Control risk Essay

The auditor obtains an understanding of the design and implementation of internal Control to make a preliminary assessment of control risk as part of the auditor’s overall Assessment of the risk of material misstatements. The auditor uses this preliminary assessment of control risk to plan the audit for each material class of transactions. However, in some instances the auditor may learn that the control deficiencies are significant such that the client’s financial statements may not be auditable. So, before making a preliminary assessment of control risk for each material class of transactions, the auditor must first decide whether the entity is auditable. Two primary factors determine auditability: the integrity of management and the ade – quacy of accounting records. If management lacks integrity, most auditors will not accept the engagement. The accounting records are an important source of audit evidence for most audit objectives. If the accounting records a re deficient, necessary audit evidence may not be available. For example, if the client has not kept duplicate sales invoices and vendors’ invoices, it is usually impractical to do an audit. In complex IT environments, much of the transaction information is available only in electronic form without generating a visible audit trail of documents and records. In that case, the company is usually still auditable; however, auditors must assess whether they have the necessary skills to gather evidence that is in electronic form and can assign personnel with adequate IT training and experience. After obtaining an understanding of internal control, the auditor makes a preliminary assessment of control risk as part of the auditor’s overall assessment of the risk of material misstatement. This assessment is a measure of the auditor’s expectation that internal controls will prevent material misstatements from occurring or detect and correct them if they have occurred. The starting point for most auditors is the assessment of entity-level controls. By nature, entity-level controls, such as many of the elements contained in the control environment, risk assessment, and monitoring components, have an overarching impact on most major types of transactions in each transaction cycle. For example, an ineffective board of directors or management’s failure to have any process to identify, assess, or manage key risks, has the potential to undermine controls for most of the transaction-related audit objectives. Thus,  auditors generally assess entity-level controls before assessing transaction specific controls. Once auditors determine that entity-level controls are designed and placed in operation, they next make a preliminary assessment for each transaction-related audit objective for each major type of transaction in each transaction cycle. For example, in the sales and collection cycle, the types of transactions usually involve sales, sales returns and allowances, cash receipts, and the provision for and write-off of uncollectible accounts. The auditor also makes the preliminary assessment for controls affecting audit objectives for balance sheet accounts and presentations Many auditors use a control risk matrix to assist in the control risk assessment process at the transaction level. The purpose is to provide a convenient way to organize assessing control risk for each audit objective. the control risk matrix for transaction-related audit objectives, auditors use a similar control risk matrix format to assess control risk for balance-related and presentation and disclosure-related audit objectives. Identify Audit Objectives The first step in the assessment is to identify the audit objectives for classes of transactions, account balances, and presentation and dis closure to which the assessment applies. For example, this is done for classes of transactions by applying the specific transaction-related audit objectives introduced earlier, which were stated in general form, to each major type of transaction for the entity. For example, the auditor makes an assessment of the occurrence objective for sales and a separate assessment of the completeness objective. Identify Existing Controls Next, the auditor uses the information discussed in the previous section on obtaining and documenting an understanding of internal control to identify the controls that contribute to accomplishing transaction-related audit objectives. One way for the auditor to do this is to identify controls to satisfy each objective. For example, the auditor can use knowledge of the client’s system to identify controls that are likely to prevent errors or fraud in the occurrence transaction-related audit objective. The same thing can be done for all other objectives. It is also helpful for the auditor to use the five control activities (separation of duties, proper authorization,  Adequate documents and records, physical control over assets and records, and Independent checks on performance) as reminders of controls. For example: Is there adequate separation of duties and how is it achieved? Are transactions properly authorized? Are pre-numbered documents properly accounted for? Are key master files properly restricted from unauthorized access? The auditor should identify and include only those controls that are expected to have the greatest effect on meeting the transaction-related audit objectives. These are often called key controls. The reason for including only key controls is that they will be sufficient to achieve the transaction-related audit objectives and also provide audit efficiency. Associate Controls with Related Audit Objectives Each control satisfies one or more related audit objectives. This can be seen for transaction-relatedaudit objectives. The body of the matrix is used to show how each control contributes To the accomplishment of one or more transaction-related audit objectives. In this , a C was entered in each cell where a control partially or fully satisfied an bjective. A similar control risk matrix would be completed for balance-related and presentation and disclosure-related audit objectives. For example, the mailing of statements to customers satisfies three objectives in the audit of Hillsburg Hardware, which is indicated by the placement of each C on the row . Identify and Evaluate Control Deficiencies, Significant Deficiencies, and Material Weaknesses Auditors must evaluate whether key controls are absent in the design of internal control over financial reporting as a part of evaluating control risk and the likelihood of financial statement misstatements. Auditing standards define three levels of the absence of internal controls: 1. Control deficiency. A control deficiency exists if the design or operation of controls does not permit company personnel to prevent or detect mis-statements on a timely basis in the normal course of performing theirassigned functions. A design deficiency exists if a necessary control is missing or not properly designed. An operation deficiency exists if a well-designed control does not operate as designed or if the person performing the control is insufficiently qualified or authorized. 2. Significant deficiency. A significant deficiency exists if one or more control deficiencies exist that is less severe than a material weakness (defined below), but important enough to merit attention by those responsible for oversight of the company’s financial reporting. 3. Material weakness. A material weakness exists if a significant deficiency, by itself, or in combination with other significant deficiencies, results in a reason – able possibility that internal control will not prevent or detect material financial statement misstatements on a timely basis. To determine if a significant internal control deficiency or deficiencies are a material weakness, they must be evaluated along two dimensions: likelihood and significance. If there is more than a reasonable possibility (likelihood) that a material misstatement (significance) could result from the significant deficiency or deficiencies, then it is considered a material weakness. A five-step approach can be used to identify deficiencies, significant deficiencies, and Material weaknesses. 1. Identify existing controls. Because deficiencies and material weaknesses are the absence of adequate controls, the auditor must first know which controls exist. The methods for identifying controls have already been discussed. 2. Identify the absence of key controls. Internal control questionnaires, flow charts, and walkthroughs are useful tools to identify where controls are lacking and the likelihood of misstatement is therefore increased. It is also useful to examine the control risk matrix, such as to look for objectives where there are no or only a few controls to prevent or detect misstatements. 3. Consider the possibility of compensating controls. A compensating control is one Elsewhere in the system that offsets the absence of a key control. A common example in a small business is the active involvement of the owner. When a compensating control exists, there is no longer a significant deficiency or material weakness. 4. Decide whether there is a significant deficiency or material weakness. The likelihood of misstatements and their materiality are used to evaluate if there are significant deficiencies or material weaknesses. 5. Determine potential misstatements that could result. This step is intended to identify specific misstatements that are likely to result because of the significant deficiency or material weakness. The importance of a significant deficiency  or material weakness is directly related to the likelihood and materiality of potential misstatements. Associate Significant Deficiencies and Material Weaknesses with Related Audit Objectives The same as for controls, each significant deficiency or material weakness can apply to one or more related audit objectives. In the case of Hillsburg, there are two significant deficiencies, and each applies to only one transaction-related objective. The significant deficiencies are shown in the body of the figure by a D in the appropriate objecti ve column. Assess Control Risk for Each Related Audit Objective After controls, significant deficiencies, and material weaknesses are identified and associated with transaction-related audit objectives, the auditor can assess control risk for transaction related audit objectives. This is the critical decision in the evaluation of internal control. The auditor uses all of the information discussed previously to make a subjective control risk assessment for each objective. There are different ways to express this assessment. Some auditors use a subjective expression such as high, moderate, or low. Others use numerical probabilities such as 1.0, 0.6, or 0.2. Again, the control risk matrix is a useful tool for making the assessment. This assessment is not the final one. Before making the final assessment at the end of the integrated audit, the auditor will test controls and perform substantive tests. These Procedures can either support the preliminary assessment or cause the auditor to make changes. In some cases, management can correct deficiencies and material weaknesses before the auditor does significant testing, which may permit a reduction in control risk. After a preliminary assessment of control risk is made for sales and cash receipts, the auditor can complete the three control risk rows of the evidence-planning worksheet . If tests of controls results do not support the preliminary assessment of control risk, the auditor must modify the worksheet later. Alternatively, the auditor can wait until tests of controls are done to complete the three control risk rows of the worksheet. As part of understanding internal control and assessing control risk, the auditor is required to communicate certain matters to those charged with governance. This Information and other recommendations about controls are also often communicated to management. Communications to Those  Charged With Governance The auditor must communicate significant deficiencies and material weaknesses in writing to those charged with governance as soon as the auditor becomes aware of their existence. The communication is usually addressed to the audit committee and to management. Timely communications may provide management an opportunity to address control deficiencies before management’s report on internal control must be issued. In some instances, deficiencies can be corrected sufficiently early such that both management and the auditor can conclude that controls are operating effectively as of the balance sheet date. Regardless, these communications must be made no later than 60 days following the audit report release. Management Letters In addition to these matters, auditors often identify less significant internal control-related issues, as well as opportunities for the client to make operational improvements. These should also be communicated to the client. The form of communication is often a separate letter for that purpose, called a management letter. Although management letters are not required by auditing standards, auditors generally prepare them as a value-added service of the audit. Test of controls We’ve examined how auditors link controls, significant deficiencies, and material Weaknesses in internal control to related audit objectives to assess control risk for each objective. Now we’ll address how auditors test those controls that are used to support a control risk assessment. For example, each key control that the auditor intends to rely on to support a control risk of medium or low must be supported by sufficient tests of controls. We will deal with tests of controls for both audits of internal control for financial reporting and audits of financial statements. Assessing control risk requires the auditor to consider both the design and operation of controls to evaluate whether they will likely be effective in meeting related audit objectives. During the understanding phase, the auditor will have already gathered some evidence in support of both the design of the controls and their implementation by using procedures to obtain an understanding . In most cases, the auditor will not have gathered  enough evidence to reduce assessed control risk to a sufficiently low level. The auditor must therefore obtain additional evidence about the operating effectiveness of controls throughout all, or at least most, of the period under audit. The procedures to test effectiveness of controls in support of a reduced assessed control risk are called tests of controls. If the results of tests of controls support the design and operation of controls as expected, the auditor uses the same assessed control risk as the preliminary assessment. If, however, the tests of controls indicate that the controls did not operate effectively, the assessed control risk must be reconsidered. For example, the tests may indicate that the application of a control was curtailed midway through the year or that the person applying it made frequent misstatements. In such situations, the auditor uses a higher assessed control risk, unless compensating controls for the same related audit objectives are identified and found to be effective. Of course, the auditor must also consider the impact of those controls that are not operating effectively on the auditor’s Report on internal control. Procedures for Tests of Controls The auditor is likely to use four types of procedures to support the operating effectiveness of internal controls. Management’s testing of internal control will likely include the same types of procedures. The four types of procedures are as follows: 1. Make inquiries of appropriate client personnel. Although inquiry is not a highly reliable source of evidence about the effective operation of controls, it is still appropriate. For example, to determine that unauthorized personnel are denied access to computer files, the auditor may make inquiries of the person who controls the computer library and of the person who controls online access security password assignments. 