Religion and Identity Essay

The question often arrived what is religion? There are more than one answer to this depending on one’s culture, identity, ethics and beliefs. Religion can be found in different cultures and throughout the whole period of human history. There is evidence that shows signs of religion such as animal spirits in art and human burials that suggest the belief in life after death. There have been many different answers and definition to what religion is (Van Voorst, 2013). According to Robert E. Van Voorst (2013), religion is â€Å"Pattern of beliefs and practices that expresses and enacts what a community regards as sacred and/or ultimate about life (pg.5). In addition to that, there is the separation of church and state. In America, the right to freedom of religion is very central to the American democracy that it was preserved in the First Amendment to the Constitution along with other rights such as freedom of speech and freedom of press. The country’s founders restrict the separation of church and state. This is due to the prohibition against government regulation or endorsement of religion. According to American Civil Liberties Union of Florida (2012), the standard of separation has been regularly tested. In early America, even after church establishment ended, some state legislators sought to revive the compulsory taxation of citizens to support religious institutions. In this century, public schools were once required to teach the biblical version of the earth’s and humanity’s creation, while the scientific theory of evolution was prohibited. Throughout our history, sectarian advocates have tried to inject religious exercises, such as daily prayer, into the public schools. At times, religious minorities, including members of â€Å"cults,† have been discriminated against because of their beliefs. And today, many citizens in many communities disagree about whether a model of the infant Jesus in the manger, which officially promotes certain religious beliefs over others, should be displayed on the steps of City Hall. The courts must frequently consider where to draw the line that separates church and state ( ¶5). Religion is one of our most critical tradition and constitutional rights and must stand against anything that would challenge the standard of separation, which protects that freedom. Reid Temple African Methodist Episcopal Church was the group that I visited. Though it is not my own religious practice, it qualifies as a religion. Driving up to the church there is a sign that has the name of the church boldly written in LED lights. The welcome message display in red across the board says â€Å"All Are Welcome†. Inside of Reid Temple church they have a Cross as their symbol posted high where all can see. The service was nice with the choir singing praises to God and special prayer request were taken. After the service, I spoke with the Senior Pastor about his church and what exactly do they believe in. I was informed that their slogan is â€Å"Aiming to Please through the 5 E’s. This came from II Corinthians 5:9 which states â€Å"So whether at home or away, we make our aim to please Him. (RSV). The 5 E’s were described to me as â€Å"Evangelism which is sowing the seed of God’s Word in the hearts of all people. Empowerment which is bestowing love and guidance on believers to disciple them in fulfilling their purpose. Education which is knowing the will of God through study and obedience of His Word. Economics which is flowing in financial prosperity according to God’s wealth principles and Expansion which is growing in all ministry areas to reach the growing harvest of souls† ( Washington, L. Personal interview January 13, 2013). The cross is a reminder of their pledge and it also reminds them that Jesus died for their sins and to Him all praise is given. Buddhism also has a symbol such as the Dharmachakra which is the wheel of the law. The eight spokes on the wheel represents the eightfold path. The wheel is one of the most important Buddhist symbols because it symbolizes the teachings of Buddha. According to Thames & Hudson (2004), The wheel’s motion is a metaphor for the rapid spiritual change engendered by the teachings of the Buddha: the Buddha’s first discourse at the Deer Park in Sarnath is known as the â€Å"first turning of the wheel of dharma.† His subsequent discourses at Rajgir and Shravasti are known as the â€Å"second and third turnings of the wheel of dharma.† The eight spokes of the wheel symbolize the Noble Eightfold Path set out by the Buddha in his teachings. The wheel also represents the endless cycle of samsara, or rebirth, which can only be escaped by means of the Buddha’s teachings. And some Buddhists regard the the wheel’s three basic parts as symbols of the â€Å"three trainings† in Buddhist practice: The hub symbolizes moral discipline, which stabilizes the mind. The spokes (usually there are eight) represent wisdom which is applied to defeat ignorance. The rim represents training in concentration, which holds everything else together ( ¶ 2 & 3). In the early days, the Dharmachakra not only symbolizes the teaching of Buddha but also Buddha himself. Today, it appears in the art of every Buddhist culture (para 5). Practicing religion can shape an individual and group identity. Take Buddhism for example that is followed by many Indians. This religion practices the Four Noble Truths and the Eightfold Path. The Four Noble Truths teaches that: 1. All life is suffering- this suggests that all beings experience suffering and that it can be ranged from great physical and mental pain to mild emotional unhappiness. Suffering originates from anger and sadness but then happiness is also suffering because it comes and goes. 2. The cause of suffering is desire- This suggests that humans want what they do not have and should not have. Humans’ personal desire for happiness is the cause of the suffering. 3. To end desire is to end suffering -which suggests that putting all craving and personal desires to an end will therefore end the suffering. This breaks the negative karma which leads to the 4th Noble Truth 4. To end desire- one must follow the Noble Eightfold Path. The Eightfold Path is : 1. The right to understanding which ends the concept of what one think is reality and see reality as it is. 2. The right to intention is where people must want to change before they can actually be change. 3. The right to speech which is speaking the truth at all times. 4. The right to conduct which means no killing, stealing, drinking, intoxicants and being sexual. 5. The right to livelihood which is working and living a life that does not cause others harm. 6. The right to effort which is developing a conscious free from craving. 7. The right to mindfulness which is to be aware and mindful and 8. The right to contemplation which is the deepening of mindfulness that leads to concentration and insight may be obtained (Van Voorst,2013). Practicing the Four Noble Truths and The Eightfold Path teaches and shape the followers of Buddhism. It is a way of life for them which teach them to take time to find out who they are and what they are all about. It is a guideline to ethical and menta l development. Shinto culture is another example of how practicing religion and shape individuals or groups. The people of Japan practices Shinto and is rooted in the people there and their traditions. The Shinto gods that are called kami are sacred spirits. These spirits can take form in things such as wind, rain, mountains, trees, rivers and fertility. Shinto religion believes that when a human dies they become a kami and is given back to their families and ancestral kami. There not a right from wrong in Shinto and their faith is based on being optimistic. The Shinto faith is blended with other beliefs such as that of Buddhism and Daoism. It does not have a founder, written documents, formalized ethics, system of beliefs, scripture or an organized system of theology but with the blend of Buddhism and Daoism, the Japanese culture now have a system of beliefs, written documents, founder, ethics and all that it was lacked before. It is still a central religion of Japan (Carroll, 2012). Shinto grounds are very sacred and behavior must be proper at all times. There are no food or drink allowed and there must be silence or hushed voices. Purity is important in Shinto and there is a certain procedure in washing your hands on mouth. Purity is important in pleasing the kami which brings a happy life. Van Voorst wrote that â€Å"Cleanliness in particular signifies a good character and freedom from bad external influences. In Western societies one hears the proverb â€Å"Cleanliness is next to godliness.† In traditional Japanese society cleanliness—of body, mind, and spirit, both ritual and practical—is godliness. To be in harmony with the kami, one must keep one’s person, home, and business clean† (pg 198). Religion has always been connected with government and politics. The Western world has a history of influence from Catholicism and Protestant rift. It is very similar to the history of some parts of Southern Asia that have been influenced by Islam. The interconnection of both religion and government is to be expected because both are regulating social behavior. During the past century, religion has been less influential. Modern governments have been influenced by Democratic philosophy which put importance of the average man and a sharing of the world’s resources. These ideas continue to shape modern society in different ways. For example, technology has drastically changed the nature of life and work. Traditional religious systems are gradually becoming less important. The trend towards secularism continues but has not been nearly as pronounced in the United States and regular church attendance started to decrease in the 1960’s and early 1970’s. It increased again post World War II period. There is only a small majority of Americans who thinks religion is of any importance in their lives (Federal Funding of Faith-Based Services, 2011). Many people know what religion is until they are asked to define it. Religion is a worldly thing, across many boundaries in human experience and so that makes it a bit hard to define. There are a few different definition of religion and many have different religious experience and understanding of Ultimate Reality. At Reid Temple, I asked the lady sitting next to me if she could tell what Ultimate Reality means. She said to her Ultimate Reality meant a personal relationship with God. In a different culture Ultimate Reality could mean spiritual growth or spiritual path. Not everyone is all about religion though. There are some cultures who prefer that their beliefs not to be subject as a religion but as a faith or teaching. There are some who argue that they are not religious but they are spiritual. References American Civil Liberties Union of Florida. (2012). Church and state. Retrieved from http://www.aclufl.org/take_action/download_resources/info_papers/3.cfm Carroll,B.J. (2012). Shinto basics. Retrieved from http://www.world-religions-professor.com/shinto.html Federal Funding of Faith-Based Services. (2011). Religion and public policy. Retrieved from http://www.newsbatch.com/religion.htm Thames & Hudson. (2004). Reading Buddhist Art: an illustrated guide to Buddhist signs and Symbols. Retrieved from http://www.religionfacts.com/buddhism/symbols/wheel.htm Van Voorst, R.E. (2013). World relg. Student edition. Wadsworth, Cengage Learning. USA Washington, L.P. (2013). Reid Temple Senior Pastor. Personal Interview January 13, 2013.

