Homeless And Criminalization - Free Essay Example

Sample details Pages: 4 Words: 1324 Downloads: 9 Date added: 2019/03/26 Category Society Essay Level High school Topics: Homelessness Essay Did you like this example? The homeless face the same dilemma of criminalization around the world. In particular, the U.S., Brazil, and Hungary treat their poor people in an inhumane manner that violates multiple human rights. Introduction Every day, countless homeless individuals seek residence on the streets with whatever resources they can muster while being persecuted by every aspect of society. Forced off the streets, laws evict them from park benches and sidewalks. In the U.S., barely within 24 hours of not returning to a shelter, their place there can be taken from them, leaving them to fend off dangerous conditions outside, not knowing from where they will receive their next meal or the next time they will be able to wear clean clothing. Properly accounting for the homeless has proved to be a daunting task because people constantly move in and out of a state of homelessness and having a temporary or permanent place of residence. While it would be unsustainable to attempt to fix the problem by just handing resources to the homeless, many countries in which the burden of homelessness can be alleviated †such as in industrialized nations that have resources available could adjust their systems to allow more r esources to be allocated to the homeless such as food, clean water, shelter, money. People in non-socialist countries would likely fear that such an allocation of resources would be akin to that of communism, so they would likely not support that solution because of their country ideals. Don’t waste time! Our writers will create an original "Homeless And Criminalization" essay for you Create order Hungary According to a new Hungarian amendment, the amendment to Article XXII of the Hungarian constitution, it is now illegal for people to be homeless. The amendment states, In order to protect public order, public safety, public health, and cultural artifacts, an Act or a local government decree may, with respect to a specific part of public space, provide that using a public space as a habitual dwelling shall be illegal. Instead of protecting the order of society, by cracking down on all homeless persons Hungary has eliminated all legal protections for the homeless. Without someone to take regular care of them, they may have no other place to go. The European Union has responded by threatening the removal of Hungarys voice from the EU, however, they await a response from Hungary (Tomlinson n.p.). United States of America The United States of America remains among the worst offenders of persecuting individuals without homes on every scale. Politically, Americas laws try to incriminate them; economically, they are disadvantaged; socially, they are voiceless. According to the United States Department of Housing and Urban Developments Annual Homeless Assessment Report, there are approximately 554,000 homeless in the United States, almost 50,000 of those people are unaccompanied youth people under 25 years old. The U.S. justice system fails to protect their homeless by enforcing vague and cruel laws. Under these laws supported by the Constitution, cities are allowed to keep individuals off the streets, leaving them stuck in a cycle of being fined, not being able to pay the fine, going on trial for their refusal to pay the fine, serving time for infringing upon the law, then losing their place at a shelter for the night(s) they missed while serving jail time and not being able to receive a job because of t heir record, thus continuing the cycle. One such law found in cities across America forbids people from feeding the homeless. Because of this law, around 12 to 15 people were arrested in El Cajon for distributing food and supplies (Winkley n.p.). Significance of Research The laws imposed by these countries blatantly violate the basic human rights of the low income and the destitute unable to establish a permanent residence. In doing so they demonstrate a power dynamic in which their governments suppress the voices of the poor to prevent them from speaking out against officials who may look bad. This is unconstitutional and a human rights violation because it takes away from their freedom of speech, as when they are arrested under arbitrary laws and imprisoned, they can no longer voice their opinions. In situations in which they are imprisoned, they lose their places at shelters, they lose the opportunity to obtain a job, they could lose whatever job they have if they have one, and their future possible career may suffer. This is because corporations and smaller businesses can and more likely than not will deny them job positions based on their record or living status, leaving them with the burden of finding a job somewhere else. This burden is also a weak form of power because their ability to choose the jobs they want are already so limited. Even if they are to obtain a job, their job will likely be insufficient as a living wage, which for Americans ranges from an average of $45,000 to $68,000 (Kolmar n.p.). In the same way, if they wanted to obtain higher education, it would be much more difficult if they have a criminal record, regardless of what laws they violated or what laws violated them. This is a violation of their basic human right to education. Homeless shelters reserve for the homeless the power to avoid being