2. Examine documents, records, and reports. Many controls leave a clear trail of documentary evidence that can be used to test controls. Suppose, for example, that when a customer order is received, it is used to create a customer sales order, which is approved for credit. Then the customer order is attached to the sales order as authorization for further processing. The auditor can test the control by examining the documents to make sure that they are complete and properly matched and that required signatures or initials are present. 3. Observe control-related  activities. Some controls do not leave an evidence trail, which means that it is not possible to examine evidence that the control was executed at a later date. For example, separation of duties relies on specific persons performing specific tasks, and there is typically no documentation of the separate performance. For controls that leave no documentary evidence, the auditor generally observes them being applied at various points during the year. 4. Reperform client procedures. There are also control-related activities for which there are related documents and records, but their content is insufficient for the auditor’s purpose of assessing whether controls are operating effectively. For example, assume that prices on sales invoices are obtained from the master price list, but no indication of the control is documented on the sales invoices. In these cases, it is common for the auditor to reperform the control activity to see whether the proper results were obtained. For this example, the auditor can re perform the procedure by tracing the sales prices to the authorized price list in effect at the date of the transaction. If no misstatements are found, the auditor can conclude that the procedure . Extent of Procedures The extent to which tests of controls are applied depends on the preliminary assessed control risk. If the auditor wants a lower assessed control risk, more extensive tests of controls are applied, both in terms of the number of controls tested and the extent of the tests for each control. For example, if the auditor wants to use a low assessed control risk, a larger sample size for documentation, observation, and re performance procedures should be applied. The extent of testing also depends on the frequency of the operation of the controls, and whether it is manual or automated. Reliance on Evidence from the Prior Year’s Audit When auditors plan to use evidence about the operating effectiveness of internal control obtained in prior audits, auditing standards require tests of the controls’ effectiveness at least every third year. If auditors determine that a key control has been changed since it was last tested, they should test it in the current year. When there are a number of controls tested in prior audits that have not been changed, auditing standards  require auditors to test some of those controls each year to ensure there is a rotation of controls testing throughout the three year period. Testing of Controls Related to Significant Risks Significant risks are those risks that the auditor believes require special audit consideration. When the auditor’s risk assessment procedures identify significant risks, the auditor is required to test the operating effectiveness of controls that mitigate these risks in the current year audit, if the auditor plans to rely on those controls to support a control risk assessment below 100%. The greater the risk, the more audit evidence the auditor should obtain that controls are operating effectively. Testing Less Than the Entire Audit Period Recall that management’s report on internal control deals with the effectiveness of internal controls as of the end of the fiscal year. PCAOB Standard 5 requires the auditor to perform tests of controls that are adequate to determine whether controls are operating effectively at year-end. The timing of the auditor’s tests of controls will therefore depend on the nature of the controls and when the company uses them. For controls that are applied throughout the accounting period, it is usually practical to test them at an interim date. The auditor will then determine later if changes in controls occurred in the period not tested and decide the implication of any change. Controls dealing with financial statement preparation occur only quarterly or at year-end and must therefore also be tested at quarter and year-end. Relationship between Tests of Controls and Procedures to Obtaining Understanding There is a significant overlap between tests of controls and procedures to obtain an understanding. Both include inquiry, documentation, and observation. There are two primary differences in the application of these common procedures. 1. In obtaining an understanding of internal control, the procedures to obtain an understanding are applied to all controls identified during that phase. Tests of controls, on the other hand, are applied only when the assessed control risk has not been satisfied by the procedures to obtain an understanding. 2. Procedures to obtain an  understanding are performed only on one or a few transactions or, in the case of observations, at a single point in time. Tests of controls are performed on larger samples of transactions (perhaps 20 to 100), and often, observations are made at more than one point in time. For key controls, tests of controls other than re performance are essentially an Extension of procedures to obtain an understanding. Therefore, assuming the auditors plan to obtain a low assessed control risk from the beginning of the integrated audit, they will likely combine both types of procedures and perform them simultaneously. One option is to perform the audit procedures separately, where minimum procedures to obtain an understanding of design and operation are performed, followed by additional tests of controls. An alternative is to combine both columns and do them simultaneously. The same amount of evidence is accumulated in the second approach, but more efficiently. The determination of the appropriate sample size for tests of controls is an important audit decisions. Detection risk and the design of substantive tests We’ve focused on how auditors assess control risk for each related audit objective and support control risk assessments with tests of controls. The completion of these activities is sufficient for the audit of internal control over financial reporting, even though the report will not be finalized until the auditor completes the audit of financial statements. The auditor uses the control risk assessment and results of tests of controls to determine planned detection risk and related substantive tests for the audit of financial statements. The auditor does this by linking the control risk assessments to the balance related audit objectives for the accounts affected by the major transaction types and to the four presentations and disclosure audit objectives. The appropriate level of detection risk for each balance-related audit objective is then decided using the audit risk model. The relationship of transaction-related audit objectives to balance-related audit objectives and the selection and design of audit procedures for substantive tests of financial statement. Types of test In developing an overall audit plan, auditors use five types of tests to determine whether financial statements are fairly stated. Auditors use risk  assessment procedures to assess the risk of material misstatement, represented by the combination of inherent risk and control risk. The other four types of tests represent further audit procedures performed in response to the risks identified. Each audit procedure falls into one, and sometimes more than one, of these five categories. Figure 13-1 shows the relationship of the four types of further audit procedures to the audit risk model. As Figure 13-1 illustrates, tests of controls are performed to support a reduced assessment of control risk, while auditors use analytical procedures and tests of details of balances to satisfy planned detection risk. Substantive tests of transactions affect both control risk and planned detection risk, because they test the effectiveness of internal controls and the dollar amounts of transactions. Risk Assessment Procedures TThe second standard of fieldwork requires the auditor to obtain an understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement in the client’s financial statements. Risk assessment procedures are performed to assess the risk of material misstatement in the financial statements. The auditor performs tests of controls, substantive tests of transactions, analytical procedures, and tests of details of balances in response to the auditor’s assessment of the risk of material misstatements. The combination of these our types of further audit procedures provides the basis for the auditor’s opinion, as illustrated by Figure 13-1. A major part of the auditor’s risk assessment procedures are done to obtain an Understanding of internal control. Procedures to obtain an understanding of internal control were studied and focus on both the design and implementation of internal control and are used to assess control risk for each transaction-related audit objectively Tests of Controls EThe auditor’s understanding of internal control is used to assess control risk for each transaction-related audit objective. Examples are assessing the accuracy objective for sales transactions as low and the occurrence objective as moderate. When control policies and procedures are believed to be effectively designed, the auditor assesses control risk at a level that reflects the relative effectiveness of those controls. To obtain sufficient  appropriate evidence to support that assessment, the auditor performs tests of controls.S Tests of controls, either manual or automated, may include the following types of evidence. (Note that the first three procedures are the same as those used to obtain an understanding of internal control.) †¢ Make inquiries of appropriate client personnel †¢ Examine documents, records, and reports †¢ Observe control-related activities †¢ Reperform client procedures Auditors perform a system walkthrough as part of procedures to obtain an under – standing to help them determine whether controls are in place. The walkthrough is normally applied to one or a few transactions and follows that transaction through the entire process. For example, the auditor may select one sales transaction for a system walk through of the credit approval process, then follow the credit approval process from initiation of the sales transaction through the granting of credit. Tests of controls are also used to determine whether these controls are effective and usually involve testing a sample of transactions. As a test of the operating effectiveness of the credit approval process, for example, the auditor might examine a sample of 50 sales transactions from throughout the year to determine whether credit was granted before the shipment of goods. Procedures to obtain an understanding of internal control generally do not provide sufficient appropriate evidence that a control is operating effectively. An exception may apply for automated controls because of their consistent performance. The auditor’s procedures to determine whether the automated control has been implemented may also serve as the test of that control, if the auditor determines there is minimal risk that the automated control has been changed since the understanding was obtained. Then, no additional tests of controls would be required. The amount of additional evidence required for tests of controls depends on two things: 1. The extent of evidence obtained in gaining the understanding of internal control 2. The planned reduction in control risk Figure 13-2 (p. 406) shows the role of tests of controls in the audit of the sales and collection cycle relative to other tests performed to provide  sufficient appropriate evidence for the auditor’s opinion. Note the un shaded circles with the words â€Å"Audited by TOC.† For simplicity, we make two assumptions: Only sales and cash receipts trans – actions and three general ledger balances make up the sales and collection cycle and the beginning balances in cash and accounts receivable were audited in the previous year and are considered correct. If auditors verify that sales and cash receipts transactions are correctly recorded in the accounting records and posted to the general ledger, they can conclude that the ending balances in accounts receivable and sales are correct. (Cash disbursements transactions will OF have to be audited before the auditor can reach a conclusion about the ending balance in the cash account.) One way the auditor can verify recording of transactions is to perform tests of controls. If controls are in place over sales and cash receipts transactions, the auditor can perform tests of controls to determine whether the six transaction-related audit objectives are being met for that cycle. Substantive tests of transactions, which we will examine in the next section, also affect audit assurance for sales and cash receipts transactions. Substantive Tests of TransactionsSTS Substantive tests are procedures designed to test for dollar misstatements (often called monetary misstatements) that directly affect the correctness of financial statement balances. Auditors rely on three types of substantive tests: substantive tests of transactions, substantive analytical procedures, and tests of details of balances. Substantive tests of transactions are used to determine whether all six transactions related audit objectives have been satisfied for each class of transactions. Two of those objectives for sales transactions are recorded sales transactions exist (occurrence objective) and existing sales transactions are recorded (completeness objective for the six transaction-related audit objectives. When auditors are confident that all transactions were correctly recorded in the journals and correctly posted, considering all six transaction-related audit objectives, they can be confident that general ledger totals are correct. Figure 13-2 illustrates the role of substantive tests of transactions in the audit of the sales and collection cycle by lightly shaded circles with the words â€Å"Audited by STOT.