Roosevelt – The Great Depression

Franklin Delano Roosevelt, a Democrat, came from a wealthy New York family and was educated at Harvard University. He entered politics in 1910 and elected Governor of New York State in 1928 after surviving a bout of polio. The Democrats choose Roosevelt as their candidate to oppose Hoover in the 1932 Presidential Election. During the campaign he said, â€Å"I pledge you, I pledge myself, to a New Deal for the American people†. He promised to use government money and power to rebuild the economy. Roosevelt won with a landslide victory. One of the main reasons for this was that the previous President, Hoover, had not controlled, or attempts to help the economic downfall of the United States. Hoover thought matters would right themselves and therefore took little action. In 1932 Hoover did eventually find some money to help a number of struggling banks and businesses, but he refused to set up federal relief programmes to aid the unemployed. As the Depression dragged on, a protest movement developed among the hungry and the unemployed. Many Americans had lost confidence in President Hoover and were looking for new leadership that arrived in the form of Roosevelt. Once elected, Roosevelt had many problems facing him and his party that the American people expected him to solve. * Most of the populace was unemployed. Over 12 million Americans did not have a job, and this figure was increasing by 12,000 every day. Families relied on charity to stay alive and breadlines were common in every city. * Over 1 million people were homeless. In 1932, 250,000 Americans stopped paying their mortgages and were evicted from their homes. Because of this, many became ‘hobos' or tramps while others moved to waste ground to build huts from scraps of wood and metal, these unhealthy camps were known as ‘Hoovervilles' after Herbert Hoover. * Total economic collapse followed – With so many people out of work the cities could not afford to buy all the food the farmers produced; and by 1932 – 1 in 2 farm owners had been evicted. * Many veterans living in poverty demanded bonuses immediately. Their annoyance at not receiving their money came to a head when, during summer 1932, veterans from all over the country went to Washington capital to protest. Many hijacked trains to get there and fought with police who tried to stop them. In June of the same year, more than 20,000 veterans had arrived in Washington and set up a Hooverville opposite the White House. Congress voted against paying the veterans their bonuses and Hoover ordered the army to evict the veterans from their Hooverville. The army thought it was necessary to bring in 4 companies of infantry, 4 troops of cavalry, a machine gun squadron and 6 tanks to disperse the veterans. In the ensuing chaos 2 veterans died and 1000 were injured. * Bank failures were another large problem. During the depression, many people with savings in the bank took the money out to stay alive. This led to new problems; small banks did not have enough money to pay their savers and went bankrupt. After a bank failed, savers with deposits in other banks rushed to take out their savings from other banks, leading to more banks going bankrupt- A total of 1616 banks in 1932. * Many people affected by the depression organised protests in hope to improve conditions. In Iowa, the farmers union organised strikes to stop food reaching markets. This aimed to create food shortage and increase food prices. Roosevelt took a tough stance towards these areas of difficulty, and in his inauguration speech he stated that â€Å"the only thing we have to fear is fear itself†. To affect change in America, Roosevelt need more power than he already had. In 1917 congress had allowed President Wilson to change laws without asking and this ‘trading with the enemy† act was still effective when Roosevelt came into power. Roosevelt realised he could use this act to speed the healing process for America's economy. Roosevelt proposed, and Congress passed, a series of measures designed to provide relief for the unemployed and promote economic recovery. Roosevelt also hoped that the New Deal would help America's problems by bringing about a number of long-term reforms. Two days after his inauguration on the 6th of March, Roosevelt ordered all banks to close for a long bank holiday while he and a cabinet worked out a way to solve the problem. Most Americans were glad to see Roosevelt dealing with the problem although some though he was becoming a dictator and leading America down the road to socialism. By 1933, the number of people unemployed was about 13 million. To get America moving again, these people had to have work and be earning money, allowing them buy products from others. Roosevelt decided that a program of temporary jobs should be put in place, as well as food distribution to the hungry and low-interest loans given to home-owners. Roosevelt's most famous actions against the depression were the Alphabet Agencies; so called because all were condensed into a set of initials for ease of use. * The Civilian Conservation Corps (C.C.C.) was set up in 1933 and was a popular Roosevelt idea. Unemployed young men were given six-month jobs in the countryside working on projects concerned with forestry, flood control and soil conservation. By doing this, they received a small wage, food, clothing, and shelter. By the end of the 1930's, two and a half million men had been in the C.C.C. * Another popular program of reform for that year was the Agricultural Adjustment Act (A.A.A.). It was designed to help farmers who were suffering from low incomes, with many being forced off their land. The government paid the farmers to grow less, which forced prices of food up. Crop prices gradually recovered, and within four years the average farm income had almost doubled. * One of the most important New Deal measures was the National Industrial Recovery Act (N.I.R.A.). This comprised of two sections; the first being the Public Works Administration (P.W.A.), which organised and provided money for the building of useful projects: schools, hospitals, roads, bridges etc. The Works Progress Administration (W.P.A.) was another successful New Deal agency that funded a number of projects to create employment, although these were on a smaller scale than the P.W.A. The other section on the N.I.R.A was the National Recovery Administration (N.R.A.) which recommended an eight-hour day, together with a minimum wage, to help create jobs. Employers who accepted these recommendations were allowed to display a ‘Blue Eagle' sign on their goods. Over 2 million people embraced the new standards and benefited because of it; the public was encouraged to buy only from businesses that had joined the scheme. * Roosevelt's many plans were new, and his kinds of tactics for dealing with depression was regarded as blunt by many people. His other plans however were over-shadowed when he decided to set up the Tennessee Valley Authority (T.V.A.) in order to help a poor, badly eroded region which was also prone to flooding. The T.V.A built a network of dams to control the floods and give the area a supply of cheap electricity. This attracted industry and gradually the whole region began to prosper. * Finally, in 1935, the Social Security Act provided pensions for the elderly and benefits for the unemployed, as well as providing help for dependant mothers and children and the handicapped. Roosevelt brought about partial recovery to the United States with the New Deal and ‘Pump priming' strategy. It was not until the Second World War and the demand for American goods however, that the American economy returned to its former prosperity.

Anorexia Nervousa Research Paper Example | Topics and Well Written Essays - 1750 words

Anorexia Nervousa - Research Paper Example This article highlights on the available reported cases regarding anorexia nervosa besides talking about the possible cases and the ultimate treatment methods. Introduction Anorexia nervosa represents one of the psychiatric disorders which associates with abnormal eating behavior, aggressive weight loss and psychiatric comorbidities (Gila et al, p. 480). Individuals with anorexia nervosa normally faces the fear of eating normally because of the fear of gaining weight. The disease normally have severe effects on individuals. It is often difficult for the individuals to know that they are suffering from the disease thereby furthering the effects of the disease. Because of the fear of gaining weight, the individuals will do anything within their effort to ensure that they have gained weight. Some of the individuals end up starving, while some seek for aggressive physical exercising in order to lose weight. These individuals may feel that they are on their daily efforts of cutting down o n their weight, when it is actually anorexia nervosa. They have the feeling that they are perfecting their nature and controlling their body weight which may not be true. The disease is often common on young women who believe that being thing is a perfectionism. The following are some of the facts about anorexia nervosa: Facts about nervosa Statistics shows that the presentation of anorexia nervosa among individuals in the society has been on the increase since the late 1960s with the female constituting gender with higher prevalence. The prevalence in females is 10 to 20 times as regarded in that of male. This statistics provide a background for studying the influence of the disease in the society (Andersen, p. 728). Many of the reported cases in the hospitals also shows that around 90% of the patients admitted because of anorexia nervosa were women. The figures are a good illustration of that women serve as the major individuals susceptible of the disease. The trend on women arise s because of the trends of lifestyle that most of the female individuals are likely to live. The statistics also show that among the women, those mostly susceptible of the disease are the women living in upper class besides those in urban societies. They are mostly educated and professionals individuals who are in the peak of exploiting their knowledge. Another striking statistics is that around 5% of the adolescent girls exhibit the symptoms of anorexia nervosa hence bringing to conclusion that the disease can affect an individual irrespective of their ages. Further, the influence of contemporary lifestyle also have considerable effect on the number of young men and adolescent boys being susceptible to the disease. These are surprising facts which must be taken into consideration during the war against the disease. Most of the named individuals in the above statistics do not always recognize the presence of the disease. A study carried in the UK also shows that 1% of women existing within the age bracket of 15-30 years always suffer from nervosa. This is indifferent to the number of men, within the same age group, whose statistics is always varying. Studies also shows that the most susceptible individuals are those who hold unrealistic expectations about their weight. Case presentation from Iraq This is case about MR is a perfect illustration of the experience an individual may have when suffering from anorexia nervosa. MR,

Courage at work Essay Example | Topics and Well Written Essays - 500 words

Courage at work - Essay Example Though the task was monumental for me at that early age, I gained courage and effectively rose to the big task that awaited me. I perfectly run the hospital well for two consecutive years. After completion of my first two years, an extremely critical decision that I have never faced in my entire career faced me. Overreact senior member in the ministry of health came knocking at my door with a hefty offer. The gentleman wanted me to append my signature as a sign of acceptance for the ministry to import Anti-revival drugs from United State. The deal showed that the government was importing first class drugs from United State. So the gentleman wanted to collude with me as a senior doctor so that he could import counterfeit drugs from China. There stood a conflicting situation on whether to agree to deal or to follow my conscious and act on the welfare of the patients. Luckily the urge inside me to protect the patient welfare won. I gained courage and disagreed to the deal. Luckily I tricked the officer, and I managed to record the conversation on my computer. After reputing the deal, I got demoted. I was transferred, to an exceedingly local dispensary in extremely remote area. However I did not regret my courageous action to protect the innocent patients who in the beginning of my professional I swore to. They successfully managed to forge their way though and luckily succeeded in importing the counterfeit drugs. Before they got distributed to relevant hospitals, the quality department issued an order to stop the distribution of drugs. A thorough research followed, and drugs were found to be counterfeit. I was asked to testify. I used the recorded conversation with the senior guy who had made me got demoted. The senior gentleman and his puppet who was appointed after my demotion lost their job. They were held by police for further investigation and prosecution.

Video in the Newsroom Research Paper Example | Topics and Well Written Essays - 500 words

Video in the Newsroom - Research Paper Example The research bases most information in relation to New York Times practices. The New York Times newspaper initiated the use of videos in newsrooms following the dawn of digitalized technology and an aspect that propelled sales and profits. The company adapts to the practice and is able to reduce paperwork and unnecessary workforce (Hale c1). The company acquires an edge of efficiency as the editors find ease in making story scripts through the relay of videos. The company prints information promptly and reaches the buyer on time. Therefore, the editors post intense and accurate information online to reach the desired reader (Cornelissen, 78). The New York Times implements that the photographers should work closely to the live footage journalists who cast the videos on the occurrence of the events. The newspaper company establishes that the photographers should take still photos, and write scripts to remain informative to the occurrence of the events (Hale c1). New York Times’ photographers cast video scripts to support their still photos, and written scripts. Therefore, the use of videos in the newsrooms affect the photographers to present supported information to the editors who find ease in revising information, attaching relevant information to the chosen articles and promptly posting it online (Day 48). New York Times relays most of the news via websites to cover a wider area. The company saves unnecessary expenses through the criteria as transport cost reduce accordingly. The use of videos in newsrooms, and in online relay of information curbs the low-income earners from accessing information. The company notes that most of the readers to newspapers lack access to digital informative sources. The newspaper company seeks to reach all the readers accordingly but deviating to the online channels curbs some readers out of reach. Therefore, use of

How and why might violence against women be perceived as indicator of Essay

How and why might violence against women be perceived as indicator of unequal citizenship - Essay Example This paper presents a very thoughtful argument as to why and how violence against women is an indicator of unequal citizenship. It explores the aspect of gender violence as a whole providing particular forms of violence affecting women, locations where these forms of violence take place, role of government in eliminating violence, and the key political values and forms of citizenship linked either directly or indirectly to the increased widespread of gender violence. Indeed, violence against women can be seen as an indicator of unequal citizenship in that from ancient times; women have been perceived as having no value in the society and considered as a man’s property. They were mandated to be submissive to their husbands and not perform industrial activities; they were forced to early marriage, and practiced female genital mutilations as well as mistreating widows like inciting them to commit suicide.2 In addition, with all these, there is no equal citizenship because men alw ays dominate and abuse women but a few or no perpetrators are brought to justice. For instance, there have been claims that death sentence as a rape case charge does not end violence but failure to prosecute rapists does not eliminate violence either. Today, feminist movements have addressed the issue of violence and discrimination aggressively as a criminal act so as to ensure that there is equality and elimination of gender discrimination because women need to be treated fairly equally as men. Additionally, violence against women serves, as a perfect example of unequal citizenship in that, the fact that women are not equally given chance to occupy some offices is a sign of inequality and as a result, women feel left out. Even though most women in the contemporary world are offered different job opportunities and others are even designated some tasks that are usually performed by men, they are still discriminated in some sectors. This to some extent can be seen as an indicator of u nequal citizenship. Furthermore, existences of forms of violence that affect women across a variety of location like battering, domestic violence, sexual violence among others, and the fact that responsible bodies cannot aggressively address them confirms gender imbalance and unequal citizenship. For instance, most societal members especially men believe that wife battering not a big issue and it is something that must be done as a way of ‘disciplining women’. More so, violence against women shows unequal citizenship since it has been noted that popular form of violence against women globally is intimate partner violence commonly referred to as domestic violence. This is what has been happening and is still happening but the government cannot work on this to offer complete protection of women. Psychological violence where a man dominates a woman and literally forcing her to be submissive to him as well as exploiting her economically,3 persists. Indeed, this confirms tha t violence against women is a manifestation of unequal citizenship in our societies. Truly, violence against women indicates unequal citizenship because men usually abuse women in other ways like sex working, child abuse and trafficking and yet, just like men they are supposed to be protected.4 As a result, only few perpetrators are held accountable of their inhuman acts and it has been confirmed that some police officers threaten the victims to never say a word. This for sure can be seen as lack of protection of wome

