Accounting

Accrual-basis and Cash-basis Accounting
Accrual basis accounting matches revenues with expenses for a particular period of time. Income is recorded when it is earned even if the item is not yet been received and the expenses incurred for the period not have yet paid. Total expenses and revenues are shown in the financial statement whether or not the money was acquired or paid out in a particular period of time. This accounting method gives a more exact picture of the actual cost and revenues of the business.

    On the other hand, cash-basis accounting recognizes the effects of accounting phenomenon when cash is received or exchanged regardless of time events. Cash-basis accounting recordkeeping works primarily in a cash-in, cash out basis. Thus, you only record income when items or revenues are received and expenses accounts are recorded when they are paid. Also, cash-basis accounting does not follow the generally accepted accounting principles (GAAP).

    Politicians prefer a cash basis accounting because they realized that cash value stay throughout the accounting period. In this manner, they can tax their equipment at higher rate since in accrual basis system deals with depreciation of the value equipment, land and other similar items. Also when transactions are recorded on a cash basis, they affect the book of the politicians only once a completed transaction occurred, making it less accurate in the short term of the accounting cycle.

As it is evident from the analysis of the firms condition through ratios that the firms financial position would be worse as compared to the previous year as direct effect of increase in the associated costs of market development expenditures and rise in the costs and other related expenses the firms decision to open a new office would be effected by the following considerations

The major consideration for the firm would be
Determining the viability of the proposed investment.
Deciding the viability of the proposed investment is critical to the firm as the firm would only prefer to go ahead with opening of the new office in Miami if it offers the company a return that is higher than the return that would be required by the financers of this project (lenders or stock holders). The company should do this by using investment appraisal techniques and evaluate whether the proposed investment brings value to the company.

As the firm believes that there exists a high potential for growth from the proposed investment, the firms should analyze and project its cash flows associated form the project. In making such cash flows the firm would need to revisit its current collection period from debtors and payment period to creditors.

The firm also needs to consider if it can make the proposed investment can be made to produce more favorable results by introducing any product innovation that might help the firm to generate better revenues and to cover the initial startup and market development costs associated with the project, however the costs of such innovation should entirely be covered by the expected benefits offered.
If based on this first analysis it appears that the project is feasible and a worthy investment, its only then that the company should undertake this project.

Determining the total amount of capital expenditure required.
The decision regarding the amount of capital investment required would depend on the scale of operations the firm is proposing to undertake from its new office. Keeping in view the firms current ROA and ROE this decision has will have a significant effect on the profitability of firms investment and the future success of its operations.

Determining how the proposed investment should be financed.
The decision regarding the mode of financing the capital investment is very much critical to the company as the financers for the firm for this particular investment would be expecting a better return as the company has to offer currently.

Keeping in view the firms existing Debt ratio calculated in part 2, the firm has some unused debt capacity that it can utilize to raise funds for the project. Raising the required investment for the proposed investment through issuing debt would be a better option for the company as the interest associated with such funds would bring to the company a tax saving normally associated with such borrowing. This would add to the value of the firm and would contribute in generating a positive analysis in part one.

However if the firm decides to raise the required investment by issuing common stock, the firm would have to make sure that it communicates its forecasted results relating to the financial viability of the proposed investment to the shareholders, as discussed earlier. The company should do this in an effort to support the expectations of the shareholders who are currently being offered a lower return on their investment as compared to the industry average.

The analysis for such communication should be presented by using investment appraisal techniques as it would assure the shareholders to the potential returns associated form the project and would help the decide if it would offer them the required return.

Corporate governance is a vital element in organisational success.  Management, leadership, communication systems and even decision making systems in an organisation are affected by the corporate governance structures that an organisation has in place.  Firm performance is considered by both internal and external organisational stakeholders as an objective measure of the efficiency in utilising resources.  To a management team, the performance level that they can muster is viewed as reflective of the levels of coordination and commitment to organisational cause.  To investors and customer who are considered important external stakeholders, improved or positive firms performance implies increased value on returns on their investment and improved service delivery respectively.  Thus, the external entities view improved firm performance as the first step in ensuring that organisational strategies are aligned to their expectations.  Improved firm performance within an organisation is associated with increased employees satisfaction and development of structures that facilitate employee interaction and operations.  Such developments resulting directly from improved firm performance could be vital in aiding organisational success.  Improved performance leads to multiple avenues for an organisation to seek its operational goals (Rebeiz  Salameh 2006).  This widening of platform for developing operational strategies results in organisational systems that can easily support innovation and creativity.  Innovation and creativity within an organisation considerably boosts organisational efforts towards attaining its operational goals, mission and driving at its vision. 

It is therefore apparent that a firms performance is an important measure in assessing its ability to meets its stakeholders expectations and drive at its operational goals.  Understanding the variables that affect firm performance and organisational systems that can improve performance are a requirement in analysing organisational value generation efforts (Garg 2007).  Determination of whether there is a causal relationship between corporate governance characteristics and firms performance which is the main goal of the study helps develop a further understanding of measures that organizations should put in place to facilitate their operations.

Methodology
In a nutshell, the study seeks to determine if corporate governance structures and strategies affect firm performance.  It is noteworthy that though causality does not imply dependence, dependence between the variables being analysed is a requirement for causality.  Therefore, the existence of a non-zero correlation between corporate culture characteristics and firm performance is a requirement for the existence of a causal relationship between these two variables.  Another important consideration that has played a role in paving the methodology is the multiple qualitative and quantitative studies that have been carried out on firm performance and corporate culture.  Existence of information on the variables being considered in the study and their interaction implies that secondary data collection strategies can be used.  This is an important aspect in choice of a qualitative research methodology based on positivism used in the study. 

Positivism as a philosophical school of thought states that authenticity of information should be judged by observed practical phenomenon and empirical evidence (Research methods Knowledge Base 2009).  Development of logical statements on the nature of interaction between two variables is an aspect that is ingrained in positivism.  Since the goal of the study is to explain the nature of the relationship between corporate culture characteristics and firms performance, explanation and prediction will be involved.  To develop a clear picture of the nature of relationship between corporate governance and firms performance, the sufficient and necessary conditions for causality have to be analysed in their relationship (Value of Knowledge Reference 2009 UMSL 2009).  This is one of the key reasons for adoption of positivism as the philosophy that guides the study since it supports the quest for such conditions.  By developing empirical evidence and deductive logic, the study will help develop an accurate picture of the nature of the interaction between the two variables.  It is further noteworthy that the emphasis placed by positivism on observation and practical evidence implies that the findings in the study will be supported by both the existing logic and observable practices in business.  Review of existing studies for empirical findings on the nature of relationship between corporate governance characteristics and firms performance will be supported by business theory and observable phenomena in the global business environment in addressing the research objective.  It is apparent that a positivist review allows for use of multiple research sources which helps improve accuracy of the findings developed in the study. 

Use of secondary data collection and review of the existing literature in the study helps develop multiple perspectives in analysing the nature of the relationship between corporate governance characteristics and performance (IEEE 2010).  The approach also allows for incorporation of cases and data developed from both qualitative and quantitative studies.  These add to the logical and empirical aspects of positivism which help in reinforcing the adopted research framework.  It is however noteworthy that the accuracy and integrity of the sources of data used in the study affects the validity and consistency of the findings (Key 1997).  Web articles with no visible traces of bias and journal articles will be used extensively in the study and the findings analysed in light of the existing business principles.

Findings
Corporate governance within firms is concerned with the management of all organisational issues that contribute to value generation.  Corporate governance is considered a set of processes, policies and laws that determine how a corporation is controlled and managed (Beiner, Drobetz, Schmid  Zimmermann 2004).  It is noteworthy that corporate governance also affects interaction between the principals in an organisation.  By affecting the nature of interaction between shareholders, the management and board of directors corporate governance helps ensure that their expectations and those of other stakeholders for instance employees, suppliers and the community are addressed.  Corporate governance is also concerned with the development of internal organisational systems and measures that help facilitate attainment of operational goals (Bebchuk  Hamdani 2009).  The importance attached to corporate governance is due to its role in development of operational strategies, goal setting, determination of organisational systems and impacting on organisational performance (Williams, Fadil  Armstrong 2005).  It is noteworthy that firms performance in this context refers to the level to which operational strategies have been aligned to stakeholders expectations and the degree to which they contribute to addressing the set expectations.  Failure in meeting the expectations of any stakeholder or total disregard of the existence of a stakeholder can only result in reduced performance. 

Corporate governance can direct and control management activities in an organisation through positive business savvy, promoting accountability and upholding integrity.  From this consideration, it is apparent that corporate governance is to a large degree an internal organisational factor that affects performance (Wade 2002).  In addition, the development of effective corporate governance practices is affected by market place commitments and the board culture which is an extension of the values and norms being pushed for by an organisation.  It is noteworthy that a positive culture facilitates the attainment of corporate culture goals and is characterised by the inclusion of multiple measures aimed at safeguarding policies and practices.