fined for living on the streets and allow them to more easily obtain a job, become more educated, obtain a more permanent residence, and (Kolmar n.p.). Another important consideration is that the public discrimination they face can wreak havoc on their dignity and self-esteem. Society sees them through critical eyes and treats them as it does criminals. The law forces them into hiding as if they should be accountable for their homelessness, then tosses away their rights in court. Businesses treat them like animals. The public insults them while mocking their disposition, shaming them into submission. Their families if they have them and they are not also homeless see them as failures or burdens that they can no longer afford to bear. Because of the stress, so many lose hope for themselves. As a result of the emotional torment and physical distress, those in destitute situations worldwide have resorted to suicide, self-harm, drugs, alcohol, prostitution.Lastly, all 3 countries are in violation of Articles 1, 3, 5, 9, 10, 12, 17, 23, 24 25 of human rights law established by the E.U. Conclusion All societies have disappointed the homeless in failing to provide them with what they need to succeed in life. Some have made noble attempts such as Finland, who is seeing its rates of homelessness decreasing. (Busch-Geertsema, ) The solution that it proposed and is employing is giving homes to the homeless. Others like the U.S. and Hungary only make it more difficult for the homeless to come out of their situations by imposing laws that effectively keep those in extreme poverty from advancing in society. It would be in every countrys interest to at least consider the longer-term benefits of reducing then eliminating homelessness. Works Cited Robertson, Marjorie J, and Milton Greenblatt. Homelessness: a National Perspective. New York: Plenum Press, 1992. Schutt, Russell K., et al. Responding to the Homeless: Policy and Practice. Plenum Press, 1992. Violations of the Human Rights of Persons Experiencing National Law Center on Homelessness and Poverty, www.nlchp.org/documents/sr-ep-2017. Hungarian Parliament. Hungarian Constitution. 2018, https://www.parlament.hu/irom41/00332/00332-0011.pdf Tomlinson, Akira. Hungary Constitution Bans Homeless from Living in Public Spaces. Jurist, 16 Oct. 2018, www.jurist.org/news/2018/10/hungary-constitution-bans-homeless-from-living-in-public-spaces/. Winkley, Lyndsay. About a Dozen People Arrested for Feeding the Homeless in El Cajon Park. Sandiegouniontribune.com, 16 Jan. 2018, www.sandiegouniontribune.com/news/public-safety/sd-me-20180114-story.html. Henry, M., Watt, R., Rosenthal, L. and Shivji, A. (2018). The 2017 Annual Homeless Assessment Report (AHAR) to Congress. [online] Hudexchange.info. Available at: https://www.hudexchange.info/resources/documents/2017-AHAR-Part-1.pdf. Kolmar, Chris. This Is How Much A Living Wage Is In Each State. Zippia, research.zippia.com/living-wage.html. Bonner, A., Luscombe, C. (2009). Suicide and homelessness. Journal of Public Mental Health, 8(3), 7-19. doi:https://dx.doi.org.jproxy.lib.ecu.edu/10.1108/17465729200900016 Busch-Geertsema, Volker. (2010) The Finnish National Programme to reduce long-term homelessness.

Essay on Is College the Only Option for Success - 902 Words

From a young age, most kids have been brainwashed to believe that college is the only path to success in life. Is it? Is college the right choice for everyone? Or are there better alternatives? These are questions that have been asked many different times but it seems like there has been a lack of a clear-cut answer. There are many different things to consider when looking at colleges as the only path to success. The brainwashing of kids seems to start as soon as kids step foot in a school. They are told over and over for the next 18 years that â€Å"you have to go to college then get a job†. What if kids were told that they shouldn’t go to college but instead start an online business or go to trade school? If kids were told that†¦show more content†¦With this increase in tuition costs it is making a college education more and more unaffordable and putting students in more debt. Supporters of getting a college degree often point to the statistics that college graduates earn more than their high school educated peers over a lifetime. Statistics by the U.S. Census Bureau reports that since 1977, â€Å"Adults with bachelors degrees in the late 1970s earned 55 percent more than adults who had not advanced beyond high school. That gap grew to 75 percent by 1990 -- and is now at 85 percent.† A gap of an 85% pay difference is a huge figure and a clear reason why college is a great option for some people. But there are problems with that figure because when the number of college graduates who are either unemployed or underemployed is taken into account it changes the value of the statistic. In an article by Businessweek’s Richard Vedder we get statistics to counter that argument. He tells of how the number of new college graduates far exceeds job growth in technical, managerial, and professional jobs where graduates traditionally have searched for employment. 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GMOs Essay Example For Students