† Observe that both tests of controls and substantive tests of transactions are performed for transactions in the cycle, not on the ending account  balances. The auditor verifies the recording and summarizing of sales and cash receipts transactions by performing substantive tests of transactions. Figure 13-2 shows one set of tests for sales and another for cash receipts. Analytical Procedures analytical procedures involve comparisons of recorded amounts to expectations developed by the auditor. Auditing standards require that they be done during planning and completing the audit. Although not required, analytical procedures may also be performed to audit an account balance. The two most important purposes of analytical procedures in the audit of account balances are to: 1. Indicate possible misstatements in the financial statements 2. Provide substantive evidence Analytical procedures done during planning typically differ from those done in the testing phase. Even if, for example, auditors calculate the gross margin during planning, they probably do it using interim data. Later, during the tests of the ending balances, they will recalculate the ratio using full-year data. If auditors believe that analytical procedures indicate a reasonable possibility of misstatement, they may perform additional analytical procedures or decide to modify tests of details of balances. When the auditor develops expectations using analytical procedures and concludes that the client’s ending balances in certain accounts appear reasonable, certain tests of details of balances may be eliminated or sample sizes reduced. Auditing standards state that analytical procedures are a type of substantive test (referred to as substantive analytical procedures), when they are performed to provide evidence about an account balance. The Extent to which auditors may be willing to rely on substantive analytical procedures in support of an account balance depends on several factors, including the precision of the expectation developed by the auditor, materiality, and the risk of material misstatement. Figure 13-2 illustrates the role of substantive analytical procedures in the audit of the sales and collection cycle by the dark shaded circles with the words â€Å"Audited by AP.† Observe that the auditor performs substantive analytical procedures on sales and Cash receipts transactions, as well as on the ending balances of the accounts in the cycle. Tests of Details of Balances Tests of details of balances focus on the ending general ledger balances for both balance sheet and income statement accounts. The primary emphasis in most tests of details of balances is on the balance sheet. Examples include confirmation of customer balances for accounts receivable, physical examination of inventory, and examination of vendors’ statements for accounts payable. Tests of ending balances are essential because the evidence is usually obtained from a source independent of the client, which is considered highly reliable. Much like for transactions, the auditor’s tests of details of balances must satisfy all balance-related audit objectives for each significant balance sheet account. Figure 13-2 illustrates the role of tests of details of balances by the circles with half dark and half light shading and the words â€Å"Audited by TDB.† Auditors perform detailed tests of the ending balances for sales and accounts receivable, including procedures such as confirmation of account receivable balances and sales cutoff tests. The extent of these tests depends on the results of tests of controls, substantive tests of transactions, and substantive analytical procedures for these accounts. Tests of details of balances help establish the monetary correctness of the accounts they relate to and therefore are substantive tests. For example, confirmations test for monetary misstatements in accounts receivable and are therefore substantive tests. Similarly, counts of inventory and cash on hand are also substantive tests. OSelect the appropriate types of audit tests Typically, auditors use all five types of tests when performing an audit of the financial statements, but certain types may be emphasized, depending on the circumstances. Recall that risk assessment procedures are required in all audits to assess the risk of material misstatement while the other four types of tests are performed in response to the risks identified to provide the basis for the auditor’s opinion. Note also that only risk assessment procedures, especially procedures to obtain an understanding of controls, and tests of controls are performed in an audit of internal control over financial reporting. Several factors influence the auditor’s choice of the types of tests to select, including the availability of the eight types of evidence, the relative costs of each type of test, the effectiveness of  internal controls, and inherent risks. Only the first two are discussed further because the last two were discussed in earlier chapters. Availability of Types of Evidence for Further Audit Procedures OEach of the four types of further audit procedures involves only certain types of evidence (confirmation, documentation, and so forth. †¢ More types of evidence, six in total, are used for tests of details of balances than for any other type of test. †¢ Only tests of details of balances involve physical examination and confirmation. †¢ Inquiries of the client are made for every type of test. †¢ Documentation is used in every type of test except analytical procedures. †¢ Re performance is used in every type of test except analytical procedures. Auditors may re perform a control as part of a transaction walkthrough or to test a control that is not supported by sufficient documentary evidence. †¢ Recalculation is used to verify the mathematical accuracy of transactions when per forming substantive test of transactions and account balances when per – forming tests of details of balances. Relative Costs When auditors must decide which type of test to select for obtaining sufficient appropriate evidence, the cost of the evidence is an important consideration. The types of tests are listed below in order of increasing cost: †¢ Analytical procedures †¢ Risk assessment procedures, including procedures to obtain an understanding of internal control †¢ Tests of controls †¢ Substantive tests of transactions †¢ Tests of details of balances Analytical procedures are the least costly because of the relative ease of making calculations and comparisons. Often, considerable information about potential misstatements can be obtained by simply comparing two or three numbers. Risk assessment procedures, including procedures to obtain an understanding of internal control, are not as costly as other audit tests because auditors can easily make inquiries and observations and perform planning analytical procedures. Also, examining such things as documents  summarizing the client’s business operations and processes and management and governance structure are relatively cheaper than other audit tests. Because tests of controls also involve inquiry, observation, and inspection, their relative costs are also low compared to substantive tests. However, tests of controls are more costly relative to the auditor’s risk assessment procedures due to a greater extent of testing required to obtain evidence that a control is operating effectively, especially when those tests of controls involve re performance. Often, auditors can perform a large number of tests of controls quickly using audit software. Such software can test controls in clients’ computerized accounting systems, such as in computerized accounts receivable systems that automatically authorize sales to existing customers by comparing the proposed sales amount and existing accounts receivable balance with the customer’s credit limit. Substantive tests of transactions cost more than tests of controls that do not include re performance because the former often require recalculations and tracings. In a computerized environment, however, the auditor can often perform substantive tests of transactions quickly for a large sample of transactions. Tests of details of balances almost always cost considerably more than any of the Other types of procedures because of the cost of procedures such as sending confirmations and counting inventories. Because of the high cost of tests of details of balances, auditors usually try to plan the audit to minimize their use. Naturally, the cost of each type of evidence varies in different situations. For example, the cost of an auditor’s test-counting inventory (a substantive test of the details of the inventory balance) often depends on the type and dollar value of the Inventory, its location, and the number of different items. Relationship between Tests of Controls and Substantive Tests To better understand tests of controls and substantive tests, let’s examine how they differ. An exception in a test of control only indicates the likelihood of misstatements affecting the dollar value of the financial statements, whereas an exception in a substantive test of transactions or a test of details of balances is a financial statement misstatement. Exceptions in tests of controls are called control test deviations. From the three levels of control deficiencies: deficiencies, significant deficiencies, and  material weaknesses. Auditors are most likely to believe material dollar misstatements exist in the financial statements when control test deviations are considered to be significant deficiencies or material weaknesses. Auditors should then perform substantive tests of transactions or tests of details of balances to determine whether material dollar misstatements have actually occurred. Assume that the client’s controls require an independent clerk to verify the quantity, price, and extension of each sales invoice, after which the clerk must initial the duplicate invoice to indicate performance. A test of control audit procedure is to inspect a sample of duplicate sales invoices for the initials of the person who verified the information. If a significant number of documents lack initials, the auditor should consider implications for the audit of internal control over financial reporting and follow up with substantive tests for the financial statement audit. This can be done by extending tests of duplicate sales invoices to include verifying prices, extensions, and footings (substantive tests of transactions) or by increasing the sample size for the confirmation of accounts receivable (substantive test of details of balances). Even though the control is not operating effectively, the invoices may still be correct, especially if the person originally preparing On the other hand, if no documents or only a few of them are missing initials, the control will be considered effective and the auditor can therefore reduce substantive tests of transactions and tests of details of balances. However, some re performance and recalculation substantive tests are still necessary to provide the auditor assurance that the clerk did not initial documents without actually performing the control procedure or performed it carelessly. Because of the need to complete some re performance and recalculation tests, many auditors perform them as a part of the original tests of controls. Others wait until they know the results of the tests of controls and then determine the total sample size needed. Relationship between Analytical Procedures and Substantive Tests Like tests of controls, analytical procedures only indicate the likelihood of misstatements affecting the dollar value of the financial statements. Unusual fluctuations in the relationships of an account to other accounts, or to nonfinancial information, may indicate an increased likelihood that material misstatements exist without necessarily providing direct evidence of a  material misstatement. When analytical procedures identify unusual fluctuations, auditors should perform substantive tests of transactions or tests of details of balances to determine whether dollar misstatements have actually occurred. If the auditor performs substantive analytical procedures and believes that the likelihood of material misstatement is low, other substantive tests can be reduced. For accounts with small balances and only minimal potential for material misstatements, such as many supplies and prepaid expense accounts, auditors often limit their tests to substantive analytical procedures if they conclude the accounts are reasonably stated. Trade-Off between Tests of Controls and Substantive Tests There is a trade-off between tests of controls and substantive tests. During planning, auditors decide whether to assess control risk below the maximum. When they do, they must then perform tests of controls to determine whether the assessed level of control risk is supported. (They must always perform test of controls in an audit of internal control over financial reporting.) If tests of controls support the control risk assessment, planned detection risk in the audit risk model is increased, and planned substantive tests can therefore be reduced. Figure 13-3 shows the relationship between substantive tests and control risk assessment (including tests of controls) at differing levels of internal control effectiveness Impact of information technology on audit testing Auditing standards provide guidance for auditors of entities that transmit process, maintain, or access significant information electronically. Examples of electronic evidence include records of electronic fund transfers and purchase orders transmitted through electronic data interchange (EDI). Evidence of the performance of automated controls, such as the computer’s comparison of proposed sales orders to customer credit limits, may also only be in electronic form. The standards recognize that when a significant amount of audit evidence exists in electronic form, it may not be practical or possible to reduce detection risk to an acceptable level by performing only substantive tests. For example, the potential for improper initiation or alteration of information may be greater if information is maintained only in electronic form. In these circumstances, the auditor should perform  tests of controls to gather evidence in support of an assessed level of control risk below maximum for the affected financial statement assertions. Although some substantive tests are still required, the auditor can significantly reduce substantive tests if the results of tests of controls support the effectiveness of controls. In the audit of a larger public company, computer-performed controls (these are called automated controls) must be tested if the auditor considers them to be key controls for reducing the likelihood of material misstatements in the financial statements. Because of the inherent consistency of IT processing, however, the auditor may be able to reduce the extent of testing of an automated control. For example, software based control is almost certain to function consistently unless the program is changed. Once auditors determine an automated control is functioning properly, they can focus subsequent tests on assessing whether any changes have occurred that will limit the effectiveness of the control. Such tests might include determining whether any changes have occurred to the program and whether these changes were properly authorized and tested prior to implementation. This approach leads to significant audit efficiencies when the auditor determines that automated controls tested in the prior year’s audit have not been changed and continue to be subject to effective general controls. To test automated controls or data, the auditor may need to use computer-assisted audit techniques or use reports produced by IT to test the operating effectiveness of IT general controls, such as program change controls and access controls. In many cases, testing of automated controls may be performed by IT audit specialists. When auditors test manual controls that rely on IT-generated reports, they must consider both the Effectiveness of management’s review and automated controls over the accuracy of Information in the report.

