviously need to be done by someone, it probably shouldn’t be the highlight of an internship program. For example, if you work in an architecture firm and need an intern, their tasks could include things like assisting in creating blueprints, suggesting additions to site planning, or helping to manage a client deal. These are real experiences. After all, you’re only discrediting your image and the image of your company if you continue to dish out menial tasks. If you’re not going have a meaningful internship program, what’s the point of even having one? The â€Å"just an intern† syndrome. Many of us have had the â€Å"just an intern† syndrome. It happens when the intern doesn’t feel like a real part of the team or a real asset, so they glide through the program with little to no experience. However, this is not just a waste of time for the intern (and frankly, for your company). It could lower your rate of production and the quality of work since there may not be an incentive, either through pay or appreciation. So, what can you do to flip the â€Å"just an intern† mentality? How about giving your intern real responsibilities that will contribute to the well-being of your team and the organization? It’s not as crazy as it sounds. By giving someone an actual reason to perform at their highest level, you could make them feel important, thus increasing the chances of efficiency and putting their work to a higher standard. Ultimately it comes down to appreciation. We all want to feel like we positively contributed to a job and were credited for it. Make sure your internship program reflects this as well. Sources: www. internadvocate. com How to cite 3 Common Problems with Internship Programs, Papers

Slaughterhouse Five and Hamlet free essay sample

The delirium that takes place throughout their adventures continuously brings them one step closer to finding the true meaning of life. From the very beginning, the Play shows that Hamlet is not living the life that everyone would expect a prince to live. His father is dead and his uncle conquered Hamlet’s throne, while declaring Gertrude as his property. Also Hamlet and his love Ophelia are told they cannot be together, which truly initiates the Play. Hamlet doesn’t understand why his life turned out this way. He is often confused and doesn’t know why his life seems to be ‘stuck’ in this horrific cycle of unfortunate events, or if there is more to his life, or a greater purpose. â€Å"To be or not to Ibrahim 2 be, that is the question† (3. 1. 57) . This is indeed the question! Is his life meant to go onto the path of suicide? Does existence offer happiness or is death a more enticing option? After speaking with the ghost that is his father’s spirit; he begins to slowly understand that he does have a purpose. That realization is completely defined by the killing of Claudius. As Hamlet pretends to be insane, it helps him see more clearly how people act around him. It also allowed Hamlet to verify Claudius’s love for him as non genuine. Hamlet fakes being ill-minded to enable him to revenge his father’s death. A genius defence would be his obvious insanity. However, Hamlet is very aware of his surroundings and clearly figures out all the pieces to the dilemma. â€Å" I am but mad north-north west: when the wind is southerly I know a hawk from a handsaw†(2. 2:351-352) this clearly shows that he is pretending to be mad, and that he is extremely observant as to what is going on around im and his uncle Claudius. Similarly, everyone who knows Billy Pilgrim thinks he is mad. The reason why people have this assumption is because he claims that he travels through time involuntarily. Billy has claimed that he also travelled to another planet with aliens. The majority of Billy’s travels take place in his time of struggle and heartache. Fo r example, he keeps on going back to WWII; mostly the bombing of Dresden, and often the end of the world. Billy always sees the end of the world ending in an exact way. The only moments in which Billy is actually progressing with his life is when he is travelling. Billy’s Journey in the search of the meaning of life starts and ends with his time travel, in other words his insanity, much like Hamlet’s. â€Å"We know how the world ends and it has nothing to do with Earth, except that it gets wiped out too† (01:26:20) this quote explains that he has seen the end of the world and that the aliens from planet Tralfamadore have told him why and how it happens. The bombing of Dresden is a significant event which makes Ibrahim 3 him insane. I was there, I was there in Dresden† (7:5:13) this was said in the hospital bed when the crazy man beside him was talking about the bombing and under Billy’s breathe he said â€Å" I was there, I was there in Dresden† †(7:5:14) the man beside him thought he was crazy and paid no attention to Billy. However in reality he re-lived it hundreds of times. The most challenging mome nt in Hamlets life was the main purpose in his search of the meaning of life, and then it finally hits him. â€Å" Haste me know’t, that I with wings as swift as meditation or the thoughts of love may sweep to my revenge† (1. 