GMOs Essay Benefits of Genetically Modified Organisms We live in a world that is constantly changing and advancing thanks to technological advancements, especially in the field of molecular genetics. Today, we are discovering and implementing new ways to overcome the ill-fated symptoms developed as a result from poor health or accidents. We are also making advancements in the field of agriculture thanks to molecular genetics. As we all know, food is an essential entity in our lives and is abundant as well as relatively easy to obtain here in the United States. However, as good as it may sound, this is not necessarily true for developing countries. Many people in developing countries receive very little food, if any, due to its scarcity. It is estimated that in Asia alone, close to 800 million people go to bed hungry every night due to food shortage. This problem can be alleviated by turning to the production of genetically modified organisms (a.k.a. GMOs Essay). Genetically modified organisms can be plants or animals that have been genetically altered to produce or express a desired characteristic or trait. By genetically altering organisms such as crops, we can eliminate the use of pesticides by making the crops resistant to insects. We can also produce crops that are resistant to floods and droughts. Furthermore, with the use of molecular genetics, we are able to produce foods that are rich in nutrients and supplements. People in developing countries may not be fortunate enough to have a full course meal that contains nutrients from all four basic food groups. However, GMOs can with a little modification provide all the amino acids, vitamins, and minerals included in a good diet by simply consuming a genetically modified staple crop such as rice. In addition, by producing crops that are resistant to harsh environmental conditions as well as pests, we would see a rapid increase in the production of food thereby reducing and or! possibly eliminating starvation in developing countries. Some people may argue that GMOs is simply not the best solution to starvation. Many believe that GMOs will lead to ill-fated consequences after being consumed. It is in fact that their fears are based on hysteria and ignorance. Consuming GMOs will not lead to the production of horns on our heads nor will it make us grow tails. Genetically modified organisms will however increase food production, which is the bottom line. What do you think the first thought will cross a persons mind when his/her stomach aches for food? Will he/she choose not to eat because of their fears or will he/she relieve their stomach pain and choose to eat? The only was we will know how to answer this question in truth is to be put in that situation. Furthermore, with all the advancements in technology and science, we are discovering that many things around us and in the environment that once was thought to have been harmful to us are no longer a concern. For instance, the use of cellular phon! es were believed to cause cancer due to their emission of radiation. However, today we know that it is somewhat impossible because for one, you would have to be exposed to a phone for very large amounts of time and two, it is mostly the older phones that may do this due to new phones being modified to emit very low amounts of radiation. Similarly, today GMOs are being developed by scientists who have a profound understanding of molecular genetics allowing them to yield safe mutants. Genetically modified organisms can indeed be beneficial to all occupants of this world. .u0033f2f6d807dc3892211a4d484d025b , .u0033f2f6d807dc3892211a4d484d025b .postImageUrl , .u0033f2f6d807dc3892211a4d484d025b .centered-text-area { min-height: 80px; position: relative; } .u0033f2f6d807dc3892211a4d484d025b , .u0033f2f6d807dc3892211a4d484d025b:hover , .u0033f2f6d807dc3892211a4d484d025b:visited , .u0033f2f6d807dc3892211a4d484d025b:active { border:0!important; } .u0033f2f6d807dc3892211a4d484d025b .clearfix:after { content: ""; display: table; clear: both; } .u0033f2f6d807dc3892211a4d484d025b { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u0033f2f6d807dc3892211a4d484d025b:active , .u0033f2f6d807dc3892211a4d484d025b:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u0033f2f6d807dc3892211a4d484d025b .centered-text-area { width: 100%; position: relative ; } .u0033f2f6d807dc3892211a4d484d025b .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u0033f2f6d807dc3892211a4d484d025b .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u0033f2f6d807dc3892211a4d484d025b .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u0033f2f6d807dc3892211a4d484d025b:hover .ctaButton { background-color: #34495E!important; } .u0033f2f6d807dc3892211a4d484d025b .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u0033f2f6d807dc3892211a4d484d025b .u0033f2f6d807dc3892211a4d484d025b-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u0033f2f6d807dc3892211a4d484d025b:after { content: ""; display: block; clear: both; } READ: Halloween Essay GMOs will not only provide the resistance to pests and harsh environmental conditions, higher crop yield, but also the means to distribute vaccination and nutrition through out our heavily populated planet. Because the discoveries and advancements being made in science today, GMOs are being made safe for all people and should not be looked upon as something that will destroy mankind. In the contrary, GMOs will save many and provide a better life for those who are less fortunate. Works Cited 1). Genetically Modified Organisms (GMOs), www.gmac. gov.sg/faq-gmo.html 2). Genetically Modified Pest-Protected Plants: Science and Regulation, www.nap.edu/books/0309069300/html/ 3). Genetic Food Alert, www.geneticfoodalert.org.uk/ .