Summary Assignment Example | Topics and Well Written Essays - 250 words - 14

Summary - Assignment Example The concept of universality was further expounded by classifying it into two types: the substantive universals and the formal universals. As disclosed, substantive universals construct the description of language; while formal universals were deemed more abstract; yet formalized and highly structured in terms of observance to grammatical rules. Samples of different sentence structures (deep, surface, A over A convention) were presented to differentiate the concept of universality. The criteria for evaluating grammar was likewise discussed based on four syntactic structures, being that: (1) sentences are deemed acceptable to the native speaker; (2) the case of ambiguity noted to be represented by constructional homonymity; (3) alleged diversity in interpretations of sentences which appear superficially similar to be likewise represented by varied derivational histories; and (4) understanding sentences in similar manner to have been apparently represented at one level description (Tranformational Generative Grammar 5-6). Finally, the discourse differentiated between linguistic competence and performance by indicating that competence is knowledge of a particular language, while performance ensued from this competence as a production and comprehension of language (Tranformational Generative Grammar 5). Other differentiating factors were presented to expound on their disparities to include boundaries, linguistic factors, incompetencies, situational factors, and creativity of the speaker, among

Implications of Leadership and Ethics on Organizational Behaviour Assignment

Implications of Leadership and Ethics on Organizational Behaviour - Assignment Example However, unlike most leaders I do not have an outgoing style or a sense of humor. My personal leadership effectiveness is perfect; however, this trait somehow affects it. To ensure that I leverage my strengths, I plan to focus more on past successful leaders and try to determine how they made their achievements. Additionally, I plan to put my strengths in every bit of practice so as to enhance them. Changing my attitude and personality in relation to my weaknesses is the only way through which I can eliminate the weaknesses I have. The only barrier to implementing these plans may be my dedication and determination to implementing them. However, I believe I have all the space and time to implement these development plans. Loyalty and respect is a key value that shapes my leadership behavior. My loyalty and respect to the organization where I work has not only improved my leadership behavior but has also enhanced my social responsibility, and help my motivate employees working under me. In addition, as a value, I often base my decisions on values and not beliefs. I believe values surpass both experiences and contexts. Therefore, the decisions I make for the organization are determined by my values and not beliefs. A reflection on Henry Mintzberg’s literary work â€Å"Beyond Selfishness† brings about the notion of a heroic manager and an engaged manager. For one to be a Heroic Manager they have to depict some form of perfection and excellence. For managers, the drive to being heroes simply involves differentiating themselves, to be who they can be. Managers who act as role models to certain individuals may still be considered heroic managers by those individuals. Being a heroic manager enables one to lead the people who admire them. In contrast, being more of a hero may become counterproductive, particularly if it dis-empowers your subjects. Generally, for mangers, occasional heroic acts may help their subjects feel they can imitate and depend on

China Currency Exchange Rate Essay Example for Free

China Currency Exchange Rate Essay The currency regime adopted by China is neither fixed nor flexible exchange rate system. China has announced in 2005 the â€Å"end of its firm peg against the dollar, instead allowing it to trade within a narrow band against a basket of currencies.† China regime is managed floating system where the currency increases very slowly year by year and the China government prevent the currency from changing quickly in the short term. The reason why Chinese government intervene in the currency market is to lower exchange rate to increase employment, maintain a fixed rate to maintain stability and improve their current account deficit. China government manage its currency rate by buying foreign currencies to increase supply of China currency, therefore lowering its currency value. They also lower the value of its currency by lowering their interest rates. In the case of China, it is very difficult and challenging for them to adopt the fixed exchange rate system due to their disadvantages. Firstly, China government must always adjust its interest rate so maintain the exchange rate. Changing the interest rate frequently will cause fluctuations in investments and growth and also stable employment. There is also a possibility that the export rate may be set at the wrong level. For example, if it was set at a higher level, this could affect China export competitiveness and their domestic market will suffer. Question 4b Though China has been heavily criticised by some foreign countries like USA for their practice, there are some advantages to managed flow system. Firstly, the managed flow system will ensure stability in China compared to floating. This is because if China suddenly appreciate their currency, their exports production will suffer and there will be lots of unemployment as a result. However there are disadvantages to managed floating system as well. People will try to challenge the earn funds from the currency as this system is very prone to speculative attack. Experiences have shown that speculative attacks could decrease the growth of a country’s gross domestic product by 6 percent or more.

Production Criticism of Oedipus the King Essay Example for Free

Production Criticism of Oedipus the King Essay The directorial concept of the play started with an overall picture of melancholy and a suggestion that the story is indeed a tragedy. The stage, as the foundation of the entire scene, has been designed to differentiate the levels of society, thus, it has different levels of platforms and steps, but leaving the center of the stage flattest, where most of the characters will be performing. The materials used for the platforms are of different types. The higher steps leading to the outskirts of the stage look like they were made with ordinary flat rocks, much like the ones we see in the old Jerusalem. The steps were made simply for the purpose of being pathways men can walk on. Nothing fashionable. The center of the stage has a different design, because I noticed that the flooring is much more modern than the flat rocks around it. The material of the floor of the center stage has a much smoother quality, although it was carved like bricks, like the ones on the streets of Paris, France. The floor carvings are designed like segmented rings that all leads to one focal point, much like the bytes in a compact disc. The most prominent part of the stage is the palace of Oedipus, the King. It stands so proud with its walls extending all the way to the top that it scares you of its command of authority and power. It stood so high and proud that it looked like it reached the heavens and looks infinite. The material of it was the smoothest of all. It has the most modern design in the stage. The cement has a slate gray color mixed with white streaks that suggested it must be made of marble†¦the strongest among the rocks on stage. That’s how powerful Oedipus, as a king, is. He is believed to be the savior of Thebes when he defeated the Sphinx by answering the most difficult riddle. The play is an obvious â€Å"non-dramatic pageantry,† because the elements of it were present and done in the stage. There is an â€Å"icon† or focal point, which usually is a â€Å"religious artifact or a saint. † (Theatrical Production, Encyclop? dia Britannica. ). There was a huge cross with a white cloth resting on its arm at the middle of the highest outstkirt platform. This is its focal point because it looks religious enough to suggest it’s the cross of Jesus Christ. Overall, the environment of the stage is melancholic. The color of the stage’s floor to the very tall palace is in the neutral shade. Again, nothing special. This just suggests the hue of sorrow, which is the shade of gray. The sorrowful environment was coupled with the stage lights, which made the scene look softer and mellower. The lights come from under the outskirts’ platforms, which gave a lot of shadow on the stage. The second light will be coming from directly above the stage, which gives all little bit of glow on the heads of the characters, but not enough light to brighten the faces of every actor. The poor lighting made it felt like the characters are speaking to me personally, in my deepest thoughts. It dawned to me that whenever I am depressed or whenever I wanted to be alone, I tend to hate bright lights. Such is the feeling of someone in wakes, especially those wakes inside chapels. The serene, soothing look of a funeral scene in a chapel is the aimed environment here. The background lights on the outskirts of the stage changes as the mood of the scene changes too. Even though the shadow was effective enough to suggest sorrow, the light blue hue of the background defined the mood. When the ugly truth of Oedipus’ character was nearly revealed, the background light turned into a reddish hue, as if the sun was setting. It gave a red glow that suggested the horrible feeling of the moment. It also made the blood coming out from Oedipus’ eyes look thick and black, which made the suffering grievous enough to die. Sounds make the hearts beat rapidly and loses one’s breath. From beginning until the end, the background music created the feeling that it is tragic. When Tiresius, the seer, showed up, there was annoying background music created by a type of violin, which made it felt like there was great irony and perversity in the scene. The horting sound of the violin made my heart twist and my throat a bit choked because I felt the tension due to the sound. It is interesting though, how the director was able to coordinate all aspects of production to make the playscript fit his directorial concept. Of course, the playscript was changed to make it more dramatic and the words appealing to the audience. The playscript was â€Å"Bowdlerized,† or words were changed to fit the lingo of the modern audience. (Dr. Eric W. Trumbull. ). Although there weren’t any fancy or colorful props on the stage, the characters are the ones that still mattered the most. Though the faces of the characters generally remained stiff throughout, their voices are full of color. Loudness and softness of the voices stated the mood. There was also a striking difference on the characters’ costumes, each has it’s own different era to represent; a group will be wearing costumes of Sophocle’s generation, another wearing the fashion of the early twentieth century, while another wearing the fashion of the latest trend. Still, the colors of the costumes were nothing fancier than red, white and gold. The colors of the cloths are in plain solid colors too. The characters’ spotlight are their white costumes, or something white in their costumes. For example, the choruses were all dressed in black except the ribbon on the neck, which is pure white. This gives the picture that their heads are floating and the rest of the body is invisible. The director’s aim to present a non-dramatical pageant play that won’t bore the modern audience so far caught my attention. He may have aimed to make the production profit a lot more by involving â€Å"famous† actors to play the role, as part of his marketing strategy. (Dr. Eric W. Trumbull. ). The production is an art in itself, and Don Taylor would’ve still passed as very good theatrical director. The play is directed gearing away from the Shakespearean concept of production, which made it quite different to the taste of theatrical fans, and thus, worth watching and recommending.