Broadsheet and tabloid artical comparison Essay

The incident that all three papers are discussing is a cable car accident in Italy in which 20 people died. This tragedy occurred on 3rd February 1998 as a low American fighter jet severed the wire on which the car hung. This caused the cable car to crash down 300ft leaving another cable car in suspension. This event happened nearby Mount Cermis, Northern Italy. The Mirror takes it account from all spectrums but focuses on British tourists in the area. The Times do not mention their eyewitnesses but focus on the American and Italian view on the subject. The Newsweek discuss mainly with American officials but they do feature any eyewitnesses. The major differences is that the Mirror is a daily tabloid, the Times a daily broadsheet and the Newsweek is a fortnightly American publication. The Mirror and The Times reported on the incident the next day, whilst Newsweek reported on it thirteen days after. The Newsweek will obviously be bias as its country is involved in the accident and the other two papers should share the same views as they are not involved. Due to the Times being a broadsheet it should have a more sophisticated language and its attitude should follow this. The Mirror has a lot of factual information on the accident. It states the number of deaths (20 skiers). It mentions the area in which it happened (Cavalese, Northern Italy). It describes the type of American jet (American Marine EA-6B Prowler). It informs the reader of the victims nationalities (at least six German, two Hungarian, two Polish). Also followed with the sex of the victims (nine women, ten men and a child). The Mirror goes on to talk about a similar incident which happened in previous years in the area of Cermis informing the reader of the number of deaths, the date, the nature of the incident and who was blamed. The Mirror gives the reader all the information needed and due to them adding information about a previous accident they are giving them that extra information this shows they researched the area and attempted to familiarise readers with the area. The Times, is a conventional broadsheet. They give the reader information of were the incident took place (Dolomites, Mount Cermis). They share the same number of deaths as the Mirror and describe the model of the plane as a ‘Marine Corps EA-6B Prowler similar to the Mirror. They include the maximum capacity of the cable car. (40 people). They mention the exact time of the incident (3:25) and the height it was going up to (6,000ft). The report does mention the nationalities of the victims in this area but it generalises saying ‘most of them German’ so it does not give figures like the Mirror. The Times also mentions the previous incident in the area in 1976 when 42 people died due to ‘the failure of automatic safety systems’ in the third column second-to-last paragraph. The American publication does not discuss the event in detail. It mentions the area in which it took place (Dolomites). It refers to the cable car as a ‘yellow gondola’. It includes the number of those killed and adds the area of origin (20 tourists from seven European countries). The Newsweek report also states the type of plane and how low the Italian air chief sad it was flying ( 3,300ft) below the allowed altitude. They also inform the reader in the about an Italian plane that went missing in 1980 by Ustica and how the US were suspected to of shot it down. This report differs significantly from the Times and the Mirror. These reports all differ. The British tabloid, The Mirror will differ as it uses sensationalism and wants to shock rather than inform and the vocabulary should be restricted and compressed, there are constant puns and word plays. The Mirror seems to take a view on the incident The Mirror’s language is pacy and dramatic. They use several forms of language to achieve this. It applies emotive language to stir up sympathetic feelings from the reader. The words such as ‘plunged’ in the first paragraph is used to describe the way in which the cable car fell to the ground. They also use figurative language to describe the cable car, this could be to make the reader able to envision the horror and harshness of the accident. They do this by using a simile. They refer to the way the cable car saying ‘it opened up like a cardboard box’ as cardboard is not very strong and can be destroyed easily. This emphasises the fragility of the cable car and the violence in which the cable car was so effortlessly ruined and reinforces the severity of the accident. A dramatic form of language is constantly used throughout the report, this accentuates the incident. The plane is described to of ‘screamed down†¦ ripped the wire’, this use of onomatopoeia including other words such as ‘limped and screamed’ This shows the reader the speed and power of the plane. This use of language is used to exaggerate the incident. They also do this when describing the car using words such as ‘crashing†¦ ripped†¦ smashed†¦ dangling perilously†¦ torn†¦ plunged’. This language is also a use of hyperbole in which he event has been exaggerated for effect and to expresses the horror of the incident and visualises it to the reader as they follow the report. The Times is a broadsheet and uses a formal language, not a form of dialect as it is circulated throughout the UK. They also like the Mirror use hyperbole and onomatopoeia to exaggerate the event. They use a simile ‘screaming through the sky like a thing in torment’ this figurative use of language personifies the plane. They also use several word to describe the plane such as ‘sliced†¦ roaring’. They go on to use several words relating to the cable car such as ‘crashed†¦ crumpled†¦Ã¢â‚¬ ¦ dangling’. They also use phrases to describe the report such as’ smashed bright yellow cable car’ and ‘twisted cabin wreckage’. The Newsweek an American paper is constantly cynical in its language. It is less formal then the other reports. It does not use an hyperbole as it is not interested in the event so it has no need to exaggerate it The Mirror interviewed people from all spectrums of the incident. They talked with a British couple who were tourists in the area and claimed they missed being in the incident by minutes. The Mirror included these British tourists to give the report a personal aspect, this may gain interest from readers who would be attracted to the article as it brings the incident to the British shores that there own were involved. They also discussed the incident with a police chief Andrea Russo who described the scene saying ‘all four wall of the car opened up like a cardboard box ‘ and tells of the severed bodies and the bloodstained snow. This shows what the scene looked like after the incident. They talked to a fire services spokesman to confirm the number of deaths and the US Defence Secretary William Cohen who gives the official American statement and view on the disaster. They also get an official statement from the Italian Regional President Carlo Andreotti who condemns the Americans. He was interviewed to give an impression of the Italians view on the accident. Cristina Antoniazzi a hotel owner nearby, she discusses what she heard at the time of the accident. This gives a view of a normal resident in the area and their view on the deaths, free from all the spin and censorship a government statement may have. The Times does not offer any statements from British officials or those on the scene. They do not care for their opinion as they are not involved and do not need their view on the matter. They have an account from an eyewitness but the name and status was not given. The report contains a statement from Fausto Colasanti, a police official describes the location as a ‘terrible scene of carnage’ . The Times also talk to a rescue worker and the Italian Deputy Defence Minister to add an official look on the cable car incident. A Signor Brutti is also mentioned but his status is unknown. This mainly has an Italian viewpoint, not that it holds a bias view but not many American opinions are given on the accident. The Newsweek does not feature many interviewees. It has views from American Gen. Tim Peppe who defends the pilots. Italian Gen. Mario Arpino said the warplane was flying 3,300ft below designated altitude and the U. S Ambassador Thomas Foglietta is said to of ‘finally conceded’ that it was flying ‘below the minimum approved altitude’. The report includes a U. S activist Grace Potorti who describes the incident as her ‘worst fear come true’. The Newsweek includes the Italian President Luigi Scalfaro who hoped ‘the accident wasn’t caused by someone†¦ who didn’t care about others’ lives’. They do not include any actual comments on the scene of the accident or from those around the area or nearby the incident. They do this because they are bias and are not in favour of the Italian view that the pilot were being reckless. They include mainly phrases and not full statements from any of their interviewees.