The importance of corporate governance is brought out in the fact that the perceived quality of corporate governance systems put in place by an organisation can potentially impact on an organisations share value.  The impact that the perceived quality of corporate governance has on share prices effectively implies that it can affect the cost of raising capital and therefore overall operational costs in an organisation.  It is noteworthy that quality of corporate governance practices is largely determined by forces that are external to a firm such as the financial market and external market forces (Al Farooque, van Zijl, Dunstan  Karim 2007).  Addressing the internal environment issues is a vital aspect in corporate governance which helps firm develop characteristics that facilitate differentiation from other competitors.  However, despite the awareness that has been developed on the need for effective corporate governance structures as avenues to value generation, poor corporate practices still persist and have been labelled as the leading cause of corporate decline (Kyereboah-Coleman 2007).  A reason for the persistence of poor corporate practices despite awareness on its importance is that the debate on corporate governance has centred on legislative policies aimed at deterring fraudulent activities while upholding transparency.  This has resulted in executives dealing with symptoms of poor corporate governance whereas the causes are left unattended. 

The spate of fraudulent activities that hit the US corporate scene in the late 2000 and early 2001 was attributed to legislative and corporate culture systems that did not protect the stakeholders and promoted greed (Core, Guay  Rusticus 2006).  A review of the firms that were involved in the fraudulent activities reveals that they had boards that were considered effective which played a role in improving their share prices in the stock market (Berkant 2009).  However, for a board to allow the adoption of accounting practices that did not allow proper disclosure, engagement in insider trading at the stock market and generally permission of practice that are potentially negative on investors value it must have personal interest or has attached little importance to investors value.  This is an example of a case where an organisation can be considered to be displaying positive strategies with respect to corporate governance whereas their internal systems do not effectively addresses cause of poor corporate practices and values. 

The after effects of the corporate scandals were a near collapse of the Wall Street as investors confidence on the financial market thinned.  This is a reflection of the effect that corporate governance as on the society and is further supported by the measures that were taken to deal with the loopholes that facilitate the major scandals (Yabei  Izumida 2008).  The collapse of firms that were implicated in the corporate scandals and their reduced performance are a reflection of the importance that should be attached to corporate governance in organisational performance.  The negative reputation associated with poor corporate governance structures negatively affect a firms ability to access resources and generate value.  In addition to thinning a firms market share, negative reputation leads to a reduction in the number of firms that are willing to be involved in any business transaction with a firm.  Cancellation of contracts and low credit ratings are observable effects of poor corporate governance structures which reduce operating capital availability and reduce the breadth of the platform that an organisation has for value generation (Radin 2007).  Thinning of the platform that a firm has for value generation is one of the effects of poor corporate governance that may affect organisational performance.  Availability of operating capital and development of a firms market share are vital requirements for successful value generation.  Therefore, there appears to be an indirect causal relationship between corporate structure values and firms performance. 

The effects that a poor corporate governance structure has on share price and value affects availability of capital and willingness to invest in an organization.  This negative reputation may be transmitted to the market resulting in reduced market penetration and susceptibility to the effects of competition (Weinberg 2003).  This reduces revenues got through sales or service delivery and with time reduces the influence that a firm has in the market or industry segments that it operates in.  Such developments resulting from corporate governance practices generally make it hard for a business to generate value in its operations and if left unaddressed could lead to corporate decline.  Studies on corporate decline support this assertion in that over 90 of recorded cases of corporate decline are a result of the inclusion of poor governance structures and adoption of values that either ignore or do not fully address the expectations of organisational stakeholders (Shaver 2005 Alexander  Lee 2006).

Corporate governance is a crucial component in the proper functioning of an organization.  The existence of corporate governance structures within an organisation is a proof of their legitimacy and goes a long way to prove credibility of their financial reporting.  However, corporate governance as a study area covers an array of corporate phenomena which is one of the reasons for the multiple misunderstanding on the requirements in implementing effective corporate governance measures (Bainbridge 2003.  Ensuring managerial accountability and financial reporting credibility and integrity are the two main areas that corporate governance structures and measures seek to address.  However, with the advent of capital markets and dilution of firms ownership, the importance attached to corporate governance has taken on a new dimension.  The existence of agency problems within firms is a result of atomisation of ownership (Griffith  Lusch 2007).  The fact that the owners of a firms are not directly involved in is daily running results in numerous operational requirements.  This is mainly because the cost of unsupervised management is considered to be high in the market unless proper measures are put in place to ensure oversight is bestowed on a separate entity that will push for the interest of the shareholders. 

The board of directors is formulated with the aim of ensuring that the strategies adopted by an organisation are aimed at not only successfully harnessing opportunities and dealing with threats but also serve to return value on shareholders investments (De Miguel, Pindado  De La Torre 2005 Garg 2007).  The existence of board of directors is therefore primarily aimed at ensuring that various stakeholders interests are addressed and dealing with numerous agency problems associated with corporate operations (Young  Buchholtz 2002).  Board of directors is charged with minimisation of agency problems that are inherent of a system of operations where ownership and control have been separated with the objective of preserving shareholder value.  From this consideration on the rationale in formulating a board of directors, it is evident that the structure, composition and power of the board of governors to a large extent affect the nature of operational strategies and the management systems that an organisation adopts.  Management and organisational systems directly impacts on the levels of performance that is attained by a firm with respect to improving internal operational efficiency and minimising wrangles.

Though shareholders interest is an area of concern to board of directors, other stakeholders interests have to be addressed for this mission to be attained.  A poorly performing organisation as an example does not return value to investors irrespective of the focus of its corporate governance structures.  Generation of value by addressing both internal and external operational requirements is therefore a critical requirement for board of directors (Van Liedekerke 2004).  The ability of the board of directors is a factor that directly impacts on the levels of performance attained by a firm.  This is the central rationale in dissolution of board of directors as a corrective measure in cases where firms report corporate decline. 

Though in most cases the board of directors is made up of shareholders who have considerable knowledge in the industry that a firm operates in diversity is considered a vital requirement in constituting a board of directors.  Diversity of the board of directors is a definitive variable in determining the nature of corporate governance systems that will be adopted by an organisation.  A diverse board is likely to be appreciative of new strategies and display higher levels of dynamism (Kyereboah-Coleman  Biekpe 2007).  However, researchers have come up with conflicting results on the effects that diversity of a board has on a firms performance (Chan  Hoi 2008).  This from consideration on strategic management principles and management of diversity is expected considering that the internal structures defining the interaction between members differ between firms.  Though diversity holds the promise of creativity and innovation, it could also result in provocation of interpersonal processes, conflicts and disagreements which may considerably affect the levels of performance attained by an organisation.  Thus diverse boards require multiple communication and interaction system to facilitate troubleshooting and develop an understanding of each others perspective for its potential to be realised.  However, most firms believe that they have this capability even if their practical ability may not support diversity requirements (Wright, Gardner, Moynihan  Allen 2005).  The result is reduced organisational performance and multiple board issues which reduce their efficiency in executing their corporate duties.  Therefore there is no direct link between diversity of a board of directors and firm performance though diverse boards are predominantly more creative and innovative if they are well supported (Quibria 2006).  It is however evident that board constitution has considerably effect on the levels of performance and could potentially affect the levels of innovation and creativity afforded by a firm. 

The importance of diversity to a firm can be derived from the fact that board of directors share numerous interests with other stakeholders.  Simply, the success of an organisation is just not determined by how well shareholders interests are represented rather is affected by other organisational systems for instance the levels of creativity and innovation displayed in developing interactive communication systems (Davis 2002).  A diverse board of directors is better placed to oversee the development of internal systems aimed at ensuring that the interest of all stakeholders is addressed.  A diverse board of directors is better placed to determine the areas that an organisation is lacking and aid in development of measures aimed at value generation.  Furthermore a diverse board of directors is likely to push for values that promote diversity in an organisation (Ayogu 2001).  It is noteworthy that diversity is potentially synergistic depending on the nature of systems that an organisation has in place to facilitate its management.  In this way, the composition of the board can affect the perceptions that an organisation has of diversity which affects the level of creativity and innovation and may also impact on organisational system requirements.