Capitalism And Consumerism Of Society

Capitalism And Consumerism Of Society Present society in the west is characterized by a capitalist economic system that is founded on private ownership of property and a profit driven economy. This economy has consequently produced few super rich individuals and further stratified the western society, (Banish the bloated overclass, p. 71). Capitalism is different to a socialist economic system where ownership of property is by the state or communally (Shachtman, p.96). The profit driven economy encourages businesses and enterprises to exploit the market for the sole purpose of making a profit. The marketing strategies of capitalism have therefore created a society of consumers whose benefit is through consumption on the individual level while the monetary profits go to the capitalists. Capitalism has created a society that consumer based and the new phenomenon has been labeled as consumerism. Consumerism has extended even into those areas, which were previously under state control as opposed to being under the control of private corporations. These include the health sector and education among others. The presence of numerous corporations which provide all kinds of services and merchandise have expanded the choices available to consumers. This has created societies, which are based on consumerism as opposed to the earlier societies, which were work based. A consumer society can be identified by the consumption habits of individuals while a work based societys identity lies in the citizenship and occupations of individuals, (Shachtman, p.101). In addition, the consumer society has evolved into a new culture, which has diverse and often contradicting principles to those of work and citizenship. Consequently, capitalists, out to maximum their revenue realization venture into global markets to exploit new markets. This will eventually lead to a single global culture based on consumerism, and individual consumer patterns based on cultural uniqueness and other such factors will be eliminated. As capitalists devise new ways of maximizing their profits, the consumers in a society based on consumerism look for goods of high quality and with the lowest cost. Consequently, both the consumers and the capitalists are not driven by social responsibility and do not try to deal with issues that are created by capitalism and consumerism. Social respon sibility is in the hands of the government and the society but the culture of consumerism and capitalism encourages individualism as each entity is in pursuit of its own goals without considering how some of these goals might be affecting others and the society in genera, (Shachtman, p.106). The nature of the western society made it possible to be targeted for consumer society. A society full of egocentricity, deceptive advertising, nihilism, and values subjectivism to academic goals is easier to sway to the path of consumerism. In such a society where economic growth is the only important thing to any individual and has the capabilities and the power to displace or degrade moral values as we traditionally knew them, the gauge of self worth is always buying power. Those in a position to buy and own property have a more reinforced worth in a society upholding consumerism. The contribution of the media can not be ignored as it continues to create an image which everyone in the western society tries to fit in thus distorting the self worth and self awareness of each person. It is the goal of every capitalist to seduce a large television audience into identification of his personality with specifically designed consumer ideas and advertising fantasies. We no longer possess t he ability to do our things independent of consumerism justification. Advertising duplicity and consumerism are now potential threats to the individuation process and consciousness regardless of continued linking of capitalism to the beginning of consciousness. Social cultural meaning diminishes as it is exploited further by media which siphons inexpressible content in order to attract more consumers. The ability to control consumption gives most capitalists the power to influence the evolvement of different consumption patterns over time. They employ different but simple mechanisms like the promise of a simpler life. The end result is a consumer revolution which in turn forced a relevant reaction in terms of information, communication and technology leading to even more production of goods and services. The goods which result from this high production forces the capitalist society to convince more people to consume goods and alters the basic institution through generation of new ideologies for pleasure. A completely new description of pleasure can also result. One of the major set back of capitalism and consumerism is witnessed at times of economic crisis. The capitalist system has been able to solve the entire crisis but considerably harming the environment especially when we consider the waste created and the resources utilized. A consumer culture is exploitative, both indirectly and indirectly. Consumption of goods and services involves spending money, which is not equally available across a society that is founded on capitalism. Considering that most resources are not infinite, there must be mechanisms that ensure that they rationed. In this context, consumption does not allow full choice for all individuals but only to those who have the purchasing power, (could you afford to be poor, p. 75). This means that vital services under the control of capitalist structures are not accessible to those who cannot afford them. Scott, (2005) states that good medical care and education is not accessible to the poor meaning that people in loose their lives if they do not have the money to have their illnesses fixed. This brings in the question of whether these divisions should only be for the wealthy or should be available for all. In this regard, consumerism culture may work more towards protecting the possessions of the wealthy through a consumerism culture, which is divisive in nature. The illusion that consumerism puts forward is that of choice for all, which is an effective way of ensuring that the deprived do not harbor sentiments that the capitalist system is short charging them. Consumerism therefore divides the haves from the have-nots and further stratifies the society. In the essay Going to extremes: CEOs vs. Slaves, the author notes the wide margins in terms that exist between the capitalist and consumers, noting that CEOs earn as much as 260% more that the third highest executive, (p. 70). The essay further notes that billionaires, created by capitalism exploit the labor market by subjecting employees to slave-like working conditions with a peanut salary. As much as consumer goods are available across the society, only those who have the money to purchase will benefit. This, according to Karl Marx, is the root of most societal problems, which arise from controlled consumption because of poverty. In a consumerism culture, individuals are motivated by the ability to acquire what they desire. This is not an obstacle for those who can afford it, but for the poor, it is continuous challenge to keep up with consumerism. Although this culture may make products, especially technology readily available in the market, those whose purchasing power is limited will not have access. Technology like PCs, hi-tech communication devices such as phones, LCD TVs and so forth remain unobtainable to the poor. The resulting economic disparity serves only to paint a dreary future for the affected economies. As the rich gain more control and the poor are left with fewer alternatives, the political hierarchy in turn adheres to these policies which violate the commonly held ideas regarding peaceful coexistence and human rights resulting to a self propagating system of exploitation. The corporate capitalist view the consumer only as a target and only embark on factors which control interests thus alter ing culture; putting this up for sale is always made easier by the media advertising. Although there exists some constitutional guarantees, the corporate capitalist anyway subjects the public to economic and political systems which only exploit the rights of the many to the benefits of the few. The major contributors are always the movers of government policies which results to political agenda based on their cravings. This inability to access what they desire will lead individuals, especially those from poor backgrounds to engage in all manner of crimes in order to afford what they want. Juvenile burglary, drug peddling and prostitution are some crimes that are associated with people from poor backgrounds. Individuals driven by what they want will engage in activities, which violate the rights of others just to have enough power to purchase commodities. Just like the elite and the wealthy who own the manufacturing and distributing franchises and are solely driven by maximizing their profits, the consumers are driven by the ability to purchase as much as they can. This individuality, by the capitalists and the consumers alike, often infringe on the rights of others and over exploit available resources to achieve individual ends. Capitalist engage in unethical practices in order to maximum their revenue. In a society that is increasingly being taken up by the consumerism culture, the capitalists are faced with stiff competition as many more industries and companies come up to get their share of the profits. This creates an atmosphere of intense competitiveness among the capitalists who want to attract and retain a bigger market share. In order to this, they need to advertise their goods so that they are widely recognized by the consumers. Consequently, most of these advertisements are misleading to the consumer who in the end is unable to make an informed decision about the quality of the goods or services. A good example is the Macdonalds fast food chain, which previously advertised meals as healthy for children. This statement had to be revised when it was established that the meals so called healthy were responsible for childhood obesity, not to mention other lifestyle diseases that are rooted in the consu mption of greasy food. Therefore, the capitalists not only exploits the consumer by providing sub-standard goods, but may also provide false information, which may ultimately pose a serious risk to the health, life and overall well-being of the consumer. Every individual in the society has the capability of selling his or her labor products. Capitalist mode of production does not support this system. All what they need is a disjointed tie between producers and the means they use for production. This simply means that, the peasant farmers to loose their farms, artisans and constructors to loose their tools among other means to deny these people access. With deprived access, these people have no choice but to seek those who have the means of production to use their land and tools and in return gain some wages. The means of production is therefore the ultimate control as it gives you the opportunity to control the goods produced which are in turn bought by back by the same people who labor to produce them. The gap between the two groups is widened as the laborers are turned once again into consumers and the money taken back by those who own the means of production. They just lend you the money for sometime; but they own it. Consumerism has also led to environmental degradation in so many ways. In order to meet the demands of consumers in such a society, and in a world where resources are increasingly becoming depleted, manufactures will look for alternative sources of raw materials in other countries or localities. After they have exhausted the resources, they will move on to the next stop, without concern of how their activities are affecting the environment. In Hardings, (2001), before you finish eating breakfast this morning, he cites the production of rubber, which has led to extensive deforestation in Thailand, which has consequently resulted to increased urbanization. It is no wonder, that the issue of global warming has become a worrying reality to many governments around the world. Global warming has led to climatic changes, whose effects are felt more by people in the developing countries. This is because most of them rely on agriculture and the major source of GDP and unpredictable weather cyc les, droughts as well as floods means that agriculture can no longer be relied on for national revenue. Developing countries are constantly faced with food shortages and global warming has worsened the situation. Global warming is also caused by industry emissions, which destroy the Ozone layer in the atmosphere. Global warming is deeply rooted in industrialization, which in itself was fueled by capitalism and later consumerism. The means used to obtain these resources further destroys the environment. Harding, (2001) notes, tuna from Somalia is fished using explosives, which destroys the coastal eco system. Bananas obtained from the Dominican Republic are grown using chemical fertilizer, which destroys the soil balance. Consumerism and capitalism are enemies of the people. Behind the fancy advertisements, symbolic values, and the promise of merchandise lays their true value characterized and driven by profit making. It is a mechanism by which big businesses ensure continued buying by the consumers not only aimed at profit making. Obsession with consumerism coarsens the moral fiber to a state where the society no longer up holds tradition, but allows itself to be oppressed by structures of consumerism and credit obligations. Consumerism is nothing but a myth meant top make those who believe in it that they can gratify all their needs only through consuming. Cultural fulfillment and social obligations are sacrificed in the altar of gratification associated with owning property and buying goods. The truth is, this gratification is short lived and adds joy for a short moment to those who cal afford to gratify this need and leads to sadness to those who can not afford to fund this need. However, this gra tification deprives us the overall fulfillment of other important cultural mythologies. When culture is commercialized, there is always a lot to loose in terms of perceived reality. Our perception looses its depth, richness and periphery. For these, and other negative reasons that are associated with capitalism and the consumerism culture, it is imperative for the society to take action sooner than later in order to avoid inflicting permanent damage to the society fabric and the environment, which sustains it. Capitalism has created a materialistic society based on individual gratification without much thought of the impact on other people, cultures and environment. Such individual gratification has facilitated societal evils such as human trafficking; drug trafficking, prostitution and forms of crimes. To begin with, changing the consumerism culture in western society is not going to be an easy task, and will definitely not happen overtime. This culture is so ingrained in western societies to the extent that it is now second nature. A more difficult task will be changing the mentality of capitalism from profit realization to moral and social responsibility. Presently, there are groups and movements that are emerging which set an example in the way to change the consumerism culture in American people. The social groups and movements engage in activities such as garbage bin hunting. These people scour dustbins in supermarkets and hotels to get food that has been thrown away but is not spoilt. The foods included canned foods and packaged vegetables, which are thrown out simply because they have minor blemishes. This may seem like an extreme method but it is sending the message to society. That wastage leads to depletion of resources, in addition to denying them to other people who need them. Achieving change is not a task that can be accomplished by one element in this chain of capitalism and consumerism. To begin with, the government should establish policies and guidelines that will ensure that resources are not exploited or depleted. Secondly, the government should also tighten regulations that will protect the environment from abuse by unscrupulous capitalists. Current measures are not effective, evidenced in the current BP oils spill in the Mexican Gulf, which is threatening marine life over a large area. With these guidelines by and punitive measures incase they are violated; the society will be ready to begin the journey towards self-transformation without the use of extreme means that characterize revolutions. However, this kind of change can only begin when the society becomes conscientious about the damage of their current habits and their long-term effects. People may perceive consumerism as a convenient lifestyle where they are able to buy anything to make life easier. However, people should realize that this convenience has adverse effects on the freedoms of others and the environment. Industries should also become more conscientious, and ensure that they do not destroy the very environment that makes their businesses possible in a bid to make quick profits. The industry should acknowledge their moral and social responsibility and ensure that their practices are environmental friendly, do not exploit resources or the market. This can be achieved through civic education of the industry management on safe practices as well as the consumers on how to minimize waste and consider how the products they choose to buy are affecting others. This aspect is demonstrated by the current campaign b eing made for the use green products. In the background of global warming that is threatening the very existence of planet earth, numerous campaigns have been launched that admonish individuals to become environmentally conscious. This movement is referred to as the green revolution where society is going green and demanding only those products that are manufactured in ways that do not harm the environment. The green movement is making progress, as manufactures and merchandisers are compelled to use products and processes that do not destroy the already fragile environment. Even for those who are reluctant to make changes, they have no alternative, as the environmental conscious consumer will simply shun purchasing such products. The effectiveness of the green revolution has been great, and consumers should subsequently step up the movement by demanding more products to go green or else loose their market. Products that have gone green include foodstuff, clothing, technology, which includes phones and computers, furnitur e, toys and even cars. Everyone in the society can contribute to the green revolution by encouraging recycling, avoiding wasteful buying especially packaged food and the use of recyclable goods.

My Soul Mate Essay example -- Observation Essay, Descriptive Essay

My Soul Mate I never thought I would meet the other "half of my orange." "Offspring" was not in my vocabulary, until I saw him, the entity of my imaginings. As he roamed the halls, strutting as though he possessed the building, he consumed my every thought. Every muscle he owned protruded through his uniform, his bulky, curly, caramel, tresses chiseled high and tight. The looks he granted me reassured my interests. He would be the father of my children. He dreaded our visit to Texas; we would travel through four southeastern states, all during the hottest months of the year. In the sweltering Texan sun, we arrived just after one o'clock. His forehead beaded with sweat, like a vehicle that had just been waxed with water beads at the surface. Sensing the encounter, he appeared nervous, almost unrecognizable. Usually he strutted tall and ambitiously; today, a difference was noted. His massive hands, displaying manicured nails, were humid to the touch; the callous that had been caused by heavy weightlifting was disguised. The origin of this unusual behavior was the infa...