Can choose from three Essay Example | Topics and Well Written Essays - 1000 words

Can choose from three - Essay Example According to Nagel, reductive arguments seek to explain a phenomenon in terms of objectivism hence it omits the essential of the conscious experience, which are subjective. Because of this, Nagel believes that the whole idea of objective does not add up or make sense. Nagel also believes that the conscious experience is about one’s interpretation and varies with people. It is like asking someone else what he or she thinks about something. In this case, one is entitled to say what he or she feels and whatever said is welcomed. Therefore, it is valid for Nagel to argue that the conscious is interpreted in terms of subjectivism. It is not always possible for the majority to see or view a phenomenon like an identical twins; the differences must be embraced and accommodated. Nagel chose the example of a bat to validate his information because of many things. First, bats resemble man to some extent. Similarly, there are rhetorical elements in his choice of bats since they have a traditional reputation of being weird, and some have special senses that humankind do not have. They are essential in persuading people that do not think others can reason the same way. Similarly, bats have experiences that man does not have. Hence, there is a limit to human understanding that makes consciousness very difficult to understand. It is also important to consider the situation and conditions of an organism that influences one’s consciousness. For example, Nagel argues that facts about what it is to be an organism conscious state is accessible only from certain points of view. A dead human being no longer reasons because she or he does not have any point of view. Similarly, a drunken person has a different viewpoint from the way sober people reason. Although a drunken is also a human being, the conscious mind that reason is not supported by alcohol but influences it towards giving unwarranted reasoning. The logic that one gives determines consciousness and all that pertains to

Tourism Industry Case Study Example | Topics and Well Written Essays - 6500 words

Tourism Industry - Case Study Example The second chapter reviews the relationship between environment and tourism as well as its implications to TUI. The third chapter analyzes the performance of TUI and it's those features that contributed to achieve the No.1 position in tourism and shipping industry. It further explains the key unmatchable factors that have made TUI far ahead of its market competitors. In the end the current structural changes in different business fields are discussed and TUI's response to these changes with its corporate strategies and business models. In order to complete this paper, a meticulous research has been done on available information on the subject of tourism and contribution of TUI in this field. A variety of case studies and few books and online journals were reviewed. Online available resources are given special precedence than available library books because there is no specific book available about a particular tourism company. It is the biggest limitations of this research that in co mparison to available web-based resources, hard copy books are not readily available specifically about TUI. TUI is an abbreviation of Touristik Union International that was established in 1968. As Preussag AG, it remained a renowned organization in transportation and industrial sector till 2001 when it became a 100% subsidiary of Preussag AG. In next ear, Preussag AG was transformed into TUI AG. During next few year

The American children of the gilded age Research Paper

The American children of the gilded age - Research Paper Example These include the native American-Indians and the immigrant groups from Europe, Asia, Africa and Latin America. Although they are the native inhabitants of the country, the Indians were compelled to succumb to the pressure of Americanization (Monaghan 59). Meaning, the government was committed to see them get assimilated into the mainstream American culture. Having traced their roots in America, the Indians were perceived to be conservative people who were deeply rooted in their traditional activities. This included practices like hunting, traditional religious practices and many values and beliefs that were fiercely opposed by the westernized government. So, to assimilate them into the main system, the government came up with several policies. The most outstanding of these strategies was the introduction of western education amongst the Indians. It was thought that education would help in assimilating them into the desired culture. After the dramatic changes in 1865, the national government came up with the idea of establishing National Boarding Schools for the American Indians. Although it was fiercely opposed by the American Indians, the government went ahead to remove the children and forcefully take them to these institutions. Here, they would be separated from the rest of the society that might influence them to embrace their native cultural practices. By taking them to the boarding schools, the government hoped, they would get an ample opportunity to learn different aspects of European-American culture without any hindrance. In these schools, the children would learn much about Christianity, English language and all the aspects of American culture that were accepted by the government. The successful withdrawal of these children from their families would not only assimilate them into the mainstream American culture, but also put them in the right path of abandoning the aspects of the native culture

Two different social networking websites Essay Example | Topics and Well Written Essays - 250 words

Two different social networking websites - Essay Example Facebook is perhaps popular for its distinct messaging app. Facebook also keeps track of users’ timelines as they appear on the page. This creates a chronology of events posted on Facebook. Most importantly, users post pictures, share their status updates, read other people’s posts, and comment on different topics posted on the website. For Twitter, the most popular aspect of the website is the use of hash tags. Contrary to Facebook, Twitter offers instant messaging in the form of tweets. This forms the distinct practice of Facebooking and Tweeting in respect to the two websites. Another distinct feature of Twitter is the mode of interaction dubbed â€Å"follow† and â€Å"unfollow.† In conclusion, Twitter’s does not offer timelines, but rather archives data and information posted so that it is available for retrieval by the user at any time. Most importantly, Twitter’s website platform is not as broad as Facebook

Anthropology 11 Essay Example | Topics and Well Written Essays - 1000 words

Anthropology 11 - Essay Example He illustrates his stand with the examples of the theories surrounding the evolution of man by starting with the rather shocking theory that we all as humans originate from the continent of Africa This topic is very important to biological and physical anthropology because it explains why we are all so different racially and genetically and seeks to explain with the help of many theories whether Darwin's theory is actually right in saying that as humans we have only recently evolved from apes. He compares the "originate in Africa thesis" with the "out of Africa thesis" where he is trying to explain the origin of our genetics and evolution. The author uses the technique of taking up many hypotheses and theories and assessing their truth and in the end he gives his verdict in the favour of the theory given by Darwin, the Out of Africa hypothesis. " This theory maintains that modern humans evolved in Africa and then spread around the world. Boiled down to its essence, the hypothesis states that modern humans are both relatively recent (100,000 to 200,000 years old) and African in origin. A major prediction of this hypothesis is that the earliest remains of modern humans will be found in Africa, dated to an appropriate time period." The author goes on to discuss the " Multiregional hypothesis" which he argues depicts that we as modern humans evolved from different locations and hence our racial and genetic differences. According to this school of thought "these regional populations evolved along parallel paths and reached modernity at roughly the same time. Because the populations were largely isolated from one another, they developed distinctive regional features, which people recognize today as "racial" differences." ( Multiregionalists believe that Neandertals, originate from the European continent.) He then goes on to say how there are three different recent researches go in the favour of the Darwinian view and oppose the Multiregionalists view which he addresses one by one as: The east african population has been found to be so diverse that the genetic composition of the population" shows that these lineages are very diverse and humans did evolve from these areas.Most of the worlds oldest lineages were found there d 170,000 years ago. Secondly because of the discovery of the "African Herto skullsthe Herto specimens (are) the earliest modern Homo sapiens yet found-direct ancestors of people living today." He concludes that the Neandertals' DNA was not closer to that of the modern Europeans. "The work was a strong blow to the theory that humans evolved in several places simultaneously. "Neandertals cannot represent a regional European transition from Homo erectus to modern Homo sapiens" 4. Did the author address any contrary evidence or the opinions/work of others that run counter the author(s) claims Although he devotes his entire discussion to proving the multiregionalists wrong he does refer to the possibility of " mtDNA contamination from researchers or others who have handled the fossils" but he is quick to provide evidence to suggest otherwise. He does give the multiregional theory its fair share of discussion though.. 5. What were the strengths and/or weaknesses of the author(s) argument