Organisational failure due to corporate decline is common place.  Corporate decline is a state where an organisation continually loses value irrespective of prevailing operational environment condition.  The causes of corporate decline are internal to an organisation and are a manifestation of systems that have been developed with little emphasis on attainment of synergy and improved interaction and coordination between different organisational facets (Watson  Wooldridge 2005).  Lack of boardroom configuration is highlighted as the most common cause of corporate decline.  The allocation of responsibilities and the number of independent directors are areas that most boards err.  In a case where a board is not sufficiently autonomous due to factors like combination of the roles of chairperson and CEO, there is likely to be conflict of interest which could considerably affect the functionality of the board.  Agency problems between the principals and the agent or rather managers are more likely to occur in a case where there is conflict of interests between the members of the board of directors and organisational operations.  The Sarbanes-Oxley Act seeks to enforce adherence to independence standards after the realisation of the effects that it could have on firms performance and stock market performance (Johnson, Davis  Albright 2009).  Defining the composition of the board of directors in a manner that seeks to maximise autonomous decision making is vital in maintaining objectivity of the board.  Failure of a board in carrying out its tasks due to conflict of interests or personal goals that conflict with organisational operations affect board performance and complicate decision making within firms.  Such avoidable complexities result in reduced and subjective decision making and poor performance which are hallmarks of organisational failure (Kit  Tan 2007).  In a dynamic competitive environment, objectivity in decision making and the speed with which an organisation makes critical decisions affect the levels of performance that it can attain.  Lack of speed and objectivity results in missing out on opportunities for professional development and is a risk to organisational performance.

Organisations that have stable and effective governance structures attract investors and display relatively stable share prices.  A well governed organization is considered by many as an organisation in which the directors have no management ties, the directors are outside entities, readily present information on organisational performance and evaluation of directors is done formally.  From the fact that efficacy in developing management systems considerably affect the perceptions that the community and other stakeholders have of an organisation, it is apparent that organisational reputation and sustainability of its operational systems is affected by corporate governance structures.  Empirical studies in the US show that the firms with the highest corporate governance ratings were also defined by high financial returns (Emslie, Oliver  Bruce 2006).  This implies that the perception that the community and stakeholders have of the corporate structure put in place by an organization affects their levels of performance.  It could also imply that assessment of the corporate governance structures put in place by an organisation is in most cases affected by the levels of performance recorded by an organisation.  Though there is no empirical finding to support the latter, consideration on quality and strategic management in general reveals that success of an organisation is often a result of internal structures that are aligned to the nature of the external operational environment and the expectations of all external stakeholders.

Discussion
A causal relationship can only exist in a case where there is dependence between the variables being considered and a logical link on how one variable affects the other.  A review of the existing literature reveals that there are multiple avenues through which corporate governance characteristics affect a firms performance.  Furthermore, empirical findings assert the role of poor corporate governance structures in corporate decline.  The existence of correlation between the structural configurations and the actual composition of the board of directors and organisational financial performance and share prices leave no doubt on the existence of a relationship.  A review of strategic management systems reveals that there is a clear link between the corporate governance structures and the levels of a firms performance through the nature of internal systems developed by an organisation.  The impact of corporate structure characteristics on a firms performance can either be positive or negative depending on the nature of systems that an organization has in place.  Corporate governance characteristics affect the internal organisational systems that a firm adopts and directly impact on share prices.  This is observable in the impact that an overhaul of a board of directors has on the share prices of an organisation.

There are cases where the relationship between corporate governance characteristic and firm performance is not clearly defined.  This is the case in analysing the effect that diversity of the board of directors has on thee levels of performance that can be attained by an organisation.  Diversity of the board of directors could result in either increased or reduced performance depending on the nature of systems that have been put in place by an organisation.  Therefore, for firms to benefit from the potential benefits associated with diversity they should have multiple systems aimed at dealing with risks associated with diversity.  Simply, management of diversity within board of directors can significantly determine the effect that it has on a firms performance.

Conclusion and Recommendations
A causal relationship exists between a number of corporate governance characteristics and firm performance.  Corporate governance affects a firms performance both directly and indirectly.  Moreover, organisations should be wary of how individual corporate governance structures affect their performance.  There are cases where a mapping between a corporate governance considerations and firm performance cannot be developed.  Focussing on organisational systems aimed at value generation and appreciation of basic tenets of corporate governance are requirements in improving a firms performance.  However, there is need for extensive empirical studies that will help develop an understanding of more corporate governance characteristics and how they affect a firms performance.

I am a person who tries not to miss out on opportunities.  I also love discovering what makes people  and organizations  tick. These have opened many interesting avenues for growth in my studies and career. My career path has been marked by a succession of moves that will help inch me closer to the realization of a long-held dream  to be the CEO of a major company.  This dream has enabled me to work with purpose and find a measure of work fulfillment. Through my professional dealings, I gleaned that through the right decisions, the right investments, and good policy changes, economies can improve and many peoples lives can be affected.  I strongly believe that professionals with solid background in accounting and strategic management skills can help make the world a better place to live in. There may be missteps along the way, but with the right mindset and skills, finance managers can carry on with their important role in helping set the direction for companies and aiding in global economic growth.  I am quite aware that the accounting profession can be very demanding and may pose restrictions in devoting time for other interests.  Nonetheless, I am ready to take on the challenges because I love the profession and I am continually amazed at the enormous impact it can have on other peoples lives. I truly look forward to the day when I can be at the helm of my company, whose vast resources I can harness for the greater good.                                                         

I graduated with top honors and tucked a Finance degree from the University of Indiana.  I specialized in international business and took up advanced courses. I consider myself among the fortunate people who have been given the opportunity, after college, to be trained and to represent reputable global financial institutions that maintain high ethical standards.  My work as relationship manager for Citibank-Dubai and as client service associate for Morgan Stanley honed my skills in client services, notably problem-solving skills and detail orientedness. I enjoyed these work opportunities that enabled me to interact daily with clients. I learned how to stay focused and to effectively relate with other people.

I became part of the Toastmasters Speak Smart Club in Bloomington, Indiana, an experience which helped me polish my communication skills. I actively promoted the club and its activities in the University of Indiana, utilizing modern marketing approaches. I am well aware that good and effective leaders need to collaborate and make optimum use of tools at their disposal to accomplish goals faster.

Looking around me, I have certainly noted how accounting plays a pivotal role in the financial world. It is called language of the business world and can help companies map out their growth. I believe that a strong accounting background can help pave the way for novel market strategies and sound financial models which, when combined with modern technology, can help a company take off.   Todays global firms are poised for astounding growth and I look forward to being part of a winning organizational team that can take advantage of that growth.

At this point in my career, I look forward to learning more, and obtaining a greater understanding of the workings and management techniques that may be applied within organizations in order to effect real change. I hope to be accepted in the Master of Accountancy Program at DePaul University,  and acquire unique perspectives and greater understanding of technical concepts in my chosen profession. The masters of accounting program at Depual, with its first-rate faculty with good credentials, ranks among the best. I look forward to learning the advance communication and management skills which are essential to succeeding in the highly competitive world of finance.  I hope to obtain a well-rounded education and to learn some invaluable skills to approach problems from a different point of view.  In other words, I want to develop myself to my full potential and unlock the door to greater opportunities.                                                                                                 

Some of my personal qualities  that I feel will be very useful as I embark on my plans to pursue advance studies are my dedication, work ethic, high motivation, and goal-oriented mindset. I am the type of person who will finish any project I have started, and it is something that has enabled me to excel in the academe and gain the respect of colleagues and superiors in the working world. I also understand the importance of fostering team spirit and cooperation. I likewise uphold ethical responsibility. It is interesting to note that the Master of Accountancy Program at DePaul University also offers not just professional skills enhancement but a broad understanding of the ethical and legal considerations that are crucial to a profession like accounting (Master of Accountancy, 2010).                                                                                                          

I firmly believe the school will help ingrain the analytical exactitude, communication skills, and managerial abilities that will help me as a future leader. I want to further build my leadership capacity.  A good learning institution will be an immense help. I hope you will take a favorable decision regarding my admission to the Master of Accountancy Program at DePaul University.

Capital project funds are specific funds which are utilized for the construction of or for acquiring significant capital assets. The monies for this are acquired via the issue of General Obligation Bonds, taxes or grants from governmental agencies of public sector vehicles. There are specific restrictions as to the use of these funds the duration and use of the residual amount and the constantly occurring costs are accounted for in one expenditures account. The funds created for the expansion of the Justice Center, construction of the Government center and the Holding Facility construction appear to accord to the regulations concerning these funds.

    The Justice Center Fund benefited from the residual of the courthouse fund and the acquisitions from the 0.3 of the rise in sales tax of 0.5 as well as capital lease proceeds. However the operational needs will be fulfilled via interest income and future residuals which may be subject to uncertainty concerning the low interest rates in the country and volatility in the economy in the wake of the financial crisis. The detention facility expansion fund also suffers from this potential volatility but a part of its revenues are generated via taxes from previous years which hedges against interest volatility to some extent, as the project reaches completion at 2008, when the fund will cease to exist. In all three projects, the incremental future costs of operations and maintenance remain an issue and may require further financing at some point in the future. At present, the two major projects are in the capital outlay phase with operations not undertaken yet which should allow for the initial phase to be completed with the funding at hand. Requirements for future use may be available through prudent investment and possible part of financial stimuli being distributed by the federal government in the wake of the financial crisis.