Graduation Speech :: Graduation Speech, Commencement Address

Do we look like fortune tellers? Declare a major? Chart a course? Have a burger instead of a dog? What do you want to do when you grow up? There are more forks in the road ahead of us than at the Country Buffet -- and we're asked to choose just one! What is your favorite color? Blue. But are orange and red and puce out of the question? Banished from possibility? Put on the eternal yuck list? It just means that blue works today, but the rest of the rainbow is at our fingertips -- to use later, or not at all. We are full of secrets. We have lives and interests and talents that exist independent of math, and English, science and social studies. Secrets in the shadows of assemblies, football games, clubs, sports, dances and homework. We have friends who paint murals, write poetry, build cars, manage computer networks, train for the Olympics and save lives. Underneath these goofy caps are talents and dreams, ambitions and hopes -- enough to last decades, to build families, to change communities, to change lives. And our real destinations are secret -- even from ourselves -- and that's OK. We may have an idea, a plan, a passion. But we can't tell for sure. We will arrange flowers, electrons, words and water. We'll shape ideas, images, politics, missions and metal. We'll be productive and worthwhile, but where do we start? I'm starting with cows! While fussing over what I would do for my application project, I said to myself, "Sarah, what do you really want to do? What do you wanna have fun learning about?" and my answer was, "I would like to hang out with cows." Now, let me tell you, it is not easy to walk up to a dairy farmer and say, "Hello, can I come hang out at your farm and play with your thousand-pound puppies?" but I was fortunate enough to find an incredible mentor and family who welcomed me into their lives. A year later, I continue to learn from my "farm family," and my "cow friends." In fact, one week from today I plan to pile into a pick-up truck and head to Boise to attend the National Holstein Convention to learn more about cows and spend more time with the people who love them -- talk about great stuff! Someday, it may be because of my secret life that you've "got milk.