Land Law - Land lease Essay Example | Topics and Well Written Essays - 1500 words

Land Law - Land lease - Essay Example In Bruton v London & Quadrant Housing Trust1, have upheld the existence of contractual, non-proprietary rights lease where the landlord has no proprietary estate from which to grant a proprietary lease. However, it must be created in the proper manner and it must satisfy the definition contained in LPA 1925 s. 205(1)(xxvii). The 1925 scheme was reformed in 1986 (Land Registration Act 1986) and again by the 2002 Act, which has been accused of introducing yet more confusion to the law of leases. There are 3 kinds of lease, legal lease, equitable lease and tenancies by estoppel. Legal lease created by deed, this includes periodic tenancies (LPA 1925 SS. 52, 54). Due to the doctrine of Walsh v Lonsdale2, a contract for a lease operates as an equitable lease without any further action being necessary. The LP (MP) A3 1989 s. 2 supersedes s. 40 of the LPA 1925. A tenancy by estopple operates where the landlord has no title to the land when a lease is granted. The LRA 2002 has made substantial changes to the formalities required for leases, most of which require registration or protection on the land register. Three types of lease are recognised by the 2002 Act: Most leases, which fall outside the scope of compulsory first registration, can be enforced either if protected by a notice on the register or if they fall within the overriding category. ... Leases requiring protection by a notice on the register. Short leases, which override the register. Most leases, which fall outside the scope of compulsory first registration, can be enforced either if protected by a notice on the register or if they fall within the overriding category. The ultimate aim is for as many interests as possible to be entered on the registered. But Leases of three years or shorter cannot be protected by notice and so are 'only' overriding. Short leases (not exceeding seven years) can override the register. Where the tenant is in actual occupation, this protects his Leases on first registration (Sched. 1 para. 2), or on a transfer either under the 'old' law (LRA 1925 s.70 (1)(g)) or the LRA 2002 (Sched. 3 para. 2). In Street v Mountford4, Lord Templeman suggested that there are three characteristics of a lease, these are exclusive possession, a determinate period, for a rent or other consideration. Exclusive possession means that the tenant has control over any one who enters the premises and can exclude everyone, including the landlord. There will be no exclusive possession if: the landlord is entitled to move the occupier at any time from one room to another according to Westminister city Council v Clarke5, there was held to be no exclusive possession. Someone merely has exclusive occupation, such as a hotel guest or a student in a university hall of residence or a resident in a nursing home (Abbeyfield) (Harpenden) Society Ltd v Woods6; In Marcou v De Silvesa7 the agreement required the landlord to provide services. There may be exclusive possession even if: In Aslan v Murphy 8 the landlord retains a set of keys. In Antoniades v

Religion Essay Example | Topics and Well Written Essays - 250 words - 3

Religion - Essay Example In addition, this culture learns how to arouse spirits using such holy names. Moreover, it inspires them to divines that will make them act like God. Claimed Gods power can summon the spirits and give them commands of their wish. Religion has become dynamic with time. Education facilitates competence in religion where people are coming up with new creative beliefs to convince people on matters related to religion and supernatural issues. Prophet Dr. Owuor of repentance and holiness ministry successfully come up with beliefs of doom prophecies by integrating sciences calculations and his prophecies. He has convinced people strong believing in God can manipulates natural factors such as when he called down rain. He also prophesied on the Italy earthquake that indeed later hit the country. His prophecy religion has attracted a lot of people who have abandoned their cultural region in favor of this which incorporates all diversified beliefs about what, when and how supernatural events will take

Multi Sector Collaborative Project Research Proposal

Multi Sector Collaborative Project - Research Proposal Example This portion of the project introduces the topic. The topic a very brief explanation regarding it should be given in this portion. The topic chosen for study is "to study the effects of the usage of Methamphetamines in Spokane." Excessive usage of Meth by the people is one of the major issues that Spokane has been facing in the recent years. Therefore, it is necessary to study the effects that are created by this drug on the social setup of Spokane and the methods to curb the further spreading of this deadly habit among the people. This portion is the introduction of the project. The project and its purpose are to be explained in detail in this portion. An introduction regarding what Methamphetamine is and what influence it had on Spokane is to be enumerated in this portion. Meth is a drug that speeds up the activities of the brain. This drug is normally in the form of powder. It is also available in pills and crystal forms. This drug is mostly used by the youth. This drug affects the central nervous system very badly. Excessive usage of this drug is harmful for human being as it causes many diseases including diseases that are related to the cardiac system. It will also result in higher body temperature. People use this drug through many ways. Smoking, swallowing, inhaling and injecting are some of the methods through which people take in this drug. This drug is used by some others to reduce weight or to boost up their performance. That is usage of this drug will accelerate the working of heart and brain. As a result of which blood flow increases in the body. It is found that excessive usage of this drug has even resulted in death. Hypothesis A hypothesis is any argument made by the researcher that he intends to prove by the results of his study. The hypothesis of this project can be any statement that shows that usage of Meth is harmful. The hypothesis here is "excessive usage of Meth will harm the social setup of Spokane and will also harm the future generations of the society" Objectives of the study This is one of the important components of any project. The objective of the study is the intention of the researcher behind doing a project. The research or project should be carried on by adopting the objectives as the base. The objectives of this project are as follows: To study the impact of excessive usage of meth on the social setup of Spokane. To analyze the impact of court order on the mindset of Meth addicts. Main body Main body of the work is where all the information regarding then topic and all the literature required for conducting the study is listed. In this portion the researcher should gather detailed information regarding the components of the topic of study. The main objective of this project is to analyze the impact of the usage of Meth. The project is being studied on the basis of prevention program that is conducted for many meth addicts of the region. The people who are considered here for prevention program are persons who are charged with drug related offences. The results of the project are based on the prevention program and the additional information gathered from various secondary sources. Spokane is a city located near to Washington. This city is located along the Spokane River. This city is also called Lilac City. Spokane is the second largest populated city in Washington. The