An auditor has the responsibility of performing and planning audit in order to obtain assurance that is reasonable on whether or not the financial statements prepared by a company are free from any material misstatement, regardless of whether such material misstatements are caused by frauds or errors. Due to the nature of the evidence of audit and the fraud characteristics, the auditor can only be in a position of obtaining reasonable assurance, but not an absolute one that material misstatements have been detected. The auditor does not have responsibility of performing or planning an audit in order to obtain assurance that is reasonable, that misstatements regardless of whether they were caused by fraud or errors that do not meet the material threshold of the financial statements of the company are detected (Heim, 2002).

Auditors responsibility for fraud
The main responsibility of auditors is ensuring that the financial statements and other books of accounts prepared by a company reflect a fair and a true position of the company. It is not the duty of an auditor to detect all misstatements in such books, whether they are as a result of errors or frauds. However, the auditor owes duty of care to several stakeholders of the company he or she is auditing. Therefore, the auditor is under obligation to disclose any material misstatement that is detected in the course of the audit work regardless of whether the material misstatement is as a result of errors or frauds. The auditor is therefore under obligation to include any material misstatement detected in the final audit report. The responsibility of fraud detection and prevention rests on the personnel charged with management and governance of the company and not on the auditor. Hence, if by any chance the auditor fails to detect some misstatements whether they are material or not, then the auditor shall not be held liable. This will however not be applicable if such omissions were as a result of negligence. Due to the highly dynamic business world and the increased frauds being reported, the responsibilities of auditors in frauds detection and prevention have been reviewed severally. In fact, according to international accounting standards, an auditor carrying out an audit has the responsibility of obtaining assurance that is reasonable that all the companys financial statements are free of any material misstatements irrespective of whether such are caused by errors or frauds (Apostolou  Crumbley, 2008).

In the modern business world where frauds can be penetrated through several channels, the duty of fraud detection and prevention has been vested on both the entities management as well as the auditors. Whereas the personnel of the entity charged with its management and governance have the primary responsibility of detecting and preventing frauds, the secondary responsibility is vested on the auditors. In overall, the goal of an auditor in carrying out an audit as per the requirements of international standards of accounting is to maintain the professional skepticism attitude. In this case, the auditor should perform and plan the audit with this attitude in mind. The auditor should therefore appreciate that there may exist circumstances that can make the financial statements being audited to be misstated materially. The skepticism attitude of an auditor should basically include being alert, a mind that is constantly questioning various entries and paying more attention to conditions that are likely to indicate any possible misstatement resulting from either frauds or errors. Such skepticism shall greatly assist the auditor in carrying out the secondary responsibility of fraud detection and prevention (Apostolou  Crumbley, 2008).

It is the duty of an auditor in fraud detection and prevention to assess and identify the material misstatement risks of the entity together with the environment in which the entity is operating in. In doing so, the auditor has to use the engagement team and hold some discussions with the companys financial statements susceptibility to misstatements that are material resulting from frauds. Such a discussion is very important in enabling the auditor to place special emphasis on where and how the financial statements of the entity might be prone to misstatements that are material resulting from frauds, including the manner in which such frauds may take place. The international accounting standards demand that an auditor carries out procedures of risk assessment. The aim of this is to enable the auditor obtain more information to be used in identification of material misstatement risks resulting from fraud (Ramos, 2003).

The primary responsibility of detecting and preventing frauds is vested on the individuals with the mandate of governing and managing an entity. However, the auditor who is auditing the financial statements of the entity has the secondary responsibility of fraud detection and prevention. The auditor should therefore use all the procedures laid down by the international accounting standards in ensuring that any material misstatement is detected and reported in the final report. Should the auditor fail to use such procedures and subsequently fails to detect any material misstatements whether resulting from frauds or errors, then the auditor will be held liable of negligence.

Materiality
Materiality is a term used in accounting and auditing that refers to the degree of an exclusion or misstatement of accounting information where by in the light of surrounding conditions, it makes possible that the verdict of a realistic person depending on that accounted information would be influenced by the misstatement or omission. It directly depends on the size of an error. Thus, an auditor verifies whether the financial statements are to the acceptable standards in financial framework, for example, those of Generally Accepted Accounting Principle (GAAP).

Reasonable assurance in an auditors report is said to be the degree of confidence to an individual or group that receives the information to treat it as legitimate and unaltered. This report is an opinion on whether the information presented is true, correct and free of material misstatements (Riahi-Belkaoui, 1992). It is a useful mechanism for reporting information mostly financial data to the users, particularly in business sectors. Todays standard relies on this concept of reasonable assurance in depicting the intensity of dependence to be found on audited information.

The main reason of an audit is to increase the credibility of a financial data by giving a written reasonable assurance mostly from a source that is not part of that organization. Therefore, providing reasonable assurance to the user is not easy but it is vital in order make sure that reports are fair and a true in reference to the standards of accounting and this is done by ensuring auditors independence in the whole process. This concept is not easy but it has to be done if we want to succeed and avoid the negative altitude the public has on this profession (Rezaee, et al, 2002).

Whereas the audit report could indicate that the company is wealthy it is a necessary but not a sufficient barometer. You have to look at other factors like the general management condition performance trends over time, the debt position and how the company intends to finance itself and so forth. It is important to consult professional consultants to be sure whether to invest or not .Note that it is an audit requirement for companies facing eminent profit decline or loss to include such warnings in their audit reports. Such information helps in making decisions based on your investment option.

Internal controls that are effective, on financial reporting offers assurance that is reasonable, in regard to the dependability of the financial statements preparation and reporting, of an entitys financial statements especially for external use. Since an auditor owes duty of care to the external users as well as all the stakeholders who will make their decisions based on the audit report, it is very important for an auditor to gain reasonable understanding about the internal controls of the entity whose financial statements are being audited. If there are material weaknesses in the internal controls of the entity, then there are high chances of the financial reporting made by the entity being ineffective (Moeller, 2005).

The objectives of an auditor when auditing the internal controls of an entity, is to express an objective opinion regarding the effectiveness of the entitys internal controls. If the internal controls of an entity cannot be said to be effective for one reason or the other, then the auditor cannot use them as a basis of forming and expressing his opinion. Therefore, the auditor must perform and plan the audit in order to get evidence that is competent and adequate so as to obtain assurances that are reasonable on whether the material weaknesses were present on the date that is specified by the assessment of the management. It is important to note that it is possible for material weaknesses to exist in the internal controls even in circumstances when there are no material misstatements in the financial statements (Vasarhelyi  Kogan, 1998).

The auditor has the responsibility of detecting any weaknesses in the internal controls of the entity. Once such weaknesses are detected, they should be reported to the management in order to ensure that the entity does not suffer in future due to such weaknesses. The auditors should perform and plan their audits in a similar manner whether they are auditing private or public entities. However, there is a general tendency by most auditors to assume that the internal controls of a private company are much stronger than those of public companies and hence rely on them more heavily in expressing an opinion. This should not be the case as it is also possible to have weaknesses in the internal controls of a private entity. The responsibility of an auditor does not differ whether the audit is being conducted on a private company or a public one (Moeller, 2005). 

The internal control responsibilities for an auditor do not differ when auditing either a private or a public limited company. In both cases, the auditor has the responsibility of assessing the internal controls to enable him or her to express an opinion in regards to it. In either a public or a private company, if the internal controls are strong according to the auditor, then the auditor can rely on them in expressing his or her opinion (Vasarhelyi  Kogan, 1998).

Private finance initiative has been becoming an increasing area of focus in recent times. It is not a new concept and has already been in extensive use since its inception in Australia and the United Kingdom. However, with the current financial crisis, it has seen increasing prominence as it is being utilizied as the primary vehicle for infrastructure development by the countries that initiated financial stimuli to boost their economies. The link between the public and the private sector that PFI forms to create a partnership has its own share of advantages and drawbacks which has been a topic of debate, not only in the financial circles but also in the British parliament as the country makes extensive use of PFI (Monbiot 2001). Evaluating what it brings to the tables requires understanding the underlying concepts of the Private Finance Initiative.