Audit – Solutions for Chapter 2

* Solutions for Chapter 2 * Corporate Governance Review Questions: 2-1. Corporate governance is defined as: â€Å"a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organization. The owners (stockholders) elect a board of directors to provide oversight of the organization’s activities and accountability back to its stakeholders. † The key players in corporate governance are the stockholders (owners), board of directors, audit committees, management, regulatory bodies, and both internal and external auditors. -2. In the past decade, all parties failed to a certain extent. For detailed analysis, see exhibit 2. 2 in the chapter and repeated here: Corporate Governance Responsibilities and Failures Party | Overview of Responsibilities| Overview of Corporate Governance Failures| Stockholders| Broad Role: Provide effective oversight through election of Board process, approve major initiativ es, buy or sell stock. | Focused on short-term prices; failed to perform long-term growth analysis; abdicated all responsibilities to management as long as stock price increased. Board of Directors| Broad Role: the major representative of stockholders to ensure that the organization is run according to the organization charter and there is proper accountability. Specific activities include: * Selecting management. * Reviewing management performance and determining compensation. * Declaring dividends * Approving major changes, e. g. mergers * Approving corporate strategy * Overseeing accountability activities. | * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that rovided perverse incentives, including incentives to manage earnings. * Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expertise to perform duties. * Continually re-priced stock options when market price decline d. | Management| Broad Role: Operations and Accountability. Managing the organization effectively and provide accurate and timely accountability to shareholders and other stakeholders. Specific activities include: * Formulating strategy and risk appetite. * Implementing effective internal controls. * Developing financial reports. Developing other reports to meet public, stakeholder, and regulatory requirements. | * Earnings management to meet analyst expectations. * Fraudulent financial reporting. * Pushing accounting concepts to achieve reporting objective. * Viewed accounting as a tool, not a framework for accurate reporting. | Audit Committees of the Board of Directors| Broad Role: Provide oversight of the internal and external audit function and the process of preparing the annual accuracy financial statements and public reports on internal control. Specific activities include: * Selecting the external audit firm. Approving any non-audit work performed by audit firm. * Selecting and/or approving the appointment of the Chief Audit Executive (Internal Auditor), * Reviewing and approving the scope and budget of the internal audit function. * Discussing audit findings with internal auditor and external auditor and advising the Board (and management) on specific actions that should be taken. | * Similar to Board members – did not have expertise or time to provide effective oversight of audit functions. * Were not viewed by auditors as the ‘audit client’. Rather the power to hire and fire the auditors often rested with management. Self-Regulatory Organizations: AICPA, FASB| Broad Role: Setting accounting and auditing standards dictating underlying financial reporting and auditing concepts. Set the expectations of audit quality and accounting quality. Specific roles include: * Establishing accounting principles * Establishing auditing standards * Interpreting previously issued standards * Implementing quality control processes to ensure audit quality. * Educating members on audit and accounting requirements. | * AICPA: Peer reviews did not take a public perspective; rather than looked at standards that were developed and reinforced internally. AICPA: Leadership transposed the organization for a public organization to a â€Å"trade association† that looked for revenue enhancement opportunities for its members. * AICPA: Did not actively involve third parties in standard setting. * FASB: Became more rule-oriented in response to (a) complex economic transactions; and (b) an auditing profession that was more oriented to pushing the rules rather than enforcing concepts. * FASB: Pressure from Congress to develop rules that enhanced economic growth, e. g. allowing organizations to not expense stock options. Other Self-Regulatory Organizations, e. g. NYSE, NASD| Broad Role: Ensuring the efficiency of the financial markets including oversight of trading and oversight of companies that are allowed to trade on the exchange. S pecific activities include: * Establishing listing requirements – including accounting requirements, governance requirements, etc. * Overseeing trading activities,| * Pushed for improvements for better corporate governance procedures by its members, but failed to implement those same procedures for its governing board, management, and trading specialists. Regulatory Agencies: the SEC| Broad Role: Ensure the accuracy, timeliness, and fairness of public reporting of financial and other information for public companies. Specific activities include: * Reviewing all mandatory filings with the SEC, * Interacting with the FASB in setting accounting standards, * Specifying independence standards required of auditors that report on public financial statements, * Identify corporate frauds, investigate causes, and suggest remedial actions. * Identified problems but was never granted sufficient resources by Congress or the Administration to deal with the issues. | External Auditors| Broa d Role: Performing audits of company financial statements to ensure that the statements are free of material misstatements including misstatements that may be due to fraud. Specific activities include: * Audits of public company financial statements, * Audits of non-public company financial statements, * Other accounting related work such as tax or consulting. | * Pushed accounting concepts to the limit to help organizations achieve earnings objectives. Promoted personnel based on ability to sell â€Å"non-audit products†. * Replaced direct tests of accounting balances with a greater use of inquiries, risk analysis, and analytics. * Failed to uncover basic frauds in cases such as WorldCom and HealthSouth because fundamental audit procedures were not performed. | Internal Auditors| Broad Role: Perform audits of companies for compliance with company policies and laws, audits to evaluate the efficiency of operations, and audits to determine the accuracy of financial reporting pr ocesses.Specific activities include: * Reporting results and analyses to management, (including operational management), and audit committees, * Evaluating internal controls. | * Focused efforts on ‘operational audits’ and assumed that financial auditing was addressed sufficiently by the external audit function. * Reported primarily to management with little effective reporting to the audit committee. * In some instances (HealthSouth, WorldCom) did not have access to the corporate financial accounts. | 2-3.The board of directors is often at the top of the list when it comes to responsibility for corporate governance failures. Some of the problems with the board of directors included: * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that provided perverse incentives, including incentives to manage earnings. * Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expe rtise to perform duties. * Continually re-priced stock options when market price declined. 2-4.Some of the ways the auditing profession was responsible were: * Too concerned about creating â€Å"revenue enhancement† opportunities for the firm, and less concerned about their core services or talents * Were willing to â€Å"push† accounting standards to the limit to help clients achieve earnings goals * Began to use more audit â€Å"shortcuts† such as inquiry and analytical procedures instead of direct testing of account balance. * Relied on management representations instead of testing management representations. * Were too often ‘advocates’ of management rather than protectors of users. 2-5.Cookie jar reserves are essentially liabilities or contra-assets that companies have overestimated in previous years to use when times are tougher to smooth earnings. The rationale is that the funds are then used to â€Å"smooth† earnings in the years when earnings need a boost. â€Å"Smooth† earnings typically are looked upon more favorably by the stock market. An example of a cookie jar reserve would be over-estimating an allowance account, such as allowance for doubtful accounts. The allowance account is then written down (and into the income statement) in a bad year. The result is to increase earnings in the subsequent year. 2-6.Users should expect auditors to have the expertise, independence, and professional skepticism to render an unbiased and justified opinion on the financial statements. Auditors are expected to gather sufficient applicable evidence to render an independent opinion on the financial statements. 2-7. The Sarbanes-Oxley Act was designed to â€Å"clean-up† corporate America, especially in the realms of financial reporting. The overall intent was to encourage better corporate governance; to make the audit committee the auditor’s client; encourage the independence and oversight of the board, a nd improve the independence of the external audit profession.There were certainly many factors that led to the Sarbanes-Oxley Act, but the failures at Enron and WorldCom will probably be pointed to in the future as the major factors that led to the act being passed when it was. The Congress intended to develop a new reporting process that would provide just cause for the public to again trust financial statements and the audit processes leading up to the audit opinion. 2-8. The PCAOB is mandated by Congress to set standards for audits of public companies and perform quality control inspections of CPA firms that audit public companies.In order to carry out these responsibilities, the PCAOB requires all firms that audit U. S. listed (public) companies to register with it. It performs annual inspections on all audit firms that audit more than 100 public companies each year. It performs less frequent inspections, usually once every three years, for audit firms that audit less than 100 c ompanies annually. The PCAOB issues Inspection Reports for each inspection that is performed. The first part describes problems they encountered in their reviews of audits and that part is made public.The second part describes problems that the firms have with their quality control process. The second part is not issued publicly unless the firms fail to address the problems pointed out within a reasonable time frame – usually no more than a year. 2-9. Management has always been responsible for fairness, completeness, and accuracy of financial statements, but the Sarbanes-Oxley Act goes a step further by requiring the CEO and CFO to certify the accuracy of financial statements with criminal penalties as a punishment for materially misstated statements.The CEO and CFO must make public their certifications and assume responsibility for the fairness of the financial presentations. It thereby encourages organizations to improve their financial reporting functions. 2-10. Whistle bl owing enables violations of a company’s ethical code to be reported to appropriate levels in an organization, including the audit committee. Because of its presence, potential violators know that there is a real possibility and simple avenue by which inappropriate actions may be revealed.As such, it contains a preventive component that is indirectly helpful to the audit committee in fulfilling its corporate governance role. 2-11. There are a number of provisions that are designed to increase auditor independence. First, Rule 201 of the Act prohibits any registered public accounting firm from providing many non-audit services to their public audit clients. Second, the audit committee became the â€Å"client† instead of management, and only the audit committee can hire and fire auditors. Third, audit partners are required to rotate every five years.Finally, the auditors are expected to follow fundamental principles of independence that have been enacted by the SEC (more details in Chapter 3). 2-12. Management is responsible for issued financial statements. Although other parties may be sued for what is contained in the statements, management is ultimately responsible. Ownership is important because it establishes responsibility and accountability. Management must set up and monitor financial reporting systems that help it meet its reporting obligations. It cannot delegate this responsibility to the auditors. 2-13.An audit committee is a subcommittee of the board of directors that is composed of independent, outside directors. The audit committee has oversight responsibility (on behalf of the full board of directors and its stockholders) for the outside reporting of the company (including annual financial statements); risk monitoring and control processes; and both internal and external audit functions. 2-14. An outside director is not a member of management, legal counsel, a major vendor, outside service provider, former employee, or others who may have a personal relationship with management that might impair their objectivity or independence.The audit committee is responsible for assessing the independence of the external auditor and engage only auditors it believes are independent. Auditors are now hired and fired by audit committee members, not management. The intent is to make auditor accountability more congruent with stockholder and third-party needs. 2-15. The primary point of this question is for students to understand that the audit committee’s role is one of oversight rather than direct responsibility. For example, management is responsible for the fairness of the financial statements.Auditors are responsible for their audit and independent assessment of financial reporting. The audit committee is not designed to replace the responsibility of either of these functions. The audit committee’s oversight processes are to see that the management processes for financial reporting are adequate and the audito r’s carry out their responsibilities in an independent and competent manner. 2-16. The audit committee has the ability to hire and fire both the internal auditor and the external auditor.However, in the case of the internal audit function, the audit committee has the ability to hire and fire the head of internal audit as well as set the audit plan and budget. The audit committee does not control regulatory auditors, but should meet with regulatory auditors to understand the scope of their work and to discuss audit findings with them. 2-17. The Sarbanes-Oxley Act applies only to public companies. Therefore, the Act does not require non-public companies to have audit committees. That is not to say that it does not happen or is not a good idea, however.Most stakeholders want an independent party to ensure that their interests are being considered. The AICPA recommends audit committees for smaller public companies. 2-18. The external auditor should discuss any controversial accou nting choices with the audit committee and must communicate all significant adjustments made to the financial statements during the course of the audit. In addition, the processes used in making judgments and estimates as well as any disagreements with management should be communicated.Other items that need to be communicated include: * All adjustments that were not made during the course of the audit, * Difficulties in conducting the audit, * The auditor’s assessment of the accounting principles used and overall fairness of the financial presentation, * The client’s consultation with other auditors, * Any consultation with management before accepting the audit engagement, * Significant deficiencies in internal control. 2-19. The audit committee needs to ensure that the auditor is independent with respect to the annual audit.In order to ensure that independence, the audit committee must consider all other services that might be performed by the external auditor and app rove any such services, in advance. If the audit committee approves the services, they are in essence saying that the provision of the services will not impair the auditor’s independence. 2-20. Good governance is important to the external auditor for a number of reasons, including, but not limited to the following. Good governance * usually leads to better corporate performance, reflects a commitment to a high level of ethics, integrity, and sets a strong tone for the organization’s activities, * requires a commitment to financial reporting competencies and to good internal controls, * reduces the risk that the company will have materially misstated financial statements. If a client does not have good governance, there are greater risks associated with the client. For example, their poor performance may lead to financial failure and lack of payment of the audit fee.Or their poor governance may lead to improprieties in financial reporting, which puts the auditor at risk in terms of litigation (if the improprieties go undetected by the auditor). 2-21. The auditor might utilize the following procedures in determining the actual level of governance in an organization: * observe the functioning of the audit committee by participating in the meetings, noting the quality of the audit committee questions and responses, * interactions with management regarding issues related to the audit, e. g. * providing requested information on a timely basis, quality of financial personnel in making judgments, * accounting choices that tend to ‘push the limits’ towards aggressiveness or creating additional reported net income, * the quality of internal controls within the organization. * review the minutes of the board of directors meetings to determine that they are consistent with good governance, * review internal audit reports and especially determine the actions taken by management concerning the internal auditor’s findings and recommendations , * review the compensation plan for top management, review management expense reimbursements to determine (a) completeness of documentation, (b) appropriateness of requested reimbursement, and (c) extent of such requests. * review management’s statements to the financial press to determine if they are consistent with the company’s operations. 2-22. Good corporate governance is correlated with increased corporate performance as measured by return on equity, or return on capital. Generally, good corporate governance reduces audit risk as it is less likely that the organization will suffer from problems of management integrity, or would have an environment that might allow or permit fraud.Less audit risk implies that the amount of work to render an opinion on the financial statements would also be less than that required for a company with poorer corporate governance. 2-23. The three categories of audit standards are general standards, fieldwork standards, and reporting standards. General standards cover the characteristics of the auditor – technical training and proficiency, independence, and due professional care. Fieldwork standards provide guidance concerning planning and performing the audit.Reporting standards cover the essential elements of the auditor’s communication, including the opinion, the criteria against which the assertions were tested, and an explanation of the basis for the attestor’s opinion. 2-24. Due professional care is the expectation that an audit will be conducted with the skill and care of a professional. The standard of due professional care plays a role in litigation against auditors. Plaintiffs will try to show that the auditor did not do what a reasonably prudent auditor would have done.To evaluate the standard, a third-party also decides whether someone with similar skills in a similar situation would have acted in the same way. 2-25. There are three important dimensions identified in Exhibit 2. 5 : * Scope of Information on which assurance is provided, * Nature of Organizations on which assurance is provided, * Domicile of Company being audited. These three dimensions influence the identification of applicable auditing standards as follows: * A U. S. public company filing annual reports follows PCAOB standards. A U. S. non-public company issuing financial statements, follows AICPA standards, * A foreign company filing financial statements in a different country follows International Standards or the standards of that country, * U. S. companies reporting on other than financial information follows AICPA Attestation or Assurance Standards. 