5:29-31) This was an eye-opener for Hamlet. He knows that it doesn’t matter if he lives or dies, as long as the revenge of his father’s death is accomplished. It is his absolute definition of happiness, whether he is alive or death. His father’s death must be avenged. His purpose was so strong that he dedicated the rest of his life to achieve his goal; he did not care how long it took him to succeed, because once he did it, he could rest and die feeling fulfilled. Hamlet created a plan and a strong strategy to kill Claudius without being killed afterward. He knew that if he pretended to be ill minded, everyone would excuse what he has done. However he realises that getting close enough to Claudius alone, was beginning to seem impossible. â€Å"But I am pigeon-livered and lack gall to make oppression bitter, or ere this I should have fatted all the region kites with this slave’s offal. Bloody, bawdy villain! Remorseless, treacherous, lecherous, kindless villain! O vengeance! Why, what an ass am I! This is most brave, That I, the son of a dear father murdered, Prompted to my revenge by heaven and hell, Must, like a whore, unpack my heart with words And fall a-cursing like a very drab, A scullion! Ibrahim 4 Fie upon’t, foh! About, my brain. —Hum, I have heard that guilty creatures sitting at a play have, by the very cunning of the scene, been struck so to the soul that presently they have proclaimed their malefactions. For murder, though it have no tongue, will speak with most miraculous organ. I’ll have these players play something like the murder of my father before mine uncle. I’ll observe his looks. I’ll tent him to the quick. If he do blench, I know my course. The spirit that I have seen† (2. 2:537-560) this quote demonstrates his passion and dedication to his mission of killing Claudius to achieve happiness. Billy Pilgrims purpose in finding the meaning of life is figuring out what everything he sees through time travel means. Billy Pilgrim has to understand why he sees his life and death many times, and why he sees the bombing of Dresden the most. â€Å"Billy Pilgrim has come unstuck in time†(2. 23:1) this simply means he has no control over where he travels; Billy opens a door in 1955 and exits another door into 1941. Billy needs to figure out why those years are so significant. It all begins to hit Billy when he says â€Å"And even if the wars didn’t keep coming like glaciers, there would still be plain old death†(1. ) I believe that Billy found his search for the meaning of life at that moment! He figures out that everything dies including the world, even the Universe. Nothing can prevent the events of death and destruction. In one way or another, it will happen. Billy Pilgrim discovered the meaning of life through time travel. Time travel allowed him to realize and experience much of his revelations. It explains why he would see an event over and over again Ibrahim 5 Hamlet and Billy Pilgrim have different types of insanities. For example Hamlet’s insanity is not real; he pretends to be insane in order to kill his uncle and get away with it. Though this be madness, yet there is method in’t† Although Hamlets insanity was an act, he did lose a lot. He lost his mother, his uncle, his friend, the love of his life and he lost his own life. However, all of this was his purpose and it reached an end, and the end was the meaning of life for Hamlet. â€Å"For Hamlet and the trifling of his favor, hold it a fashion and a toy in blood, a violet in the youth of primy nature, forward, not permanent, sweet, not lasting, the perfume and suppliance of a minute. No more†(1. 3:5-10) Billy Pilgrim is completely sane; however people just do not believe him. Billy says to himself â€Å"it’s true, it’s all true, every minute of it† (2. 37) This proves to me that he is not lying to anybody, it shows that he truly believes in what happened. Billy learned a lot from the Tralfamdorians, most of all he that â€Å"A dead person is in bad condition at that particular moment†(2. 34) We are a cycle of living things until the universe ends, which he sees throughout his time-travel. Billy Pilgrim is a man who coped with the hardest times of his life by learning to escape through his excursions in made belief travel. He has experienced WWII thousands of times; he is the only person who has ever done that. That is truly remarkable and inspiring, especially to do that with an open mind each time. In retrospect, the meaning of life was different for both these characters, however they both accomplished the search through insanity and through something greater than themselves. The search for the meaning of life becomes quite difficult for Hamlet and Billy Pilgrim. They both experience horrific adventures in their lives along with the insanity that has been magnetic Ibrahim 6 to their personalities. The delirium that takes place throughout their adventures continuously brings them one step closer to finding the meaning of life. This has proved the journey of the two characters, and has shown the world that insanity is not such a bad alternative to sanity. It may even alleviate pain and offer happiness and purpose. Ibrahim 7 WORK CITED Shakespeare, William. Hamlet. Spark Publishing, . Shakespeare side by side Plain english) (3. 1:57) (2. 2:351-52) (1. 5:29-31) (2. 2:537-60) (1. 3:5-10) VONNEGUT,KURT. Slaughterhouse five. New York, New York: Dell Publishing, 1969. A Division of Random House Inc. (01:26:20) (2. 34) (7. 5:13)(7. 5:14) (2. 23:1) (1. 4) (2. 37)

