Day: February 19, 2021

INTRODUCTION Capital Rationing is a situation where a company has insufficient capital to complete all projects which it would like to undertake (e.g. those with a positive NPV). Broadly, Capital Rationing can be described as: Soft Capital Rationing – due Read More …

INTRODUCTION An organisation may be faced with a decision on the best policy regarding the replacement of assets.  If the asset is to be replaced with an “identical asset” the question is how long to retain the asset and the Read More …

INTRODUCTION To illustrate how inflation should be handled in Investment Appraisal we shall take a simple example, under two different scenarios – an environment with no inflation and an environment where inflation is present: No Inflation – suppose you are Read More …

INTRODUCTION To appraise fully an investment, management must take account of the impact of taxation, as it is the after-tax cash flows that are relevant to decision making. As a result of accepting a project tax payments or savings will, Read More …

NATURE AND STAGES OF INVESTMENT APPRAISAL Nature Replacement Investment Investment for Expansion Product Improvement/Cost Reduction New Ventures Strategic Investment – may satisfy overall objectives but might not satisfy normal financial criteria. Statutory Requirements/Employee or Community Welfare – may not produce Read More …

INTRODUCTION Corporate Governance can be defined as the system by which organizations are directed and controlled.  BEST PRACTICE A “Code of Best Practice” should outline the recommendations listed below:- Some of the main recommendations are: The roles of chairman and Read More …

INTRODUCTION It is often assumed that the single objective of commercial entities is: To Maximise the Value of the Firm Or To Maximise the Wealth of the Shareholders In reality, firms have multiple, and often conflicting, objectives and will seek Read More …

THE ROLE OF THE OFFICE OF THE AUDITOR GENERAL (OAG) The office of Auditor General of Rwanda (OAG) was established in 1998 and began its operations in 2000.  The 2003 Constitution of the Republic of Rwanda recognised OAG as the Read More …

. REVIEW CONSIDERATIONS       Review Procedures   An auditor must perform and document an overall review of the financial statements before making an audit opinion.  This review, along with the conclusions drawn from other audit evidence obtained, gives Read More …

ENTITY’S COMPUTER SYSTEMS AND CONTROLS Computer systems In the modern age many businesses use computer systems to help them run their business and produce financial information.  Directors are still required to put into place safeguards to protect the assets of Read More …