What impact does these interest rate swaps have on the bank’s interest rate sensitivity, liquidity, accounting ratios and capital ratios? Make sure you work through the Appendix to the case. Interest rate risk : is the unexpected changes in the interest rate which can alter the bank’s profitability and the market value of equity. To hedge against interest rate risk a verity of techniques can be used that are classifieds into direct and synthetic methods. The direct method is relies on changing the contractual characteristics of Asset and Liabilities to reach a particular duration and maturity gap to get over any Asset and Liability mismatch.
A US multinational company is required to report its financial results in US dollars. How does this create currency exchange risk for the company? What is the term which most accurately describes this particular risk? a. Currency risk- if unexpected changes in currency values affect the value of the firm 4.
Why are CRAs (particularly, Moody’s Investors Service and Standard & Poor’s) so entrenched in financial markets? 3. What are the criticisms of CRAs and is it feasible for regulators to attempt to reduce the reliance of financial markets on CRAs? 4. The article refers to the various sovereign rating changes that have recently occurred.
Sarbox Scooter, Inc [a] What should the auditor consider when determining whether an account should be considered Significance is determined by applying quantitative and qualitative measures of materiality to the consolidated financial statements. Auditors need to consider both quantitative and qualitative measures of materiality, and some special factors also need to be considered to identify significant accounts. The Audit Policy of Delmoss Watergrant LLP shows the consideration to identify significant accounts. From a quantitative standpoint, planning materiality need to be considered when identifying significant accounts. “The more an account exceeds planning materiality, the greater the likelihood it should be considered a significant account, even when the qualitative risk factors are low.” However, this doesn’t mean that an account that exceeds planning materiality is automatically a significant account.
This is an implausible trend on the Balance sheet that BDO should have investigated further, especially with Leslie Fay’s outstanding Income Statement. 2.) First of all I would want to investigate vendor and customer accounts to reconcile payable and receivable amounts. Also, I would obtain bank statements and other lines of credit since the long term debt to equity ratio shows the company being highly leveraged.
(b) What are the ethical issues involved in this situation? The ethical issues involved in this situation pertain to following accepted accounting principles. Violating the generally accepted accounting principles to satisfy a short-term personal or company would create misleading financial statements. This situation would therefore be unethical. Robbin Industries is jeopardizing itself by not properly reporting the advertising costs.
1. What are the key risks that Yorktown is currently facing? Explain how those risks will affect financial statement risk (FSR), explain the impact ofgFSR (ie. is it pervasive or does it impact specific accounts and assertions) the and how the risks will impact the audit. (Use the table below to answer your question).
2. Would Calaveras be a creditworthy borrower? What are the principal risk factors in this prospective credit? Can Calaveras adequately service the proposed amount of debt? What other considerations might influence your evaluation of this firm as a prospective borrower?
Globalisation causes Economic inequalitiesEconomic inequalities in any country arise from overconcentrations of wealth & power. Imbalances in the distribution of power can lead to a lack of political representation in government for some groups, the creation of power elites, the loss of personal freedoms & civil liberties, & abuses of authority, of which genocide is an extreme example. Imbalances in the distribution of wealth can lead to the loss of economic opportunity & social mobility, the creation of a permanent underclass, & conditions of illiteracy, unemployment, homelessness, hunger, & disease. The social issues caused by economic inequality are a threat to global security. The relationship between economics & global security is complex & not necessarily an immediate link to make.
Identify possible consequences of failing to properly disclose certain items in financial statements. One the possible consequences