Cognitive Development Essays (1105 words) - Cognitive Psychology

Cognitive Development Cognitive development is very crucial in the development of a child. A friend of mine, Julie just recently had a perfect baby boy. Since Julie found out she was pregnant she has been reading book after book, each book that she has read talks about cognitive development, but never really explains what cognitive development is or how to improve ones development. Julie has asked me to help her to understand what she can do to give Hunter the best optimal cognitive development though out his life. I'm going to start by telling Julie exactly what cognitive development is, the four stages of cognitive development and what kinds of activities to do together as he gets older. I believe that this will help Hunter develop into a very smart child he most likely will be ahead of his classmate's in school and will excel through out his life. Cognitive development is the growth in children's ways of thinking about and interacting with their environment. Young children initially learn about the world through active, physical exploration and then gradually develop the ability to think symbolically and logically about their experiences. Children are curious explorers, and their cognitive development involves learning new concepts and testing a variety of ideas. A biologist, known as Piaget was interested in how an organism adapted to their environment, especially behavior adaptation to the environment. Piaget hypothesized that infants are born with schemes operating at birth that he called reflexes. However, in human beings an infant uses these reflexes to adapt to the environment, these reflexes are quickly replaced with constructed schemes. Piaget described two processes used by the individual in its attempt to adapt: assimilation and accommodation. Both of these processes are used though out life as the person increasingly adapts to the environment in a more complex manner. Assimilation is the process of using the environment so that it can be placed in cognitive structures. Accommodation is the process of changing cognitive structures in order to accept something from the environment. Both processes are used simultaneously and alternately throughout life. In his work Piaget identified the child's four stages of mental growth. In the sen sorimotor stage, occurring from birth to age 2, the child is concerned with gaining motor control and learning about physical objects. In the preoperational stage, from ages 2 to 7, the child is preoccupied with verbal skills. At this point the child can name objects and reason intuitively. In the concrete operational stage, from ages 7 to 12, the child begins to deal with abstract concepts such as numbers and relationships. Finally, in the formal operational stage, ages 12 to 15, the child begins to reason logically and systematically. All of these four stages are very important to the developmental growth of a child. There are many exercises and games that you or your spouse can do with your child to improve the cognitive development of children. Smells: Infant Activity (up to 15 months) Save old spices containers with shaker tops and put a variety of smelly materials into these. Break up pieces of orange peel, save some whole cloves, soak a cotton ball in perfume, and break up some onion or garlic. Put each smell item in a separate container. Label each and talk about the type of smell. Be sure to name each object several times and encourage infants to try to vocalize sounds. Model smelling the different containers and encourage infants to try to smell each container. Let them explore the containers by touching and manipulating them. Oh, smell this one. This is an orange peel. It smells fruity! This perfume has a strong smell. Do you smell it? It smells like a flower. This is an onion. It has a really strong smell. It makes my eyes water. This activity also helps children develop communication skills in receptive language and perceptual motor skills in eye-hand coordination. Buried Treasure: Toddler Activity (15 months to 3 years) Fill a large plastic tub with sand. Add shells, plastic eggs, wooden cubes, large plastic keys, and wooden animal figures. Provide a muffin tin to hold items after they are found. Let children take turns hunting through the sand to find the treasure and then place it

Abc costing v traditional costing The WritePass Journal