2-26. For the most part, the standards issued by the IAASB are quite similar to that of the two U. S. based audit standard setters. They differ in the following major ways: The auditor must assess the appropriateness of the accounting framework against which the audit opinion will be given (U. S. standards require only that the auditor commu nicate if the accounting is not consistent with U. S. GAAP. ) * IAASB utilizes a concept of Professional Skepticism rather than independence. * The IAASB utilizes a concept of ‘reasonable assurance’ compared with the U. S. evidence on sufficiency of audit evidence and due professional care, * The IAASB standards include both audit standards and assurance standards. 2-27.The IAASB Audit Standards are quite consistent with that of the PCAOB as well as that of the AICPA. Most of the concepts are the same, but are stated differently. They are very similar in the following ways: * Requirement of independence, * Gathering and evaluation of sufficient evidence, * Documentation of audit work, * Audit designed to minimize audit risk, * Due professional care vs. reasonable assurance, * Nature of the audit report The AICPA and the IAASB have announced a plan to work towards convergence of existing and future standards. The PCAOB has not yet announced a plan for convergence. 2-28.A n audit engagement applies to the development of an opinion on an organization’s financial statements. It is planned that the financial statements will be used by third parties who do not have direct access to client data. The audit engagement is a form of ‘positive assurance’ in which an opinion must be rendered. An assurance engagement differs from an audit in a number of important dimensions: * It can apply to almost any assertion that management wants to make as long as there is agreed-upon criteria by which to test management’s assertion. It is preferable that the criteria are generally accepted. An assurance engagement generally requires a third party (although assurance can also be provided to the audit client), but it is an identified third-party as opposed to a potential user of financial statements, * Assurance can be given on individual items of a company’s financial statements, rather than the full set of statements. 2-29. Assurance enga gements are designed to provide ‘positive assurance’, i. e. the item being attested to is either properly presented, or is not properly presented. For example, one of the Big 4 firms provides assurance to the audience that the votes are properly maintained and counted for the Emmy Awards.A ‘limited assurance engagement’ does not contemplate a full audit or assurance engagement such that sufficient information (evidence) is gathered to warrant a positive statement about whether the item being assured is, or is not, properly presented. Rather, based on a more limited amount of work, the auditor either states that ‘nothing came to his or her attention – based on the limited procedures – that indicates something is not fairly presented’. This is often referred to as ‘negative assurance’. An even more limited assurance engagement is one in which the accountant expresses ‘no assurance’ whatsoever on the item be ing reported. -30. * Auditing Standards apply to the auditor’s task of developing and then communicating an opinion on financial statements and, where applicable, independent opinions on the quality of an organization’s internal control over financial statements to the board, management, and outside third parties. * Assurance Standards apply the auditor’s task of developing and communicating an opinion on financial information outside of the normal financial statements, or on non-financial information to management, the board, and outside third-parties.Assurance services are engagements in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users about the outcome of the evaluation or measurement of a subject matter against criteria. * Attestation Standards is a term used by the AICPA to describe assurance services that involve gathering evidence regarding specific assertions and communicating an opinion on th e fairness of the presentation to a third party. Compilation and Review Standards refer to AICPA Standards that apply only to non-public companies where the board or a user has requested some assurance on the fairness of presentation of financial statements. These are referred to as negative assurance standards because the auditor does not gather enough evidence to support a statement as to whether the financial statements are fairly presented. 2-31. Independence means objectivity and freedom from bias. The auditor can favor neither the client nor the third party in evaluating the fairness of the financial statements The auditor must be independent in fact and in appearance.Independence in fact means the auditor is unbiased and objective. An auditor could be independent in fact if he or she owned a few shares of common stock in an audit client, but might not appear independent to a third party. Independence in appearance means that a third party with knowledge of the auditor’ s relationship with the client would consider the auditor to be independent. Professional skepticism, as used in the standards promulgated by the IAASB, has a broader meaning in that it refers to all of the factors that would affect an auditor’s ability to exercise proper skepticism in an audit engagement.The factors to be considered vary from those associated with the individual, such as objectivity, to those associated with the structure of the firm. These are similar to the independence standards that emphasize both audit firm relationships to the client as well as objectivity. However, the IAASB emphasis on professional skepticism goes a bit further: an auditor could be objective, but not necessarily exercise professional skepticism, i. e. being open to potential explanations of events that are not consistent with the auditor’s prior experiences. Professional skepticism appears to be a broader term than independence. 2-32.PCAOB – sets audit standards for the audits of all public companies that are registered with the SEC AICPA * sets audit standards for audits of non-public companies * sets attestation standards for areas other than public company reports on internal control sets standards for assurance services that are less in scope than an audit, such as reviews and compilations IAASB – sets standards for financial statement audits on an international basis. Right now, the international standards are being increasingly accepted by all political jurisdictions, but particularly in Europe and many developing countries. Harmonization with U.S. will continue to be an objective. GAO – sets the standards for financial audits of governmental entities within the U. S. and certain other organizations that receive Federal financial assistance. Goes beyond financial statement audits and also provides standards related to program audits for economy and efficiency of operations. IASB – sets standards for the professional prac tice of internal auditing around the world. Incorporates other standards by reference where applicable. 2-33. General Standards: The audit and attestation standards both require adequate technical training, expertise, and knowledge.They also both require independence and due professional care. The attestation standards differ in that they explicitly require links between assertions and reasonable criteria and a reasonably consistent estimation process; the audit standards implicitly assume this link. Fieldwork Standards: The audit and attestation standards both require planning and sufficient evidence. The audit standards go a step further in requiring an understanding of the entity and its environment. Reporting Standards: The reporting standards are completely different. Each reflects the underlying purpose of the engagement, i. . , the audit is designed to test whether the financials adhere to GAAP, whereas the attestation is designed to test a broader and more diverse set of ass ertions. 2-34. An audit program follows good corporate governance in the following way: Good governance is critical to the development of sound controls in an organization. The stronger the controls, the less risk that the financial statements will be misstated. The development of audit programs follow the standards in determining that sufficient evidence is gathered in order to evaluate the assertions being addressed in the audit engagement.Further, the gathering and evaluation of that evidence must be done by auditors who are independent of the client – in both fact and in appearance. Finally, the work must be carried out by auditors that understand the standards and exercise due professional care in the conduct of the audit engagement. 2-35. The major planning steps are: * Meeting with the audit client * Developing an understanding of the client’s business and industry * Develop an understanding of the client’s financial reporting processes and controls * Dev elop an understanding of materiality Develop a preliminary audit program that identifies the audit objectives defined in chapter 1. 2-36. Materiality is defined as the â€Å"magnitude of an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. † Materiality guidelines usually involve applying percentages to some base, such as total assets, total revenue, or pretax income and consideration of qualitative factors such as the impact on important trends or ratios.The base should be a â€Å"stable† account however, making total assets a better choice than pretax income. 2-37. The auditor would take a sample of all additions to PP&E and verify the cost through reference to vendor invoices to determine that cost is accurately recorded and that title has passed to the company. If the company was considered high risk, the auditor might choose to physically verify the existence of the asset. Multiple Choice Questions: 2-38. d. 2-39. d. this is part of the profession’s problem, but not a cause of the failure. 2-40. a. 2-41. d. 2-42. a. 2-43. . 2-44. d. 2-45. b. 2-46. a. 2-47. f. Discussion and Research Questions: 2-48. a. The auditor might use the following approaches to determine whether a corporate code of ethics is actually followed: * observe corporate behavior in tests performed during the audit, e. g. approaches the company takes to purchasing goods, promoting personnel, and so forth, * observe criteria for promoting personnel; for example does performance always take on greater importance than how things are done, * observe corporate plans to communicate the importance of ethical behavior, e. g. ebcasts, emails, and so forth to communicate the importance of ethics, * review activity on the client’s whistleblowing website, or a summary of wh istleblowing activities reported by the internal auditor, * read a sample of self-evaluations by corporate officers, the board, and the audit committee and compare with the auditor’s observations of behavior, * examine sales transactions made during the end of quarters to determine if the sales reflect ‘performance goals’ as opposed to the company’s code of ethics. b. Are auditors equipped to make subjective judgments?This should be a great discussion question because many young people are attracted to the accounting profession because there are rules and relative certainty as to how things are done. However, as the profession is evolving, more judgments are required in both auditing and accounting. Audit personnel need to be equipped to make judgments on whether the company’s governance structure operates as intended and whether there are deficiencies in internal control when it does not operate effectively. The profession believes that auditors ca n make such judgments. . Assessing the competence of the audit committee can occur in a number of ways. Fortunately, the most persuasive evidence comes from the auditor’s direct interaction with the audit committee on a regular basis. The auditor can determine the nature of questions asked, the depth of understanding shared among audit committee members, and the depth of items included in the audit committee agenda. Many audit committees have self-assessment of their activities using criteria developed by CPA firms, or by the National Association of Corporate Directors.The auditor should also review the minutes of the audit committee meetings and determine the amount of time spent on important issues. An external auditor should be very reluctant to accept an audit engagement where the audit committee is perceived to be weak. There are a number of reasons including: * The lack of good governance most likely influences the organization’s culture and is correlated with a lack of commitment to good internal control. * The auditor has less protection from the group that is designed to assist the auditor in achieving independence. The company may be less likely to be fully forthcoming in discussions with the auditor regarding activities that the auditor might question. d. Internal auditing is an integral part of good corporate governance. It contributes to corporate governance in three distinct ways: * It assists the audit committee in its oversight role by performing requested audits and reporting to the audit committee, * It assists senior management in assessing the continuing quality of its oversight over internal control throughout the organization, * It assists operational management by providing feedback on the quality of its operations and controls. -49. a. Corporate governance is defined as: â€Å"a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organiza tion. The owners (stockholders) elect a board of directors to provide oversight of the organization’s activities and its accountability to stakeholders. † The key players in corporate governance are the stockholders (owners), board of directors, audit committees, management, regulatory bodies, and auditors (both internal and external). b.In the past decade especially, all parties failed to a certain extent. For detailed analysis, see exhibit 2. 2 in the chapter and reproduced below: Corporate Governance Responsibilities and Failures Party | Overview of Responsibilities| Overview of Corporate Governance Failures| Stockholders| Broad Role: Provide effective oversight through election of Board process, approve major initiatives, buy or sell stock. | Focused on short-term prices; failed to perform long-term growth analysis; abdicated all responsibilities to management as long as stock price increased. Board of Directors| Broad Role: the major representative of stockholders to ensure that the organization is run according to the organization charter and there is proper accountability. Specific activities include: * Selecting management. * Reviewing management performance and determining compensation. * Declaring dividends * Approving major changes, e. g. mergers * Approving corporate strategy * Overseeing accountability activities. | * Inadequate oversight of management. * Approval of management compensation plans, particularly stock options that provided perverse incentives, including incentives to manage earnings. Non-independent, often dominated by management. * Did not spend sufficient time or have sufficient expertise to perform duties. * Continually re-priced stock options when market price declined. | Management| Broad Role: Operations and Accountability. Managing the organization effectively and provide accurate and timely accountability to shareholders and other stakeholders. Specific activities include: * Formulating strategy and risk appetit e. * Implementing effective internal controls. * Developing financial reports. * Developing other reports to meet public, stakeholder, and regulatory requirements. * Earnings management to meet analyst expectations. * Fraudulent financial reporting. * Pushing accounting concepts to achieve reporting objective. * Viewed accounting as a tool, not a framework for accurate reporting. | Audit Committees of the Board of Directors| Broad Role: Provide oversight of the internal and external audit function and the process of preparing the annual accuracy financial statements and public reports on internal control. Specific activities include: * Selecting the external audit firm. * Approving any non-audit work performed by audit firm. Selecting and/or approving the appointment of the Chief Audit Executive (Internal Auditor), * Reviewing and approving the scope and budget of the internal audit function. * Discussing audit findings with internal auditor and external auditor and advising the Boa rd (and management) on specific actions that should be taken. | * Similar to Board members – did not have expertise or time to provide effective oversight of audit functions. * Were not viewed by auditors as the ‘audit client’. Rather the power to hire and fire the auditors often rested with management. Self-Regulatory Organizations: AICPA, FASB| Broad Role: Setting accounting and auditing standards dictating underlying financial reporting and auditing concepts. Set the expectations of audit quality and accounting quality. Specific roles include: * Establishing accounting principles * Establishing auditing standards * Interpreting previously issued standards * Implementing quality control processes to ensure audit quality. * Educating members on audit and accounting requirements. | * AICPA: Peer reviews did not take a public perspective; rather than looked at standards that were developed and reinforced internally. AICPA: Leadership transposed the organization fo r a public organization to a â€Å"trade association† that looked for revenue enhancement opportunities for its members. * AICPA: Did not actively involve third parties in standard setting. * FASB: Became more rule-oriented in response to (a) complex economic transactions; and (b) an auditing profession that was more oriented to pushing the rules rather than enforcing concepts. * FASB: Pressure from Congress to develop rules that enhanced economic growth, e. g. allowing organizations to not expense stock options. Other Self-Regulatory Organizations, e. g. NYSE, NASD| Broad Role: Ensuring the efficiency of the financial markets including oversight of trading and oversight of companies that are allowed to trade on the exchange. Specific activities include: * Establishing listing requirements – including accounting requirements, governance requirements, etc. * Overseeing trading activities,| * Pushed for improvements for better corporate governance procedures by its membe rs, but failed to implement those same procedures for its governing board, management, and trading specialists. Regulatory Agencies: the SEC| Broad Role: Ensure the accuracy, timeliness, and fairness of public reporting of financial and other information for public companies. Specific activities include: * Reviewing all mandatory filings with the SEC, * Interacting with the FASB in setting accounting standards, * Specifying independence standards required of auditors that report on public financial statements, * Identify corporate frauds, investigate causes, and suggest remedial actions. | * Identified problems but was never granted sufficient resources by Congress or the Administration to deal with the issues. External Auditors| Broad Role: Performing audits of company financial statements to ensure that the statements are free of material misstatements including misstatements that may be due to fraud. Specific activities include: * Audits of public company financial statements, * Audits of non-public company financial statements, * Other accounting related work such as tax or consulting. | * Pushed accounting concepts to the limit to help organizations achieve earnings objectives. * Promoted personnel based on ability to sell â€Å"non-audit products†. Replaced direct tests of accounting balances with a greater use of inquiries, risk analysis, and analytics. * Failed to uncover basic frauds in cases such as WorldCom and HealthSouth because fundamental audit procedures were not performed. | Internal Auditors| Broad Role: Perform audits of companies for compliance with company policies and laws, audits to evaluate the efficiency of operations, and audits to determine the accuracy of financial reporting processes. Specific activities include: *Reporting results and analyses to management, (including operational management), and audit committees, * Evaluating