    It is basically a mechanism whereby the government can obtain finance from the private sector, forming a kind of semi-privatized and de-regulated structure which works jointly on primarily infrastructure development projects. This is done on behalf of the public sector which effectively works to reassign the responsibility for these projects but the accountability still rests on the public sector. The exact details of each PFI deal are specified in the individual contracts signed between the public sector authority and the collection of private investors. These are long term contracts, spanning many years, during which the private sector group has to undertake provision of services and maintenance work (Heald 2003). Payment is made to the consortium on a service provision basis and termination of contracts is a highly complex procedure as it often requires public ownership of the project and repayment of debt to the private entity. The performance by the private partner is also specified in an output specification document whereby the desired quality and specifications are mentioned, which are required to be achieved before the public sector will make payment for the services rendered.

    A Private Finance Initiative accords many advantages to the public sector. First, with this mechanism the costs of major infrastructure development and construction projects do not appear immediately as one big amount on the books of the government. This has a tendency to reduce public expenditure in one term and spread it out over multiple years during which the service is utilized (Heald 2003). This is of importance to the government as the public sector has a finite amount of funds available to pursue multiple goals and this procurement of services and finance through private sector results in an arrangement that allows the public sector to undertake an increasing number of projects. Advantages have also been pointed out in terms of better delivery of services engaged through PFIs. This is because the private sector is deemed more efficient because of its profit motive. The risk of the project undertaken is also transferred from the public to the private sector. As the latter is known to be better at management of risk, the arrangement is believed to result in a better and more risk adjusted outcome where the public sector does not have to bear the brunt of it (Sturmfells 2009).

    PFI projects undertaken in Britains health sector as well as others show that these undertakings reach completion quicker than those pursued solely by the public sector. This represents value for money to the taxpayer. The private consortium also seeks to improve design specifications in a bid to lower costs which may ultimately result in improved provision of services as well as better maintenance of the infrastructure and buildings constructed. This is something that is seen to be lacking in public sector enterprises. Furthermore, the projects are carried out without the costs of them accruing on the national debt of the nation as the contract requires the public sector to make a singular payment.

    There are however significant drawbacks to the Private Finance Initiative as well. The overall costs of PFI projects tend to be higher than those undertaken by the public sector. This is because the private consortium obtains finance via banks which issue the money at rates of interest potentially higher than those of public funded schemes. Cost of capital thus goes up along with the increasing costs of paying for services, rent, maintenance as well as the huge profits that private sector is able to draw from these projects. It thus can be seen as a compromise in terms of higher overall costs to benefit from spread out payments. A lack of incentive for quality maintenance is also pointed out in PFI projects (Sturmfells 2009). Although the private consortium will need to maintain output specifications to get payment, this is restricted by what is written in the contract, and aside from that, there is no incentive to cut costs of construction which may see rising expenses with lower standards.

    In the case of the NHS in the UK, an increasing focus is going towards formulating the PFI contracts and the dealings that have to be subsequently made rather than on patient care and provision of healthcare (Allen 2001). Employment also becomes an issue as many of the public sector workers who are related to the PFI project get their contracts transferred to the private sector which worsens pension arrangements for them and potentially reduces employment as the private sector aims to reduce costs by firing workers. The increasingly complex contracts which are drawn for PFI projects also act as a barrier to effective accountability as assessing the potential tradeoff between benefits and costs becomes difficult and transparency becomes a problem. This is further highlighted in the accounting treatment of PFI projects as they are off-balance sheet for the public sector as it has to make a singular payment for the services obtained from the private sector, resulting in the national debt appearing artificially lower (Monbiot 2001). The assets may not appear on the private consortiums books either as it is an undertaking on behalf of the government and the termination clause means the assets can be taken over by the government at any times with immediate repayment of debt. Thus, revenues and liabilities are recognized but the assets remain off balance sheet. This questions the transparency of the project and is already an issue with the accounting bodies which are contemplating changes in the treatment of PFI projects to bring the assets on the balance sheet.

Question 2
A continuing trend in the financial circles for a substantial number of years has been declaration of the need for a harmonization of the financial reporting mechanism followed around the world. This is stressed on because the advantages of such an undertaking would be enormous. There would be a rapid reduction in the cost of compliance with accounting regulations of global firms that operate in different regions around the world. As the regulations become easier to implement, it will encourage companies to list on stock exchanges around the world without the additional costs of compliance, allowing easy flow of capital world wide (Buchanan 2003). This carries obvious benefits for development of commercial activity and growth in the world economy. Finally, the investor class would benefit tremendously as well as a single harmonized way of financial reporting will make company comparisons around the world a lot easier as well as encourage more trust in a globally accepted set of accounting standards which will be a result of the combination of accounting skills from every part of the world. This idea however carries many obstacles as has been shown by opposition from different corners. The SEC and IOSCO publicly stated that there is no acceptable global standard to follow as yet. However, the IASB has been making rapid strides towards this goal (Murphy 2000).

    Historically, countries devised their own accounting standards or established regulations and the USs GAAP under the FASB was regarded as the leader in this effort for quite a while. Then IASB stepped in and started developing accounting standards for countries that did not have them and took a principles based approach to setting basic mechanisms for financial reporting as well as reporting them. It eventually gained increasing acceptance from the European Union and countries around the world, being adopted by most. The IAS, as they were developed, however did have their critics who questioned their application as a globally applicable set of standards.

    IOSCO raised questions regarding some of the standards that were produced by the IASB and even preferred the application GAAP in certain cases. At the time, there were around 255 stated differences between the IAS and GAAP in application. In addition, vehement opposition stemmed from the US and the SEC as it viewed the GAAP to be superior in terms of quality to the other set of standards being proposed. This was built on a history of development of accounting standards as well as a strict rules based approach which specified compliance for every case, as opposed to the leniency of judgment accorded by the principles based IAS. In addition to claims of deficiency in quality, SEC also questioned the infrastructure of the IASB which varied in its operations and methodology from FASB, potentially leaving less control with the US if the global standards were adopted. Apart from these openly stated differences, harmonization faces other implicit difficulties as well. Culture and the historic development of mechanisms in certain parts of the world mean that there is a rigid loyalty to the things of old and opposition to anything that seeks to replace it. Nationalism also comes in at certain points such as in the US and EU countries as harmonization means giving up control which raises questions of sovereignty (Nobes 2006).

    These differences however have been slowly disappearing which is an encouraging sign for harmonization of financial reporting at some time in the future. IOSCO has agreed to endorse use of IFRS as they are now known for cross border reporting, provided a core set of standards of significant quality is going to be developed. This was accomplished in 1999 leading to eventual support of IOSCO. The strong claim of SEC about superiority of GAAP took a hit in the wake of the accounting scandals such as Enron, WorldCom and Sunbeam which questioned the rules based approach of GAAP and presented a favorable picture of the principles based IFRS. Thus the FASB and the IASB agreed to sign a memorandum of understanding aimed at greater convergence of standards. In pursuance of this objective, both decided to work together towards harmonization and a revised standard on Earnings per share was prepared by the FASB (Nobes 2006). Obstacles in the EU disappeared to a great deal with the adoption of the single currency and monetary policy by the European Central Bank which paved the way for acceptance of the IFRS by EU and requirement for the companies to be in accordance with the standards. This additionally prompted countries that trade with the EU countries to endorse the IFRS and initiate policies aimed towards adopting them. Even in the US, companies with a big scale of operations present accounts in accordance with both IFRS and GAAP or publish a reconciliation from one to the other which makes comparisons easier. In essence, the only element that now needs to be satisfied for effective harmonization is convergence between the GAAP and the IFRS which is already underway. When these differences are bridged by the ongoing process, the US and EU will have common mechanisms for financial reporting which will prompt the remaining countries to follow. Thus it can be said that international harmonization of accounting standards is a reality that will be accomplished in the not too distant future.

The board of directors has various roles and responsibilities in the petrochemical industries in Saudi Arabia. There are several activities which are carried out in organizations. It requires some management to oversee all the activities done in a company. Petrochemical industries in Saudi are managed and controlled by board of directors. It is the mandates of the board of directors to control the various activities carried out in an organization. Board of directors may acquire different titles depending on the organization. These include board of governors, board of trustees amongst other titles. The authority of the petrochemical industries determines the responsibilities of the board of directors (Porter, 2002). The duties and the powers delegated to the board of directors are also determined by the authority. There are bylaws which control the activities carried out in an organization. The bylaws covering an organization determine the manner in which the board of directors operates. This includes determining the meeting schedules as well as the number of people to be included in the board of directors. The manner in which board of directors are elected is also defined by the law.

    The board of directors presents the organizations mandates during inter organizational forums. The members of the board of directors are normally by the shareholders as put in the organizations bylaws. The board of directors is entitled to various duties which are defined under the bylaws.