At Kearney Luxury Report Essay Example for Free

At Kearney Luxury Report Essay October 2010 Confederation of Indian Industry The Mantosh Sondhi Centre 23, Institutional Area Lodi Road New Delhi – 110003 India Tel: + 91 11 24629994-7 Fax: + 91 11 24626149 Contact: Amita Sarkar, Senior Director (amita. [emailprotected] in) Jaya Gupta, Deputy Director (jaya. [emailprotected] in) A. T. Kearney Limited 1st Floor, Future Capital House Peninsula Corporate Park Ganpatrao Kadam Marg Lower Parel (W) Mumbai 400 013. India Tel:+91-22 4097 0700 Fax:+91-22 4097 0725 Contact: Neelesh Hundekari, Principal (neelesh. [emailprotected]); Hemant Kalbag, Vice-President (hemant. [emailprotected] com); Pameela Pattabiraman, Manager (pameela. [emailprotected] com) Subhendu Roy, Manager (subhendu. [emailprotected] com) This report has been jointly produced by Confederation of Indian Industry and A. T. Kearney Limited, the contents of which are meant only for information purpose of the reader. Readers are advised to conduct their own investigation and analysis of any information contained in this report, and not rely on the information contained in this report for any purpose. Neither Confederation of Indian Industry, nor A. T. Kearney make any representation regarding the accuracy or completeness of such information and expressly disclaim any or all liabilities based on such information or any omission thereof. No part of this report may be reproduced or distributed without the prior written consent of Confederation of Indian Industry and A. T. Kearney Limited. Copyright: CONFEDERATION OF INDIAN INDUSTRY. 2010, and A. T. KEARNEY, INC. 2010 iv FOREWORD The Luxury industry in India is no longer a new comer. Like many other industries in India, it is of great interest to both international and Indian players. International brands see India as an emerging luxury market which could become a significant part of their portfolio tomorrow. Indian companies also see the growth at the top end of the market as an opportunity to introduce premium offerings. This enthusiasm was reflected in the first moves of several iconic international brands in the last 5-7 years. Indian companies have also seen the opportunity and a handful of players are now very active in the space. Apart from luxury products such as watches, apparel, accessories, large Indian five star hotel chains, fine dining and spas, apart from luxurious houses, the latest luxury cars and yachts have expanded the definition of luxury. The Confederation of Indian Industry (CII) and A. T. Kearney have been active players in the luxury space. CII through its National Committee on Retail has played an active role in trying to create an industry forum for players in the luxury industry. CII brought the industry together to help organize the industry and create a forum for dealing with issues of common interest. A. T. Kearney, apart from serving clients in the luxury industry has also contributed to providing a robust fact base and perspectives on realizing the potential of the industry through their first study in 2007 (The Economic Times A. T. Kearney India Luxury Review 2007). Just when the industry was showing signs of coming of age in 2007, from the third quarter of 2008, the global recession dampened the hopes of the industry. The industry suffered internationally, and that acted as a brake on the emotional euphoria for a good 9-12months in India as well. Several players used that time to consolidate their position, right size their business, restructure real estate deals and become fitter. A few others suffered. Now with positive signs in the Indian economy, optimism about the industry is on the rise, as demonstrated by heightened market activity and consumer spending. However, key issues such as a relatively new market, duties, access to quality real estate etc continue to pose a challenge to exponential profitable growth. A few key questions keep bothering CEOs in the sector: How to make the luxury business a successful proposition in India? How big is the market really? When will the market be fully ripe? What operating models work and do they need to be customized for India? Given this backdrop, CII and A. T. Kearney decided to team up and take stock of the industry and address key questions that current players, potential entrants and other stakeholders have about the industry. Our desire was to study and understand the major changes in the industry in the last 3-4 years and the implications of these for the future of the industry.. With this end in mind, over the last three months, we conducted an exhaustive and comprehensive research of the industry. The A. T. Kearney team collated and analysed large amounts of data, interviewed several industry leaders and luxury consumers to develop all round insights on the industry. The report establishes the growth trajectory for the industry over the last three years, takes stock of the opportunities and the potential as well as the continuing challenges that it faces and estimates the likely potential over the next 5 years and recommends actions for industry players to undertake. We believe that this report will serve as an important step in the industry’s v journey of growth. It clearly confirms that the hope in the potential of the Indian luxury industry is not misplaced, that there is still a huge latent demand in the market and that India will be an important market and player on the global luxury platform. While the hope in the potential remains undaunted even after the recession, infrastructural and regulatory issues continue to impede the development. Like in all other sectors, though we are confident that the Indian industry will discover a uniquely Indian way of converting them into opportunities. We are grateful to all the industry leaders and consumers who spent time with us in sharing their perspectives and validating our hypotheses. We hope this study will act as a milestone in the evolution of the Indian luxury industry and will take the collective understanding of the industry a few steps forward. Confederation of Indian Industry A. T. Kearney vi EXECUTIVE SUMMARY Over the last two decades, post liberalization in the 90s, the new maharajahs of business have created some serious wealth in India. This new found prosperity has attracted luxury brands that were looking for new engines for growth to make up for slow growth in their traditional markets. While most industries are now coasting along smoothly, the small and emerging luxury industry players have not stopped reflecting on the past to ask some fundamental questions about the market. This report attempts to answer these questions through a wide and deep coverage of all segments of the luxury market in India. To get the most credible answers, we adopted a robust methodology with a large element of primary interviews and extensive data collection. We collated data from a variety of sources to size the market and understand the growth rates over the last few years. Indian Luxury Consumer passport to the elite segment of the society and conspicuous consumption is their way of announcing it to the society. The children are the bigger spenders, having been educated abroad and hence familiar with brands and the luxury way of living. Traditionally wealthy families/large industrialists: This group comprises two sub-segments the first is the traditionally wealthy families who have been consuming luxury for several decades and go for the finer things in life. The other sub segment comprises the promoters of some very large businesses which have come up in the last two decades and have created a disproportionate amount of wealth very quickly. Corporate executives: Senior executives of corporate India who are paid in excess of INR 1 crore (USD 225,000) and bankers who earn big bonuses epitomize this category. These executives are well traveled and are aware of brands. Most of this segment consists of people who are in their mid-late forties and represent some of the brightest minds in the country. Many of them though have come from middle class backgrounds and hence have a conservative approach on conspicuous spending. Other segments include self employed professionals, young professionals, expatriates, politicians and bureaucrats. A correlation between the size of the luxury market, the GDP/capita, number of HNIs and HNI wealth over the years 2004-2009 shows that in terms of importance the number of high net worth individuals is the most important driver. Interviews with leading luxury brands in India point to the fact that family wealth is a stronger determinant of spending than household income. The masstige phenomenon can also be observed very clearly in India. Luxury products in India are appealing to, and purchased by, middle-class consumers that do not fit the typical profile of an elite consumer segment. While Indian consumers talk about exclusivity, uniqueness and appeal to personal taste, the majority of the market is still far away from this and brand/logo/badge value drive luxury purchases very clearly. That said, traditional attributes such as high quality, heritage, longevity, the â€Å"stories† associated with brands are beginning to emerge as drivers of purchase. The mindset is still that of an â€Å"aspirer† not that of a â€Å"connoisseur†. The Indian luxury consumer is young 30-45 years old. While the average Indian luxury customer values High Quality, Exclusivity and Social Appeal as key drivers of luxury purchase, they are also very Price Conscious and often straddled with a â€Å"middle-class mindset†. The segments are composed primarily of: Medium size enterprise owners: This is the largest segment in terms of number these are typically the medium enterprise owners industrialists and traders who run businesses with revenues upwards of 50 cr. Their wealth is their vii The distribution of the rupee millionaires is a good indicator of the luxury consumer distribution in the country. While Delhi and Mumbai continue to be the mainstay markets for luxury consumption, there are several other cities with a large base of potential luxury consumers. We believe in the next 57 years, at least 5-7 new towns will get added on the luxury map of India. We also believe that the potential in Delhi and Mumbai has not been fully exploited and that there exists a few more micro markets within these cities that need to be tapped. Luxury Market 2007-2009 watches and jewellery as well wines, spirits and high-end electronics. This market has been estimated to be USD 1. 5 billion in 2009. Most luxury product categories have witnessed over 15% growth over the past 2 years performance of categories like Electronics, Wines and Spirits, Apparel and Jewellery has been exceptionally strong. The Indian luxury services market was severely hit by the recession over the past 2 years. Nonetheless, the India Luxury Services industry is considered to be one of the best in the world. Consumer interviews revealed that consumers prefer Indian hotel chains like the Taj, Oberoi or ITC even when International chains like the Hyatt, Hilton or Four Seasons have entered the country. The current Indian luxury assets market is estimated at USD 2. 45 billion. The growth of the Luxury Assets market is driven mainly by the phenomenal growth of the Real Estate and Automobile sectors. Latent Demand and Future Potential Our endeavor in this study has been to provide robust data on the size and growth of the Indian luxury market for stakeholders to consider, debate and if it makes sense to base their decisions upon. For sizing the market, Product, Price and (where possible brand also) filters are applied to isolate the luxury from the non-luxury in all segments. We err on the side of conservatism i. e.only pure luxury is included. Based on a category wise build-up, the size of the Indian luxury industry in 2009 is estimated at USD 4. 76 billion (at retail prices). This includes all luxury products, luxury services and luxury assets sold in India. The total luxury market has grown at a CAGR of 13% between 2007-09, with luxury products growing at 22%, services degrowing at 5% and assets growing at 18%. Luxury market in India The Indian luxury market is still very small compared to global standards. While India has one of the highest GDPs in the world, its luxury consumption, in absolute terms, is still very small. We believe that there exists a large latent demand in India, constrained by both demand side and supply side factors. On the demand side, there are several potential consumers in India who either do not buy luxury at all or do not buy enough of it from the local market. As we had mentioned, Rupee millionaires with incomes between INR 10-30 lakhs do not really spend on luxury. On the other side, supply of most luxury products in India is present is mostly present Mumbai, Delhi or Bangalore. However, wealth creation in the country is now no longer limited to these cities. It is taking place at a rapid rate in Tier I and Tier II cities like Ahmedabad, Pune and Hyderabad. The current market size for luxury products in the country is around USD 1. 5 billion. A regression based on India’s GDP per capita and Number of HNIs, indicates that the size of the Indian luxury products market should have been around USD 3-3. 5 billion. This implies that there is a latent demand of almost USD 1. 5-2 billion. As percentage of the current market size, India’s latent demand is estimated at 120-150% while for China it is estimated at only 10-15%. We have estimated the expected growth in the luxury goods market using a number of methods. Regression of the mar- Source: A. T. Kearney research and analysis The most visible segment of the luxury industry is the luxury products segment. This includes the most visible fashion luxury segments such as apparel, accessories, personal care, viii Country comparison based on GDP and # of HNIs 1. 2. 3. Source: Altagamma, A. T. Kearney research and analysis, Merrill Lynch Capgemini world wealth reports ket size for luxury products against the number of HNIs results in a growth estimate of 18%. Based on numerous interviews with luxury company CEOs, executives and industry experts as well as secondary research, a bottom-up build up of category wise growth rates leads to an average of 21%. Given this and considering the huge latent demand, we believe that India’s overall Luxury Market will grow 21% to become almost 3 times its current size by 2015. Projected growth of luxury market in India 4. Difficulty in reaching the target consumer: The scattered nature of the target population and absence of critical mass in India is a big concern for the industry. While luxury magazines have increased in maturity and volumes, they still reach only a small fraction of the existing consumers and a much smaller fraction of new consumers. Cost of reach is high, results uncertain and word of mouth continues to be best method to create a â€Å"buzz†. Consumer reservations about luxury purchases: India is faced with a low luxury penetration, with most of the rupee millionaires with income between INR 1030 lakh segment having the capacity but not the propensity to spend on luxury goods and services. Furthermore, there are reservations against buying lesser known brands as well as shopping in India. Infrastructure and regulatory constraints: Companies have to struggle with lack of credible real estate options, underdeveloped back end infrastructure like warehouses and logistics as well as regulatory restrictions on FDI and high import duties. Lack of talent: Absence of skilled manpower has hindered luxury players from being able to provide the same customer service experience as that in international locations. However, there are several ideas that could be used to address these challenges. To convert potential customers, who have the financial wherewithal, to luxury consumers, players should look at micro-segmentation of the population to identify specific â€Å"high potential† professions. Once identified, focused communication would be needed to reach out to them and convince them of the offering. Players also need to look at effective media vehicles to reach their target consumers. Consumer perceptions and reservations about shopping for luxury goods in India can be addressed by breaking the myth, getting high recall brands and bringing in â€Å"ladder brands†. To address the infrastructure and regulatory challenges, players can use smaller retail formats to increase store densities far above the global benchmarks in order to drive higher sales productivity. A multi-brand environment would also help players attract a critical mass of consumers and also lower the burden on each brand in terms of operating costs. Other options include mini high streets, collaborative efforts with competition for both retail and supply chain and airport retailing. Indian companies can capitalize on the regulatory. Source: A. T. Kearney research and analysis Luxury Industry Challenges Fundamentally there are four key challenges that any luxury player faces in India. ix restrictions imposed by the Indian government to enhance their presence in the market. The resource crunch needs to be addressed through the creation of a parallel education ecosystem similar to what has happened in the IT, ITES, airlines and fashion industry. Critical Success Factors There is no instant formula for success in the Indian luxury market. Everything about our country is different the consumer, the challenges and also opportunities for luxury players. The Indian consumer is in a state of flux evolving rapidly, but perhaps along a path that is inherently different from that taken by other developing economies. Several luxury players have managed to seize opportunities in the market early. We believe that the critical factors for success in this market include exploring formats that enable players to attract footfalls; getting the pricing right to encourage Indians to purchase locally; Providing a world class experience e.g. ambience and service; bringing in iconic brands as Indians still buy luxury products for brand value and not to make a fashion statement; getting the cost structure right by ensuring the cost base is justified by the sales realized; getting access to local expertise to get the best real estate deals; experimenting with new formats such as a luxury discounter (liquidation channel) that can help open the market by getting consumers exposed to last year’s collections at attractive prices and help them move up the ladder. While we believe there is a clear opportunity to make an impact in this market, a systematic, smart and careful approach is what will differentiate the winners from the losers in the long run. x.

