Finance and Accounting

Finance and Accounting
Finance and Accounting: Materiality and Internal Control
Financial audit as an aspect of business management employs various concepts in
ensuring that diverse qualitative analyses have estimated the potential issues that are important in
the running of the business. Materiality is among the applied methods of simple calculations
involved in determining the different decisions that investors consider before committing to any
business ideas. The Materiality calculations are an essential information source to both the
investors and the business management as a factor it helps with the presentation of all company
financial statements and disclosures that in their role help to highlight the existing position of the
company regarding both debts and instruments of equity. The complexity that is associated with
materiality as an aspect of internal audit and control provides room for qualitative estimations
through different methods of analysis in the presentation of the presentation of the company’s
materiality in the form of instances that the business has incurred operational costs at one point
or another through debts
The Internal Controls
Internal Controls refer to the assurances that organizations through their objectives and
missions have sought to achieve through reduced risks that the company exposes itself through
trade. The control of risks include paying much attention to the elements such as safeguarding
the business from aspects such as resource loss from an outright loss that consists of both
mismanagement and waste through errors and abuse from office. Controlling internal business
factors and affairs includes the various checks and balances that are all important in the operation
of the different systems to a level that guarantees their efficiency. Effectiveness in the
management of data creates an element of accuracy in the timelessness of reporting and
promoted compliance. Failure to conduct proper internal audits creates a scenario that leads
quickly to mismanagement and resource abuse. Such managerial factors that are considered
include debts, credits, and company equity.
Consolidation and Equity Methods of Accounting
To: The Chief Executive Officer
From: Finance Office
Cc: Human Resource Office
Subject: Consolidation and Equity Methods of Accounting
Date: 13/12/2017
Following the decision of the company to acquire the stocks of one of our leading
competitors, it is vital that as the finance department, we take the initiative of accessing the
various methods applicable in ascertaining the value of such companies before committing to
purchasing shares belonging to the corporations. The technique applied in the evaluation of
company worth from equity involves the two methods of consolidation and equity accounting
methods. The methods are both critical in determining the amount of stake the firm owns and
such value that the stake holds.
Consolidated accounting Method: the method either is applied for assessing stocks of
the company that holds the commanding stake in the business in the forms of equity or shares.
As such, depending on the amount of stake owned by the company at the time of consolidation
either in the types of investment or dividends, the company method of accounting applied in
determining the stake the company holds in its interests in the business. In case the decision
arrived at by the company is to acquire controlling shares, then we shall act as the parent
company of the acquired firm. The parent firm shall treat the subsidiary as a non-existent and
place all its assets and liabilities in our consolidated balance sheets not forgetting to have all its
profits, losses, losses, and revenues to the income statements.
The Equity Method: The equity method ensues in cases where the company in question
has no commanding control of the subsidiary firm that it intends either to purchase or to act as a
parent company to in the business sphere. In equity method of accounting, it becomes important
for the company to record the revenue of the company it intends to acquire without
compromising on its finances. The Equity method makes the company treat the revenues, and all
the cash flows from the other companies treated as capital returns while decreasing the asset
value in the amounts of payments made as part of the fees.
Components of Corporate Governance
The systems of regulations, practices, and processes necessary in providing directions
and controlling the different aspects of the business are considered the elements of corporate
governance. The governance techniques through their different features are important in ensuring
that there exists a balanced nature regarding interests and controlled outcomes. The various
components of governance include among others transparency, accountability, and participation.
The three components have in essence the anchoring grounds from which governance as an
aspect of business management has helped ensure that there exists an appropriate ethical
environment. The three components form the primary principles through which corporate
governance applies.
Transparency as an element of corporate governance has continued to ensure that
employees remain steadfast in carrying out their roles responsibly without absconding. Further, it
enhances the relationship between the management and the employees. Accountability acts as
the second component of governance places forth the responsibility of management to task with
all employees expected to show high vigilance to misappropriation of both firm and personal
resources. Participation comes in as the final component that influences the ethical business
environment immensely. The ethics attached to involvement are entirely related to the feelings
that outline consensus and inclusivity as the primary features of an ethnically inclusive
environment that establishes a working condition that is by far, beyond reproach.
Godfrey Hullers:
Godfrey manages to outline clearly, the different roles as espoused by both consolidation
and equity accounting methods with regard to the primary factor of firm shares and stakes of
James Lavery:
James provides a memo that despite identifying the two accounting methods applicable in
the case of firms engaging in business transactions concerning their company shares.
Zheng provides a comprehensive outline based on case studies of how different
companies have employed the various concepts of corporate governance. Such cases are
important in providing outright responses to the happenings within the organizations.
Buxi Wen:
Wen provides an insightful and well detailed review of the corporate governance as a
subject area managing to identify its various influence on company performance. Importantly,
Wen manages to relate the different scenarios presented in organizations as part of the learning
areas that best inform the various segments of business participation. The discussion post
provided by Wen comprehensively covers the topic on governance promptly relating the same to
different aspects of governance with the performance of the business. Among the areas of
relationship where Wen’s post focused include the relationship between the firms’ visions and
missions with the reality that is in the employees, their ethics, and how all such affects

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