Abc costing v traditional costing Introduction Abc costing v traditional costing IntroductionBibliographyRelated Introduction There are different stages that a firm must go through to implement ABC into their business, these are defined in appendix one. Under Traditional Cost Accounting (TCA) there is a simple method by which   to implement allocation of overhead for the purpose of arbitrarily assigning indirect costs (overhead) to cost objects (products or services).   When using TCA, the sum of a company’s overhead is allocated among products based on some sort of volume measure (Proctor, 2006). In TCA it is assumed that there is a direct relationship between overhead and the volume of output based on the volume measure. The different stages of implementing a TCA method are demonstrated in appendix two. TCA is now outsourced in most organizations. This is due to the effect that product costing serves an important function in an organization and also helps in achieving goals and to implement some principles like setting targets for competitors, growth and improvement, coordination between units and processes and measurement and control.   ABC has become an increasingly popular process for which many organizations are replacing traditional methods that no longer meet their demands.   As Reinstein and Bayou (1997), argue the switch from the traditional system to an activity-based costing (ABC) system opens new avenues for eliminating waste and reducing costs. Implementation of ABC provides management with a different point of view on the profitability of products and services, providing insight into pricing. Middle management and technical performing organizations are involved in the line item reporting provided within the ABC system, enabling management to achieve more responsibility of reported information throughout all levels of the organization. By understanding how resources are transformed into products or services, and by focusing on the cost of activities, ABC helps an organization and its managers to obtain a greater understanding of how costs behave and which activities create significant amounts of cost. Firms can then begin to control their costs based on tangible activities rather than relatively uninformative general ledger or cost centre reports. Stevenson Barnes (1996) stated that ABC can more realistically model the cost structure facing businesses today. As agreed by many other authors, ABC is highly accredited to business’ in society today than the TCA due to competitive environment and advances in technology (Proctor, 2006). The improved accuracy within ABC is accomplished by tracing costs to products through activities. Essentially, an attempt is made to treat all costs as variable, recognizing that all costs vary with something, whether it is production volume or some non-production volume related factor. Both manufacturing costs and selling are traced to products in an ABC system. In traditional full absorption costing indirect manufacturing costs are allocated to products on the basis of a production volume related measurement such as direct labour hours. Furthermore the significant differences between traditional systems and activity based systems are: How the indirect costs are assigned and which costs are assigned to products. The main differences are also demonstrated in the diagram in appendix three. Most traditional costing systems utilize a single basis, (e.g. direct labour) to distribute the indirect costs to all products and services. This method of allocating indirect costs commonly results in erroneous cost data. Often products which have high volume are over costed. Likewise, the cost of lower volume products are often understated, and many of the indirect costs of these products are overlooked. Rather than relying on a single basis to distribute costs, ABC assigns costs to activities and products based on how the costs (resources) are actually consumed by the process or product. By moving away from traditional cost allocation methods and using improved ABC methods of tracing and a ssignment, ABC provides managers with a clearer picture of cost of processes and the profitability of customers and products. As Helberg et al. (1994) states ABC provides answers that can be crucial to the survival of the company, so it is imperative to make sure the right decisions are made. ABC differs from TCA and is advantageous as overhead costs are broken down into activities that cause the costs. The determined results can help management implement a more thorough understanding of product costs and they should be able to see the relationship between product complexity, product volume and product cost. This would be vital information for pricing decisions and profitability strategies. Traditional methods would not be able to give a firm this data which could give a sustainable competitive advantage. Activity Based Costing accurately predicts costs, profits, and resource requirements associated with changes in production volumes, organizational structure, and resource costs for the present and the future. Where in Traditional Cost Accounting, although future costs are somewhat predicted based on the current allocation of costs, the accuracy of those predictions is dependent upon the strength of the correlation between the selected cost driver as it relates to the actual usage of overhead. If a company is to rely on such predictions for future product costing it could hinder business performance rapidly.   