Friars dress Essay Example for Free

Friars dress Essay Chaucer pays close attention to the richness of the Friars dress with: lyk a maister or pope, of double worstede was his semycope.. Even so, the Frairs appearance is innocent and pure his nekke whit was as the flour-de-lys. And althoughthis is all that is given of his physical appearance it implies that he is even more dangerous as he is a wolf in sheeps clothing and hence almost devil-like. This imagery is echoed in the monks description: He is intimating, a manly man who is ful fat and in good point, which suggests of his luxury lifestyle. The narrator is obviously intimidated by him saying And I seyed his opinion was good implying that he was afraid to oppose him and therefore indicating that the monk appears to be a man capable of standing up for himself to quite an extent, hence silencing others, who dont want to test this capability! The image of an aggressive and imposing figure does not go hand in hand with that of a monk. Indeed, the narrator states ; his eyen stepe, and rollinge in his head, that stemed as a forney of a leed. This imagery also suggests a devil-like connotation that is clearly hyperbole, but must have had a great effect on the narrator for him to use it. The sense of the varied Medevil society in trios vocation is only suble, i.e. the first stays in a convent, anther preaches about God and the last one can take confession. But where the sense of variet is more evident is in the fact that the extent to which they mix up, or rather become confused between their duty to god and their love of the more material world and its pleasures. Here the main contrast between the characters is the strength of criticism. I.e. The prioress only receives slight criticisms of minor faults but on the whole it is delivered with affection and used to poke fun at her. But the portrait of the Friar presents us with a cynically ironic view on the way that the smarmy, sly and selfish villain works. Also, the trios priorites for God become less pronounced as we move down the list of portraits. The prioress seems to think of herself as a courtly romantic saviour, but it is presented as a cute little nuance, and the monk who would rather be having fun than doing boring jobs that will turn him wood. But the reader feels that it is understandable and rather a humane reaction. But the Friar is positively working against God and defeating society.

The Life And Work Of Confucius

The Life And Work Of Confucius Confucius (551 479 BCE), was a thinker, political figure, educator and founder of the Ru School of Chinese thought. Confucius was born at Shang-ping, in the country of Lu. His given name was Kong, but his disciples called him Kong-fu-tse, (i.e. Kong the Master, or Teacher.) His father passed away when he was only three years old. Confucius mother Yan-she raised him. During his younger years Confucius showed a love of learning, and an expression of awe for the ancient laws of his country. Confucius was only nineteen years old when he married, but he divorced his wife after only four years of marriage so that he could have more time for his study and the performance of his public duties. His mother passed away when he was twenty-three, which was the reasoning behind the first solemn and important act of Confucius as a moral reformer. The solemnity and splendor of the burial ceremony that Confucius honored her remains struck his fellow citizens with astonishment. Confucius shut himself up in his home for three years of mourning for his mother, using the whole time dedicated to philosophical study. He reflected deeply on the eternal laws of morality, tracing them to their source, saturated his mind with a sense of the duties they impose instinctively on all men, and determined to make them the unalterable rule of all his actions. From that day forward his career was only an illustration of his ethical system. He began to instruct his countrymen in the principle of morali ty, exhibiting in his own person all the virtues he instilled in others. His disciples gradually increased, as the practical character of his philosophy became more apparent. Generally, Confucius disciples were not young and enthusiastic. He preferred middle age men who were sober, grave, respectable, and occupied public situations. This fact cast light on both the character and design of his philosophy. It was moral, not religious, and aimed exclusively at fitting men for conducting themselves honorably and carefully in this life. Confucius travelled through many states, some of them he was welcomed, while in others he wasnt appreciated. His later trips were very unfavorable, with state after state refusing to be improved. There were some instances where Confucius was persecuted. He was once imprisoned and nearly starved. He finally realized there was no hope of securing the favorable attention he desired from his countrymen while alive, he returned to his native state, spending his last years in the mixture of literary works, by which all of his descendants at least might be instructed. Confucius died 479 B.C., in his seventies. Immediately after his death, Confucius began to be regarded with respect and his family was characterized by excellence with various honors and privileges. Many people honored all of Confucius work by building temples in every city in China to honor Confucius. Since Confucius teachings and philosophy was so advanced, it was the education for China for 2,000 years. It is called Confuci anism which is the complex system of moral, social, political, and religious teaching built up by Confucius and the ancient Chinese traditions. Confucianism goal is making not only the man virtuous, but also making him the man of learning and of good manners. The perfect man must combine the qualities of a saint, scholar, and gentleman. Confucianism is a religion whose worship is centered in offerings to the dead. The notion of duty is extended beyond the boundaries of morals and embraces the details of daily life. The best source for understanding Confucius and his thought is the Analects. But the Analects are considered problematic and controversial work, having been compiled in variant versions long after Confuciuss death by disciples or the disciples of disciples. Some have argued that, because of the texts inconsistencies and incompatibilities of thought, there is much in the Analects that is non-Confucian and should be discarded as a basis for understanding the thought of Confucius. Benjamin Schwartz cautions us against such radical measures. While textual criticism based on rigorous philological and historic analysis is crucial, and while the later sections [of the Analects] do contain late materials, the type of textual criticism that is based on considerations of alleged logical inconsistencies and incompatibilities of thought must be viewed with great suspicion. . . . While none of us comes to such an enterprise without deep-laid assumptions about necessary logical relations and compatibilities, we should at least hold before ourselves the constant injunction to mistrust all our unexamined preconceptions on these matters when dealing with comparative thought. (The World of Thought in Ancient China, p. 61) Confucius philosophy was predominately a moral and political one. It was founded on the belief that heaven and earth coexist in harmony and balanced strength while maintaining a perpetual dynamism. Human beings, he taught, are sustained by these conditions and must strive to emulate the cosmic model. The Doctrine of the Mean is the elaboration of the way of harmony; it furnishes the details of the kind of life that, in its recognition of due degree, will be in accordance with the principle of equilibrium, the root of all things. These ideas of harmony, justice and balance in both the cosmos and the individual provided a focus for political theory and practice. (Collinson. Plant, Wilkinson, Fifty Eastern Thinkers) Links / Confucius Philosophy, Confucianism Religion http://www.friesian.com/confuci.htm An analysis of the moral philosophy of Kung-fu-tzu or Kongfuzi (Confucius). http://pasture.ecn.purdue.edu/~agenhtml/agenmc/china/classlit.html Art of China Homepage. Classic Chinese Literature, The Analects, Confucius Bibliography on Confucian Philosophy Da Xue (The Great Learning) Confucius Tao Te Ching / Lao Tzu The Art of War / Sun Tzu http://plato.stanford.edu/entries/confucius/ The life and work of the Chinese philosopher and educatory; by Jeffrey Riegel. http://www.wsu.edu:8080/~dee/CHPHIL/CONF.HTM Discussion of Chinese Philosophy and the life and thought of Confucius along its principle lines http://www.heptune.com/confuciu.html What Confucius Thought by Megaera Lorenz. A brief summary of the basic concepts behind one of the worlds oldest philosophies, Chinese Confucianism.