    The board of directors is answerable to maintaining the cash flows in the organization. Adequate financial resources can be maintained in an organization if there is a reliable board of directors. Organizations budget is overseen by a board of directors. It is the responsibility of the board of directors to evaluate and approve the companys budget. The board of directors is also entitled to governance of the petrochemical industries. An organizations governance can be assured by setting company objectives. The board of directors is also responsible in establishing governing policies. There are policies which govern the petrochemical industries. These policies are set and formulated by the board of directors as laid by the organizations bylaws. The objectives of an organization are formulated by the board of directors. The board of directors is responsible for evaluating the performance of an organization (Cuervo, 2008).  The board of directors is responsible for relaying information about the organizations performance. The performance of an organization should be revealed to the stakeholders during scheduled meetings. It is the responsibility of the board of directors to monitor departmental performance. The board of directors is concerned within filling vacant position of the chief executive.

    Petrochemical industries in Saudi Arabia have some history in which case the board of directors is the major determining factor for the success of the petrochemical industries. Most of the petrochemical industries produce naphtha and natural gas as feedstock. The petrochemical industries produce natural gas such as butane, ethane, and natural gas amongst other natural gases. Petrochemical industries produce various chemicals and fertilizers.  The petrochemical industries in Saudi Arabia have been successful. Saudi Arabia has been a major target of petrochemical industries. The board of directors of these industries has worked tirelessly to ensure excellent records.  The Saudi Arabia petrochemical industries have been successful due to the laid plans by the Saudi Basic Industries Corporation which manages the petrochemicals. Saudi Arabic Industries Corporation serves as a board of directors (Imle, 1999).

This body has been involved in setting the objectives of the petrochemical industries. They have set petrochemical industries in Germany and Netherlands. The performance of the petrochemical industries has been successful under this umbrella. The board of directors has been in the forefront in ensuring success. The work of the board of directors include maximizing on the available opportunities by investing heavily in petrochemical industries. The products of the petrochemical industries in Saudi Arabia have been widely accepted within the global markets (Schwartz, 2006). This has been as a result of the work of the board of directors of ensuring high quality products thus improving organizations performance.

    There are several factors which determine the responsibilities of board of directors.  These include the available opportunities, the financial resources of an organization, the global markets. The work of the board of directors in defined in the bylaws of an organization. These bylaws dictate the objectives of an organization. Other factors which determine the manner in which the board of directors should execute its duties include competition forces. The powers and control in the board is held by authority (Mueller, 1999). The bylaws governing an industry hold the powers and control in the board. The roles and responsibilities of the board of directors are defined in the bylaws.

    In conclusion, the board of directors has various responsibilities and roles. These include evaluation and analysis of the company budget, governing the various activities in an organization and accounting the companys performance. These duties and responsibilities are defined in an organizations bylaws. The responsibilities and duties of board of directors vary from one company to another. The factors which define the manner in which the board of directors carry out their work include companys objectives. Petrochemical in Saudi Arabia have successful due to the devoted board of directors.

The main area that this study aims to cover is the role and responsibilities of the Board of Directors in an organization, especially in reference to the Petrochemical Industry in Saudi Arabia.

The Methodology
The Methodology will be mainly based on ethnography. According to ethnographic principles of research the study would be based on qualitative date and would require research to be done across the field of study using methods of interviews, participant observation and detailed open ended questionnaires (Ketchen  Bergh, 2005).

Ethnography is to study a way of life and ethnography can takes various forms from participant observation to in-depth interviews. Ethnography, however, is a very tiring process and can consume a lot of researchers time. Another problem associated with ethnography is that the researcher may get over involved in the subject of research and may lose himself in the research process. Also, the researcher may influence people with his presence. Moreover, the problem with ethnography is that the research may not be reliable and cannot be repeated as people would not be able to repeat thee research. The researcher may, however, prefer to use ethnography to get an in-depth analysis of the research subject and would want to get a detailed account of the organization under consideration.

Comparison of Ethnography with other Methods
If other research methods are compared under the light of ethnographic research a clear identification can be made of the advantages and the disadvantages of ethnography over other research methods. Firstly, the research is not objective or reliable as the sample size is small and would not clearly identify the overall roles of the BOD in allvariety of organizations. On the other hand, questionnaires may help collecting a wide range of data across a large sample size and would be more objective. However, the data would be truly valid and representative of the sample size that is being studied. Although, ethnographic research would be representative for the particular sample size in the organization, it would fail to show the roles of BOD across various organizations. Ethnography is more time consuming and requires greater involvement from the researcher and can have a researcher bias. Whereas, as compared to grounded theory, ethnography is relatively easier and faster to carry out as no hypothesis has to be made before the data is collected and no theory evaluation takes place. Ethnography finds data which is then converted into a theory while grounded theory helps in finding data for a theory which has been established before the collection of data. Moreover, comparative analysis method compares two or more subjects which are then analyzed and a theory is established. However, this method is not valid for this particular research as the researcher does not want to look at the roles of the BOD of selective organizations the research seeks to assess the generalized roles of BOD in a petrochemical industry in particular. Case studies will not even provide the researcher with the best form of data as the case studies are concentrated on only a single organization which is analyzed in greater detail. Hence, ethnography is most suitable for this research as it would allow the researcher to carry out a detailed analysis over the whole industry.

There are three steps while an ethnographic research is being conducted. Firstly, the researcher should do a field analysis. Field analysis should be followed by formal analysis and then by writing and interpreting that research. Field analysis may be very critical as it helps the gathering of the main data. This process is the most difficult and time consuming and may also harm the researcher. However, in the particular research of the roles of the BOD the researcher is not threatened as this is not a risky subject to study as compared to studies related to subjects like the behaviour of juvenile delinquents (Goddard  Melville, 2007).Writing and interpreting are also very crucial steps as they actually convey what has been observed by the researcher. If these steps are not carried out properly then the whole purpose of the study may become futile. If the writing is not done properly then the research may not be categorized as value free. Hence, the writer should be careful not to assess or judge the doings of the organizations based on own values.

To achieve valuable and first hand information, the study will have to be carried out across a wide number of organizations to judge the varying roles of the Board of Directors (BOD) across different companies (Bryman, Lewis-Beck,  Liao, 2004). The main focus, however, would be the Petrochemical Industry in Saudi Arabia. The researcher can conduct interviews with various organizations in Saudi Arabia and can get information. Semi structured interviews can be used to conduct research to collect the required quantitative and qualitative data which would then support the conduction of the ethnographic research. The main point of concern while designing this type of an interview would be to choose questions which would collect the required data for further research to be facilitated (Goddard  Melville, 2007).

However, it should be noted that the methodology of interviews could be misleading if bias is involved. It may be unreliable if people give a misleading image due to a bias against the management or the members of the board (Ketchen  Bergh, 2005). Moreover, people can feel pressurized by the interviews and may reproduce misleading responses favouring the board even if they believe something else to be the case. Peoples perspectives keep changing according to their experiences and encounters with the BOD and hence, they may give varying views if the interviews are conducted after they had a good interaction from when they would have a negative interaction (Kothari, 2008). Qualitative data would be extremely difficult to collect and quantify and it would be difficult to express it in a form of a study. Moreover, qualitative data allows only a limited number of people to be interviewed as it is detailed and time consuming and requires the interviewer to build up a rapport with the interviewees, this would consume a lot of time (Bryman, Lewis-Beck,  Liao 2004).
It should however, be noted that the research method is not completely unstructured interviews, in fact, semi structured interviews would be held to give the interviews some organized order and to make the research comparatively more objective and systematic (Goddard  Melville, 2007).

The interviewer however, can negate the negative effects of a detailed interview and interviewees bias by adopting a friendly and approachable attitude (Goddard  Melville, 2007). Also, an interviewer should ask questions in an easy language which can be easily understood by the interviewee, moreover, the interviewer should make sure that he or she does not violate the cultural beliefs and values held by the interviewee so that the interviewee may not feel offended while answering the question (Bryman, Lewis-Beck,  Liao 2004). Also the interviewer should not ask biased or leading questions and should not try to direct an answer given by the interviewee (Kothari, 2008).

The semi structured interviews are based on a structure which probes some closed and structured questions to the respondent, while, at the same time there are a few open ended questions which allow collection of a qualitative form of data.  Interviews can also gather a large sample as compared to participant observation. This makes generalization more appropriate and also makes the data more representative however, as compared to questionnaires they may not be valid. Also, respondents may lie or may forget actual information which may make the results misleading (Kumar, 2008).

A focus group will not be a good approach to deal with the topic of study. The reason to avoid focus group is that it would bring with itself a lot of superficial details and biases held by different people in the organization. Interviews would be an efficient way to collect data from the concerned people (Kumar, 2008). On the other hand focus groups would involve a lot of conflict and politics within the organization and would consume a lot of time and energy and would also be unnecessary. During the conduction of an interview on a focus group a lot of time is lost as irrelevant topics come into focus than important and relevant topics (Kumar, 2008). An interviewer tends to lose control of the group than compared to the one to one interview.  Moreover, a focus group is also relatively a very small size of people and will hinder diversity in views (Bryman, Lewis-Beck,  Liao, 2004).

