Month: January 2022

When the managers report to the owners or shareholders and stakeholders there is the likelihood that they will try to paint a picture that they delivered as agreed with the stakeholders or shareholders. The reports are likely to: Have misstatements Read More …

Financial statements usually three forms namely: Income statement, Cash flow statement and Statement of financial position. The financial statements may be produced quarterly, semi – annually or annually. The company’s Act recommends that they must be produced annually. There are Read More …

Creditors lend to the firm at a rate which depends on the riskiness of the firm as perceived by the creditors. The creditors provide the firm the finances for a specific time period. A lot can happen during that period Read More …

The creditors are contributors of debt capital. They are not in any way involved in the day to day running of the business. After the provision of debt finance, the shareholders are expected to manage the finances along with the Read More …

There is the assumption that the managers and shareholders left on their own will each attempt to act in their own self interest. The managers are likely to pursue goals which do not maximize the shareholders wealth. The goals would Read More …

The shareholders are the real owners of the company through equity capital contribution. However, they may not be involved directly in the day to day running of affairs of the business. The shareholders may not have the necessary skills and Read More …

An agency relationship arises whenever one or more individuals called principals use other people or individual/s called agents to perform some services on their behalf. The principals delegate decision making authority to the agents. In case of public limited company, Read More …

The Definition for Audit and Assurance Standard AAS-1 by the Institute of Chartered Accountants of India(ICAI) — “Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal Read More …

Certain policies must be formulated before a successful compensation system can be developed and implemented. These policies are strongly influenced by the organizations objectives and its environment. Compensation policies must deal with the following issues: Minimum and maximum levels of Read More …

Compensation refers to that which employees receive in exchange for their work/effort. Compensation is usually composed of base wage or salary plus any accompanying bonuses and benefits. Base wage or salary is the hourly, weekly or monthly payment that employees Read More …