This is also stated by Glynn et al. (2003) as he denotes the total cost figures can understate the ‘real’ cost and these costs will not be sufficiently accurate or reliable for use in forward decision making.   Activity-based costing requires a much more detailed breakdown of costs into activities that cause costs. Under TCA the drawback of assigning costs based on a predetermined overhead rate is the assumption that the selected cost driver is what drives a large percentage of the costs in an organization.   In most organizations, the re is no one single cost driver, rather a multitude of cost drivers.   A company should implement ABC only if it thinks the benefit from improved management decisions will outweigh the cost of establishing and maintaining the new cost system. Furthermore, Activity Based Costing is not appropriate for every company. Activity Based Costing is an alternative to the traditional way of accounting. ABC is a costing model that assigns costs to products and services (cost drivers), based on the number of events or transactions that are taking place in the process of providing a product or service. As a result, Activity Based Management (ABM) can support managers to see how shareholder value can be maximized and how corporate performance can be improved. Proctor (2006) defines ABM as a collection of actions performed by managers based on the information produced by an ABC system. In order to manage costs, a manager should focus on the activities that give rise to such costs. Accordingly, given the activity focus of ABC, managers should implement ABC systems in order to facilitate financial management. The goal of ABM is to improve the value received by customers and, in doing so, to improve profits which will be advantageous for the organization in the long run.   The key to ABM success is distinguish ing between value-added costs and non-value-added costs. A value-added cost is the cost of an activity that cannot be eliminated without affecting a product’s value to the customer. In contrast, a non-value-added cost is the cost of an activity that can be eliminated without diminishing value. Some value-added costs are always necessary, as long as the activity that drives such costs is performed efficiently. However, non-value-added costs should always be minimized because they are assumed to be unnecessary. Oftentimes, such non-value activities can be reduced or eliminated by careful redesign of the plant layout and the production process. This will help benefit the organization for the future as costs can be reduced in one area of the firm and placed into another area with the general objective to help boost sales levels. Using a cost management system has helped enterprises in answering the market need for better quality products at competitive prices. Analyzing the custo mer and product profitability, the ABC method has continued effectively for the top management’s decision making process. With ABM firms are able to improve their efficiency and reduce the cost without sacrificing the value for the customer. This has also enabled firms to model the impact of cost reduction and subsequently confirm the savings achieved.   Beheshti (2004) denotes that ABM should not be viewed as the exclusive property of any particular department but should be integrated into the corporate strategy and culture. This will help any particular department operate fully with the rest of the business to help achieve goals and objectives set. ABM is a dynamic method for continuous improvement and firms can have a built in competitive cost advantage so it can continuously add value to both its stakeholders and customers. Major (2007) states that changes within the last couple of decades have led to a new competitive business environment.   It is these different cha nges that have led to many firms implementing the use of ABM to acquire and maintain a competitive advantage within the market. The successful implementation of a cost management system will allow a firm to identify its most profitable customers, products and channels. In turn, this will allow them to acquire the necessary measures to attain and secure a competitive advantage from its most productive lines of the business. It will also enable a firm to identify the least profitable in which the managers will be able to direct their decisions towards reversing the outcome to a profitable one. Activity Based management can be superior in how a business performs within the competitive environment as it can have a predominant effect on how a business facilitates their marketing mix. With a successful mix containing Place, Promotion, Product and Price the executives of any business can expedite the different elements in accordance with how the business is performing. By offering the prod uct with the right combination of the four Ps marketers can improve their results and marketing effectiveness. Allocation of overhead costs to a product or job is an important part of the accounting process in an organization.   