internal controls. | * Focused efforts on ‘operational audits’ and assumed that fina ncial auditing was addressed sufficiently by the external audit function. * Reported primarily to management with little effective reporting to the audit committee. * In some instances (HealthSouth, WorldCom) did not have access to the corporate financial accounts. | c. There is an inverse relationship between corporate governance and risk to the auditor i. e. he better the quality of corporate governance, the lower the risk to the auditor. This relationship occurs because lower levels of corporate governance implies two things for the auditor: * There is more likelihood that the organization will have misstatements in its financial statements because the commitment to a strong organizational structure and oversight is missing, * There is greater risk to the auditor because the governance structure is not designed to prevent/detect such misstatements, and will likely not be as forthcoming when the auditor questions potential problems. -50. Element of Poor Corporate Governance| Audit Activity to Determine if Governance is actually Poor| Risk Implication of Poor Governance| The company is in the financial services sector and has a large number of consumer loans, including mortgages, outstanding. | This is not necessarily poor governance. However, the auditor needs to determine the amount of risk that is inherent in the current loan portfolio and whether the risk could have been managed through better risk management by the organization. The lack of good risk management by the organization increases the risk that the financial statements will be misstated because of the difficulty of estimating the allowance for loan losses. The auditor will have to focus increased efforts on estimating loan losses, including a comparison of how the company is doing in relation to the other companies in the financial sector. | The CEO and CFO’s compensation is based on three components: (a) base salary, (b) bonus based on growth in assets and profits, and (c) significant s tock options. This is a rather common compensation package and, by itself, is not necessarily poor corporate governance. However, in combination with other things, the use of ‘significant stock options’ may create an incentive for management to potentially manage reported earnings in order to boost the price of the company’s stock. The auditor can determine if it is poor corporate governance by determining the extent that other safeguards are in place to protect the company. In combination with other things, the use of ‘significant stock options’ may create an incentive for management to potentially manage reported earnings in order to boost the price of the company’s stock. The auditor should carefully examine if the company’s reported earnings and stock price differs broadly from companies in the same sector. If that is the case, there is a possibility of earnings manipulation and the auditor should investigate to see if such manipula tion is occurring. The audit committee meets semi-annually. It is chaired by a retired CFO who knows the company well because she had served as the CFO of a division of the firm before retirement. The other two members are local community members – one is the President of the Chamber of Commerce and the other is a retired executive from a successful local manufacturing firm. | There is a strong indicator of poor corporate governance.If the audit committee meets only twice a year, it is unlikely that it is devoting appropriate amounts of time to its oversight function, including reports from both internal and external audit. There is another problem in that the chair of the audit committee was previously employed by the company and would not meet the definition of an independent director. Finally, the problems with the other two members is that there is no indication that either of them have sufficient financial expertise. This is an example of poor governance because (1) it s ignals that the organization has not made a commitment to independent oversight by the audit committee, (2) the lack of financial expertise means that the auditor does not have someone independent that they can discuss controversial accounting or audit issues that arise during the course of the audit. If there is a disagreement with management, the audit committee does not have the expertise to make independent judgments on whether the auditor or management has the appropriate view of he accounting or audit issues. | The company has an internal auditor who reports directly to the CFO, and makes an annual report to the audit committee. | The good news is that the organization has an internal audit activity. | The bad news is that a staff of one isn’t necessarily as large or as diverse as it needs to be to cover the major risks of the organization. The external auditor will be more limited in determining the extent that his or her work can rely on the internal auditor. The CEO is a dominating personality – not unusual in this environment. He has been on the job for 6 months and has decreed that he is streamlining the organization to reduce costs and centralize authority (most of it in him). | A dominant CEO is not especially unusual, but the centralization of power in the CEO is a risk that many aspects of governance, as well as internal control could be overridden. The auditor should look at policy manuals, as well as interview other members of management and the board – especially the audit committee. The centralization of power in the CEO is a risk that many aspects of governance, as well as internal control could be overridden. This increases the amount of audit risk. | The Company has a loan committee. It meets quarterly to approve, on an ex-post basis all loans that are over $300 million (top 5% for this institution). | The auditor should observe the minutes of the loan committee to verify its meetings. The auditor should also intervie w the chairman of the loan committee to understand both its policies and its attitude towards controls and risk. There are a couple of elements in this statement that carries great risk to the audit and to the organization. First, the loan committee only meets quarterly. Economic conditions change more rapidly than once a quarter, and thus the review is not timely. Second, the only loans reviewed are (a) large loans that (b) have already been made. Thus, the loan committee does not act as a control or a check on management or the organization. The risk is that many more loans than would be expected could be delinquent, and need to be written down. The previous auditor has resigned because of a dispute regarding the accounting treatment and fair value assessment of some of the loans. | The auditor should contact the previous auditor to obtain an understanding as to the factors that led the previous auditor to either resign or be fired. The auditor is also concerned with who led the c harge to get rid of the auditor. | This is a very high risk indicator. The auditor would look extremely bad if the previous auditor resigned over a valuation issue and the new auditor failed to adequately address the same issue.Second, this is a risk factor because the organization shows that it is willing to get rid of auditors with whom they do not agree. This is a problem of auditor independence and coincides with the above identification of the weakness of the audit committee. This action confirms a generally poor quality of corporate governance. | 2-51. a. External auditors are supposed to perform audits of financial statements to ensure that the statements are free of material misstatements. They work for each of the parties to a certain extent and since they are independent, they will not favor any party over the other.The auditors are an independent and objective attestor that evaluates the quality of financial reporting and conveys an opinion to all parties involved in corp orate governance. b. Some of the ways the accounting profession was responsible were: * Were too concerned about creating â€Å"revenue enhancement† opportunities, and less concerned about their core services or talents * Were willing to â€Å"push† accounting standards to the limit to help clients achieve earnings goals * Began to use more audit â€Å"shortcuts† such as inquiry and analytical procedures instead of direct testing of account balance. Relied on management representations instead of testing management representations. c. The term â€Å"public watchdog† implies that auditors will look over the business world and stop bad things from happening. In terms of financial statements, Arthur Levitt said, â€Å"We rely on auditors to put something like the good housekeeping seal of approval on the information investors receive. † The term â€Å"public watchdog† places a great deal of responsibility on the shoulders of auditors to protect the public’s interests. 2-52. b&c. Cookie jar reserves are essentially funds that companies have â€Å"stashed away† to use when times get tough. The rationale is that the reserves are then used to â€Å"smooth† earnings in the years when earnings needs a boost. â€Å"Smooth† earnings typically are looked upon more favorably by the stock market. An example of a cookie jar reserve would be over-estimating an allowance account, such as allowance for doubtful accounts. The allowance account is then written down (and into the income statement) in a bad year.Auditors may have allowed cookie jar reserves because they are known to smooth earnings, and smooth earnings are rewarded by the market. On the flip side, fluctuating earnings are penalized, and present more risk to the company of bankruptcy or other problems. The Sarbanes-Oxley Act addressed the issue by creating an oversight body, the PCAOB, but also addressed the issue in other ways. For example, Congr ess felt that creating more effective Boards would decrease the use of earnings management. Allowing improper revenue recognition is one thing that auditors may have done in their unwillingness to say â€Å"no† to clients.For example, companies shipped out goods to customers at the end of the year for deep discounts and allowed returns at the beginning of the next year. This practice is known as channel stuffing. Since the goods had a great chance of being returned, it would be improper to recognize all as revenue. Again, auditors were unwilling to say â€Å"no† to clients. Greed is probably the reason here. If companies claim more revenue, their stock would grow in the short-term, making management richer, and making management more willing to give pay raises to their auditors.With the establishment of stronger audit committees and certification of financial statements in the Sarbanes-Oxley Act, this kind of accounting trickery will certainly decrease. Creative accoun ting for M&A included the use of the â€Å"pooling† method of accounting. Pooling allowed acquiring companies to value existing assets at historical costs and did not require the recognition of goodwill for the acquisition. Because true costs (values) were not shown on the financial statements, management was often encouraged to bid up prices for acquisitions with the result that many of them were not economic.The creative accounting also shielded the income statement from charges that would have otherwise hit income including: goodwill amortization, depreciation, and depletion expenses. Greed, the same reasons as the revenue recognition issue, was most likely the motivation for this creative accounting. Discussion between an educated audit committee and auditor plus certification of financial statements required by Sarbanes-Oxley will certainly address this issue. Assisting management to meet earnings.Too often, auditors confused ‘financial engineering’ with val ue-adding. In other words, auditors often sought to add value to their clients by finding ways to push accounting to achieve earnings objectives sought by management. These earnings objectives then played a major role in escalating stock prices – all desired because of the heavy emphasis of management compensation on stock options. Incentives were misaligned. Most of management compensation came in the form of stock options.Better audit committees, increased auditor responsibility, identification of users as the client of the auditor, and management certification of statements will address the issue via requirements of the Sarbanes-Oxley Act. 2-53. a. Some ways that the impact of the Sarbanes-Oxley Act affects the external audit profession: * The creation of the PCAOB puts a watchful eye on the accounting industry. * Reporting on internal controls is required by the external auditor, adding to their workload but also strengthening their value to organizations and giving them more assurance when giving an audit opinion. Auditors can now feel more comfortable taking issues to the audit committee * Audit partners must rotate off every five years. This will create a difficult transition at every client every five years. * With the cooling off period, audit partners or managers cannot take jobs with clients as easily. b. The Sarbanes-Oxley Act encourages effective internal audit functions for all public companies. The internal audit profession has been active in assisting companies in complying with the internal control provisions of the Act. c. This could be argued either way.On one side, the legislation clearly creates a â€Å"watchdog† of the accounting industry, which decreases the power and prestige as the profession is no longer self-regulated. On the other hand, the Act and recent business press has brought a lot of attention to the accounting industry, which has educated the world about the role of accountants in the economy, and possibly incr eased their power and prestige. Now, there is a general feeling that the public accounting profession has reestablished itself as a watchdog for investors and see the audit committee as their primary client.Overall, the consensus seems to be that the profession has regained a great deal of its prestige. 2-54. a. The Sarbanes-Oxley Act changed responsibilities of management in the following ways: * Requirement that CEO and CFO certify the financial statements and disclosures * Requirement that companies provide a comprehensive report on internal controls over financial reporting * Requirement to describe whether they have implemented a Corporate Code of Conduct, including provisions for whistleblowing, and processes to ensure hat corporate actions are consistent with the Code of Conduct. b. Under The Sarbanes-Oxley Act, management is no longer the â€Å"client. † The auditor reports to the audit committee, who is independent of management. With these changes, the auditor shoul d be able to be â€Å"tougher† on management because the audit committee will be demanding it. However, the auditor still has to work with management to gain access to needed information, as well as understanding management intent as management intent drives some accounting treatments. . The CEO and CFO, as members of management, are ultimately responsible for the financial statements. The chair of the audit committee and the external auditor are then responsible to a certain extent, probably more in the minds of the public than in reality. Finally, the Director of Internal Audit is the least responsible of the group, as they are essentially employees of management and the audit committee. 2-55. a. The audit committee must be comprised of â€Å"outside† independent directors, one of whom must be a financial expert.The audit committee now has the authority to hire and fire the external auditor, and will therefore serve as the auditor’s primary contact, especially for accounting and audit related issues. In addition, the audit committee sets the scope for and hires internal auditors. They must review the work of both parties. b. The audit committee certainly takes on much more responsibility with the new standard. They will now be much more informed about the audit function and financial reporting processes within their company. The auditor must report all significant problems to the audit committee.For auditors, the reporting relationship should reinforce the need to keep the third-party users in mind in dealing with reporting choices. c. The audit committee is basically in a position of mediator, but not problem solver. One member must be a financial expert, but all members must be well versed in the field. This financial knowledge can help the audit committee to understand the disagreement. Ultimately, the auditor has to be able to give a clean audit opinion. If they believe a certain accounting treatment to be wrong, they do not have to give that clean opinion.In this way, neither the audit committee nor management can necessarily solve a dispute. d. The accounting choice is acceptable, and thus, the financial statements are fairly presented in accordance with GAAP. The fact that the auditor believes there is a better treatment should be communicated to important parties as follows: * Management – the communication should be made directly, and the rationale for the auditor’s opinion should be explained to management and documented in the working papers. The working papers should also include the client’s rationale for the chosen accounting treatment. Audit Committee – Both management’s chosen treatment and the auditor’s preferred treatment should be communicated to the audit committee. Preferably the communication would include both verbal communication and written communication. The rationale for accepting management’s accounting treatment should also be communicate d. * Users of the Financial Statement – There is no required communication to the outside users of the financial statements as long as the auditor has concluded that the financial statements are fairly presented in accordance with GAAP. 2-56. . An audit committee is a subcommittee of the board of directors; it is responsible for monitoring audit activities and serves as a surrogate for the interests of shareholders. Audit committees should preferably be composed of outside members of the board, that is, members who do not hold company management positions or are closely associated with management. b. The following information should be discussed with the audit committee: * A summary of the auditor's responsibilities under GAAS. Auditor responsibilities change over time as new standards are issued.The audit committee should always be aware of the nature of the audit function within the organization. * Initial selection or major changes in significant accounting policies that c ould have a material affect on financial statement presentation. The audit committee needs to know how the choice may affect both current reports and future financial reports as well as the rationale for the choice because it is presumed that companies select the accounting principles that best reflect the economic substance of their transactions and are thus changed only when dictated by standard-setting bodies or when the economics of the situation change. The process utilized by management to make significant estimates and other management judgments such as loan loss reserves in banks and savings and loans and insurance reserves in insurance companies. * Significant audit adjustments that may reflect on the stewardship and accountability of management, even if management agreed to make the adjustments. * The auditor's review of and responsibility for other information contained in an annual report (outside of the audited financial statements). * All major accounting disagreements with management, even if such disagreements are eventually resolved to the auditor's satisfaction. The auditor's knowledge of management's consultation with other auditors regarding accounting or auditing issues. * Any significant accounting or auditing issues discussed with management prior to the acceptance of the audit engagement – in particular, any positions taken regarding the proper accounting of controversial areas should be disclosed. * Any difficulties encountered in performing the audit, especially any activities undertaken by management that might be considered an impairment of the audit function. * Internal audit plans and reports and management’s responses to those reports. The extent to which the client has implemented a comprehensive plan of risk assessment and the organization’s plans to mitigate, share, control, or otherwise address those risks. * Any known internal control weaknesses that could significantly affect the financial reporting pro cess. The rationale for this communication is that the board of directors through