Focus Groups are also not good in conducting this particular research as these groups cannot maintain confidentiality and privacy as there are many people involved in the group who may threaten confidentiality. Most organizations would not want to answer probing questions about their daily organizational decision making as they would be concerned about the information that they would be giving indirectly to their competitors. Moreover, people involved in focus groups may start affecting each other in their views and decisions. Also, the moderator can influence the views of people. If the moderator is biased, there is a chance that he may influence the opinion presented by people. Focus groups, hence, would not be an efficient way to collect data for this study (Kothari, 2008).

Ethical considerations are extremely important while conducting ethnographic research. Firstly, it should be made sure that the participants involved in research are fully aware that the research is being carried. Moreover, the consent of the participant should be taken while conducting research. It should be made sure that the participation of people in the study would not harm or hurt them in anyway. For example an employee may get dismissed because of his or her participation in the research. It should be taken into consideration that the participants do not display any harmful or illegal behaviour while the research is being conducted. Last but not the least, the confidentiality should be maintained thoroughly as the participants may leak out some of the information which is being shared with them and that information may be an organizations secret and may affect some participants (Bryman, Lewis-Beck,  Liao 2004). .

The research methodology would allow the researcher to observe the biases of the participants and the way qualitative data proves to be better than quantitative data as it helps in empowering the researcher with sufficient relevant and first hand knowledge. The research would also make the researcher realize the internal politics within the organizations and the conflict that is present (Ketchen  Bergh, 2005).

1. From the situation at hand, one can contend that this company does not have appropriate accounting and internal controls against the prevention and detection of fraud.  It is true that the store has an excellent surveillance system but important accounting and internal controls are lacking.  As one can notice, at the beginning of this case the company does not have any cash control since several reports on falsified checks and stolen credit cards have been reported and also via the surveillance system the cashier was caught taking money from the cash till.  Not to mention the false UPC labels that the cashier was scanning through the system listing the wrong price items.  This was another defect present in the operations of the company, which outlines the absence of inventory controls.  Further more, security on the UPC labels is also absent.  The case further illustrates that for the recruitment of new staff in the organization there are no policies and procedures to investigate on the employees history if heshe is reliable and holds no criminal records.  Appropriate accounting and internal controls will be illustrated in the proceeding paragraphs. 

2. Large stores tend to encounter greater risks of being defrauded by any of the staff or the clients. So before a company begins to operate it has to adopt the necessary internal controls for the business in order to diminish the risk of forgery.  Such internal controls have to be around the day-to-day operations of the company.

Accounting wise, first of all the company should adopt appropriate control measures on the cash and inventory.  Such controls will mitigate the risk of fraud and prevent any unnecessarily losses that may hinder the financial performance of the company.  Such controls on cash encompass daily reconciliations of cash balances with sales receipts.  Such exercise entails comparing all the issued receipts with the remaining cash balance in the cash register.  Ideally the cashier should be held responsible for any differences arising from such reconciliation.  For example if in his cash box heshe is given an amount of 200 and heshe effected cash sales worth 1,000. At the end of the day the final amount in the cash till should be of 1,200.  If it is lower, for example 1,180, the cashier should compensate for such a discrepancy.

With respect to inventory, periodic spot checks should be carried out by the accounts department, to ensure that the sold items during that particular day or month will be equivalent to the remaining items on the shelves.  This will further enhance the controls and accurate accounting records with respect to inventory.

Together with this the company must ensure that every item in the store must have attached properly the UPC labels and ensure that it will not be easily removed from the item.  The person in charge must also make periodical spot checks on such facet to ensure that nobody is removing or changing the UPC labels to enable stealing.  Job rotation among staff should also be undertaken in order to diminish the risk of fraud.

Appropriate procedures and policies should also be enacted as regards the recruitment of new staff.   The interviewers, who are responsible for the recruitment of the new staff must request a police conduct note accompanied with the resume, which highlights the history of any criminal records.  Further more, references of such employees should be requested from past employers.  This will help to employ the right persons, which will further diminish the risk of fraud.

This comprehensive study has been carried to highlight and examine the factors that cognitively affect the independence of auditors barring them from executing their auditory duties successfully. The relationship between the audit function and the audit committee involved is one of the major setbacks experienced by independed auditors. Study reveals that an unstable relationship between these two figures might affect the individual objectivity due to pressure from the other party compromising the quality of report. Lack of originality and value is another demeaning factor in auditing. Value in an audit report is determined by the technicalities employed in the program design and the planning materiality. In analyzing the importance of a good planning materiality design,   Hans, Fred  Simunic stated that

The determination of Planning Materiality (PM) is an important judgment made by the auditor when designing an audit program (p.1).

Limited data availability is a major factor compromising the quality of independed audit reports. The client company should hand out all the related financial reports needed to compile an effective report. As a practicing accountant, I strongly concur with the above findings citing eminence of the factors affecting independed audits. Auditors are supposed to include in their proposal the terms and conditions addressing their request for independence in undertaking the project. Independence of auditors dictates the value of expected reports from a certain project. The office of the auditor general should provide independed auditors the power to reveal financial rackets uncovered in auditing procedures without fear of losing their contracts or jobs.

The woes of the banking sector have just refused to go away. They were initiated by the global economic credit crunch which progressed and moved away from the financial sector to affect most other sectors of the US economy. While on the brink of collapse, most of these troubled banks have had to seek the lending hand of the government in order to fight their way out of the economic quagmire. The critical issues that have emerged from these events have centered on how, if at all, the government had to recognize the really deserving cases and as such help such people out with taxpayers money. Also important was what role these banks will pay in the repayment of the money (Sydney Morning Herald 2009). As the controversy has been raging on, banks have found themselves having to account for some of their historical practices especially that of awarding top executives huge bonuses. This essay critically responds to an article published recently highlighting the state of affairs in the banking sector in the US.

    This article focuses on a couple of interrelated issues that have been taking place in the recent past in the US banking sector. These issues are contained in a report that was released regarding the banking crisis that followed the global economic melt-down. The first issue is that of having to bail banks out of the eminent collapse that was occasioned by the global economic crisis, and was especially severe in the banking sector (Sydney Morning Herald 2009). The other issue being addressed is that of the specific banks and the specific amounts that they have been paying out to their top executives as bonuses. The main focus of the report lies on the fact that while some banks were on the brink of collapse and required government funds to bail them out, they were never paying any attention to the fact that they were really adding more financial strain to themselves by having such large volumes of money given out as bonuses.

The Stakeholders and the Ethical Dilemma
    The article gives a detailed list of the main banks that were noted to have engaged in this habit of careless trading practices whereby they continued with the unethical practice of paying out huge bonuses, some of the payouts coming too close to what the banks actually required to stay afloat in business. Some eight banks, most of which are based in New York, are known to have received a combined sum of about 175 billion US dollars through the infamous Troubled Asset Relief Program (TARP) while they shamelessly managed to pay out bonuses to their top executives amounting to some 32.6 billion US dollars. The report was compiled by the New York attorney General (Meyer 2009).

Apart from the banks the other stakeholders in the saga are the federal government and Congress both of who feel banks are going too far and are too wiling to engage in what is being referred to as risky behavior (Sydney Morning Herald 2009). This behavior is being seen as inherent in the nature and manner in which these banks acted in the face of trouble. The taxpayers are also another group whichis very much affected by such moves. The main ethical dilemma is the habit by banks to continue paying out huge bonuses to their top executives while at the same time expecting taxpayers to pay in order to help salvage the banks from going under with debt. It defeats logic that such a move could be taken without any restraint. It is unethical in the sense that such huge bonuses are risks that the banks knowingly exposed themselves to, and as such they ought to have regretted their moves and shied away from seeking help from taxpayers (Sydney Morning Herald 2009).

To add to these, there is the issue of morality in compensation or rewarding of performance, and this entails rewarding or giving gifts when the performance is good and withholding when performance is dismal or below the expected standards. To this end, it was very unethical for the banks to go ahead and reward their top executives huge bonuses when actually these executives were responsible for running the banks into the mire of economic decline. Such bank executives ought to have been punished for their mistakes and not rewarded with taxpayers money (APES 110 2006).

The article, however, does not contain all the facts that are necessary to give the reader an informed position. Critical facts like who the beneficiaries of these huge bonuses are and what role they played to deserve such generous handouts are lacking. There is also the conspicuous absence of the actual amount that went to each executive. Missing too are the details of the executives who returned either part of or all the money they had received as bonuses. Finally, there is no mention in the report of the conditions that were agreed upon between the banks and the government before they were given the money they needed.