It also plays into multiple decisions outside of the accounting department, including work flow design, allocation of resources, and product and marketing mixes.   It is important to take into consideration the benefits offered by Activity Based Costing as well as the potential drawbacks.   Although Activity Based Costing is not meant for every organization, the overall benefit of the system should be considered. The implementation of activity based management within any organization is generally perceived to be advantageous but care must be placed to notice any potential limitations. The managers of any business must be effective with applying an activity based costing system as it can be timely and costing so it is imperative to ensure applying ABC will be beneficial for the firm in the future. Bibliography Atrill, P., McLaney, E. (2002) â€Å"Management Accounting for Non-specialists† Pearson Education Beheshti, H. (2004) â€Å"Gaining and sustaining competitive advantage with activity based cost management system† Industrial Management and Data Systems, Vol: 104 No: 5, Pg: 377 – 383, MCB UP – Emerald Publishing Group CIMA Insider – Technical: Absorption Costing (2002) Retrieved from: cimaglobal.com/cps/rde/xbcr/SID-0AAAC544-88FBDBAA/live/MgmtAccFundamentals.pdf Glynn, J., Murphy, M., Perrin, J., Abraham, A. (2003) â€Å"Accounting for Managers (Third Edition)† Thomson Learning Helberg, C., Galletly, J., Bicheno J. (1994) â€Å"Simulating Activity-Based Costing† Industrial Management and Data System, Vol: 94 No: 9, Pg: 3 8 , MCB Press – Emerald Publishing Group Johnson, H., Kaplan, R. (1991) â€Å"The Rise and fall of Management Accounting† Harvard Business School Press http://books.google.com/books?id=bpcpVLTl4boCprintsec=frontcover Major, M. (2007) â€Å"Activity-based Costing and Management: A critical review.† In T. Hopper, D. Northcott R. Scapens (Eds.), Issues in Management Accounting, Pg: 155 – 174, 3rd Edition, Harlow – FT Prentice Hall, Retrieved from University of Chester faculty of Education Website: http://ganymede.chester.ac.uk.voyager.chester.ac.uk/view.php?title_id=315545 Proctor, R. (2006) â€Å"Management Accounting for Business Decisions (Second Edition)† Pearson Education Reinstein, A., Bayou, E. (1997) â€Å"Product Costing Continuum for Managerial Decisions† Managing Auditing Journal, Vol: 12 No: 9, Pg: 490 – 497, MCB UP – Emerald Publishing Group Stevenson, T., Barnes, F. (1996) â€Å"Activitybased costing: Beyond the smoke and mirrors† Business Source Elite, Vol: 18 No: 1, Pg: 25, Harvard Business Review

The Role of the Project Manager Literature review

The Role of the Project Manager - Literature review Example Most often, the project manager is responsible for fulfilling these tasks, but sometimes higher level management or purchasing departments play significant roles in the process. (Mindtools, 2008, pg. 1). According to EPIQ (2008), the process of procurement management provides some very valuable benefits to organizations. One of the most prominent benefits is reduced costs on the part of the company. Another highly praised benefit is time savings. Yet another is the ability of efficient procurement management to reduce redundancies in job tasks and positions. If an organization chooses to adopt a procurement management system, certain job tasks become automated, producing quicker and smoother results. Centralization is also an important feature of procurement management, so this helps to eliminate redundancies throughout the organization as well. Eliminating redundant jobs often opens up equipment and space for the organization, thereby allowing it to be used for better and more efficient purposes or be disposed of for extra income. Â  Projects are infiltrated with multiple relationships occurring amongst the different parties involved in the scenario, and the project manager must continuously monitor those relationships. These relationships involve parties such as clients, employees, top management officials, or organization partners. Essentially, the project manager is at the very center of the project. (2007, pg. 1) The scenario states that I have performed various procurement tasks in the past, hence me being chosen as the project manager. First of all, I have a great deal of experience with the system that is being upgraded. Secondly, I have managed previous upgrade projects for the company. For this particular package, I have also performed roles as a business analyst, developer, and tester for individual and related projects in the past. If the PM has not completed those activities, who in the organization hasThis particular project is expected to affect the billing and customer service departments the most. The idea is to reduce the time it takes to collect accounts receivable, reduce costs, and improve overall customer satisfaction. The billing staff has no proficiency with web applications as they will be seeing with the upgrade, but the customer service staff does.