APES 110 Application to the Situation
    There are a number of the fundamental principles that would be seriously breached if APES 110 could be applied to this situation (APES 110 2006). This is either because something wrong was done when it should not have been, or some course of action that was deemed necessary for one or more stakeholders was not carried out as expected. In essence, the fundamental principles of APES 110 require that there be a total keeping of the principles. There is punishment for both committing offences and failing to do the right thing. In this case, there was a breach of the principle that requires that all actions ought to be performed in the interest of the public (APES 110 2006). The bank executives failed to do that but instead received huge bonuses in spite of the outcry from the public.
In addition to this, by continually accepting to take bonuses, they endangered their banks. Secondly, the banks can claim to have had a contractual responsibility to pay the bonuses to honorable members of the banks. However, according to APES 110 principles, it is never acceptable that one acts contrary to expectations and cite acting in an honorary capacity as the cause of the action. To that end, the banks ought not to have continued to pay the bonuses when they realized it was contrary to the will of the majority of the people, and the recipients of the bonuses must have declined or refunded the money due to the public outcry. Both the banks and the top executives who received the bonuses did not act with integrity but were determined to get their interests served at all costs (APES 110 2006).

Teleological, Deontological and Virtue Ethics
    The decision by the banks named in the report to pay out huge bonuses to top bank executives failed to adhere to the teleological, deontological, as well as virtue ethics as would have been required by the acceptable and laid down principles and guidelines of APE 110. Teleological ethics were contravened in that the banks paid out the bonuses for a purpose other that what was very important at the moment (APES 110 2006).

The purpose was to have a few bank executives enriching themselves from the efforts of other people - the tax payers (APES 110 2006). That aside, the application for TARP by these banks was for a selfish motive that only focused on ensuring they remained afloat regardless of their risky business behaviors. These banks also failed to follow the virtue ethics that require that there be a considerate treatment of the people to be affected by a decision.  By paying out the bonuses even when there was a grieving public that had no hand in the woes of the banks, there was a gross violation of virtuous considerations for the public.

However, there was an adhering to the rule of the game by the banks in all they did. In essence, the deontological ethics which require that a decision carried out must follow certain laid down rules were adhered to (APES 110 2006). The banks are obligated by contract law to pay these bonuses and it was ethical to honor that even though it was hugely an unpopular move. By following the previously laid down rules, the banks were just being ethical as was required by banking law regarding bonuses. This is all the prevailing conditions notwithstanding (APES 110 2006).

Alternative Courses of Action
    Given the gravity of the matter as can be demonstrated by the huge public and government interest, I believe a lot ought to have been done to avert this critical situation where taxpayers were left baying for the blood of those beneficiaries of the bonuses. The first alternative that I could have recommended is for Congress to have foreseen this trend of top bank executives being paid huge bonuses without really basing this on their merit and responded by passing legislation to block or limit the payment of such. Although it is a bit too late, most of the beneficiaries already having spent their money, the legislation can still be passed. 

The advantage of there being a law that governs the behavior of banks especially one with a focus on the amount to be paid out as bonuses is that such banking crises as has just been witnessed will be minimized. Then there will be no requiring of the public to fund banks for their irresponsible behavior. However, this approach has the risk of making bank officials to lose morale at work and most likely quit the practice. This is because the bonuses are largely to motivate employees through rewarding their efforts. Another disadvantage of this approach is that it will limit the innovation and competitiveness of banks due the increased political meddling and poor performance on the stock market due to negative forecasting (Arcega 2009).

Another possible alternative could have been to ask the bank executives to postpone their collection of the bonuses until such a time as when there was less strain on the banks financial base. The advantage of this approach is that there would never be the need to get into so dire a financial position that would call for resorting to seeking financial assistance in order to come out. The disadvantage is that the banks could find themselves liable to legal action owing to failure to honor their contractual side with the executives (Reinhart 2009). The result could be both a loss of more money in terms legal fees and compensations and probably the loss of skilled human resources.
 Finally, another possible course of action would entail having a central authority mandated to oversee and monitor the operations of banks and other financial institutions. This has the advantage of limiting too much political meddling and so averting negative publicity of banks while ensuring that they operate within recommended guidelines and limits especially as far as risk mitigation is concerned. This alternative, however, will likely cause a case where most banks are less prepared to lend for fear of losses, a trend that will ultimately result in other banking crises (Reinhart 2009).

    The banking crisis in the US has taken a critical turn where the main players are trying hard not only to get back after a past season of loss-making occasioned by the global economic crisis but also by the crackdown that has been launched by the Congress to have a limit put on the amount of bonuses that banks are allowed to pay to its executives. This comes in the wake of the release of a report that sought to investigate the issue of bonuses especially with respect to eight banks that were able to get government help in order to break free from the crippling effects of the banking crisis. This followed an outcry from the public regarding the rationale behind such a move to bail the banks out of a hole they had willingly gotten themselves in by continuing paying out huge bonuses and taking on other risky banking practices. As the debate rages on, it remains to be seen what will become of the US banking sector.

Cases of fraud in the recent past have significantly increased. The consequences are that companies have suffered immense losses in terms of money and bad publicity. This has made various companies to come up with various ways of how to detect, identify and prevent cases of fraud. Many technological methods have been applied to do this but the best approach to dealing with fraud is by use of human brain. For the human brain to do this effectively, it has to be trained on how to detect signs of fraud and how to identify them (Calderon  Green, 1994).

      The purpose of this article is to equip auditors and accountants with knowledge that will help them as they carry out their work. This is by providing answers to some of the common questions of fraud they face as they carry out their work. The motivation for research on this article was the increased cases of fraud involving high profile individuals and corporations that are well known (Calderon  Green, 1994). Another source of motivation was the observation that in many cases, external auditors were unable to detect any fraud even though the employees knew it existed. In addition, the authors had observed that even though auditors and accountants had been supplied with guidelines on how to deal with cases of fraud, still they had unanswered questions regarding fraud (Calderon  Green, 1994). The article provides the answers to these questions.

    Some of the common questions sought to be answered by this article include in companies where fraud has occurred, which are the common internal control problems that have been observed What are the common actions that companies take following a fraud investigation At what personnel level is fraud most likely to occur Which transactions are more prone to fraud What are the common first indicators of fraud And finally, does degree of fraud risk differ based on type of business After intensive research the article was written to answer these questions.

    The prevalent internal control problems in most instances of fraud were found to be false documentation, failure to separate duties well, lack of internal controls in some companies, negligence, poor procedures of authorization, collusion and failure to review internal controls (Calderon  Green, 1994). To minimize and detect cases of fraud, companies need to address these issues. Internal controls should be properly installed and evaluations should be done routinely to ensure they are adequate and that they are effective.

    According to the article, personnel of any level can commit fraud but employees who are managerial or professional are more prone (Calderon  Green, 1994). This has serious implications since this is the level of personnel that is charged with the responsibility of directing the operations of a company. In some cases they are usually the highest level of authority and internal auditors are supposed to report to them. This poses a dilemma for the internal auditors since their reports on fraud cases are likely to be concealed and that they risk being sacked especially if the fraud involves the top management.

    After investigating a fraud, most companies dismiss the employees involved (Calderon  Green, 1994). Companies differ in how they dismiss. Some dismiss without prosecution, others prosecute and some require that the employee return the money. An interesting observation is that some companies do not take action against the individuals involved (Calderon  Green, 1994). This usually has a negative influence on the company as employees get the impression that they can get away with fraud. To prevent this, a company should take action against the perpetrators to prevent future cases of fraud. A policy stipulating actions to be taken should be formed and this should be applied uniformly across all cases of fraud.

    The most common first indicator of fraud is usually improper documentation. Other indicators include analytical procedures, observations, confirmations, recalculations, inquiries and physical examinations (Calderon  Green, 1994). To be able to detect fraud, auditors should scrutinize documents, apply techniques of analytical procedures as well as take tips from employees seriously.

    The aspects of companies that are usually involved in fraud are expenditure and revenue transactions (Calderon  Green, 1994). Internal auditors who intend to detect fraud should focus more on these areas. Every business is at risk of fraud but the exposure extent differs. Research shows that fraud cases are more common in financial institutions and least common in retail businesses (Calderon  Green, 1994). All companies regardless of their type should ensure that their systems of internal control are strong to enhance detection and prevention of fraud.

    Based on the findings of this article, to prevent fraud the internal controls of a company should be strong. The company should also formulate policies that will serve to prevent fraud and these should be implemented and actions taken to ensure they are followed. Evaluation of the internal control systems should also be done routinely. Another important step is to ensure that the internal auditors work independently by allowing them to report directly to the audit committee. When these actions are taken, cases of fraud will be detected early enough and actions taken to prevent future occurrence.