Solutions Edition Essay Example

Solutions Edition Paper What information could Amazons management provide to investors to clarify the change in inventory turnover? What are the costs and benefits to Amazon from disclosing this information? What issues does this change raise for the auditor? What additional tests would you want to conduct as Amazons auditor? Amazon had annulled sales of $51. 6 billion and an implied annulled inventory turnover rate Of 16. 1 at the end Of 2010 and $696 billion and 13. , respectively, at the end of 2011 Analysts could view this change in a positive manner if they anticipate that the increase in inventory is a signal that Amazon expects higher sales in the future. Once these higher sales are realized, the turnover rate will return to its prior level (unless the company anticipates notational sales increases, which certainly is a possibility with a company such as Amazon). Analysts could also view this change in a negative way. While sales have increased, inventories have increased faster, suggesting that Amazon is not managing its inventories well. Because Amazon has more resources tied up in inventory, it will have to cut back on spending related to improving its operations and developing new products such as the Kindle series to readers. To Clarita/ the reasons for changes in inventory turnover, Amazon could provide information about: ;The types of products in inventory. Is the inventory mainly old products that have not sold and will have to be deeply discounted or written- off or is it new, popular products that have not yet been released to the public? We will write a custom essay sample on Solutions Edition specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Solutions Edition specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Solutions Edition specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Forecasts of sales by product liana ; Technical specifications, marketing strategies and release dates for new product introductions. ; Changes in overall firm strategy that might be related to the increase in inventory. The costs of providing this type of additional information include: ; Disclosure Of proprietary information about the firm. Amazons competitors could use this information to adjust their business plans; ; Loss Of credibility if Amazons forecasts turn out to be incorrect. Investors and analysts will be more skeptical in the future; and ; Potential legal liability if Amazons forecasts turn out to be incorrect and disgruntled shareholders sue. The benefits of providing this type of additional information include: ; Provide analysts and investors with a better understanding of the firms plans: and ; Added credibility for the firm in the future if the current forecasts and information turn out to be correct. The firms auditors would be interested in answering the same types of questions as outside analysts. They would be especially concerned about whether the slower turns are attributable to old obsolete inventory that may have to be Mitten Off. This Will require tests that help clarify what type of inventory has increased, whether that inventory is for older lines or for new lines that are expected to be strong sellers next quarter/ year. 2. A. What are likely to be the long-term critical success factors for the following types Of firms? a high-technology company, such as Microsoft ; a large, low-cost retailer such as Wall-Mart Critical success factors for a high firm, such as Microsoft: ; Investment in search and development of new technologies and applications; ; Continual improvement of existing products to keep ahead of competitors: and ; Large installed base of customers, Provides a ready market for compatible products and upgrades and makes it harder for competitors to build market share. Critical success factors for a large, low-cost retailer, such as Wall-Mart: ;Maintenance of its low cost structure; ; Growth in sales per store; and ; Ability to open new stores in untapped markets. 2. B. How useful is financial accounting data for evaluating how well these two companies are managing their critical success factors? What other types of information would be useful in your evaluation? What are the costs and benefits to these companies from disclosing this bye of information to investors? For a high-tech firm, non-financial accounting types of useful information could include: ; Long-term strategy for the firm; ; Market share by product; ; Introduction schedules for new products and updates of existing ones; ; Profitability Of individual products: ; Forecasts of future performance; ; Third-party evaluations Of firms products; and ; Estimates of switching between firms products and those of its competitors. For a large, low-cost retailer, types of useful non-financial accounting information could include: ; Long. ERM strategy of the firm; ; Sales and profitability per store, per existing store, per new store, and by region of the country: Number and locations of new stores; ; Number and locations of closed stores; ; Management initiatives to reduce costs; ; Disclosure of volume discounts negotiated with major suppliers; ; Understanding to how firm manages its value chain through use of technology; and ; Sales and cost projections. In general, both types of firms will benefit from greater disclosure by increasing analysts and investors understandings of the firm. They Will both bear costs related to the release of proprietary information to competitors, decreased credibility if subsequent actions and results do not match the disclosure, and legal liability from dissatisfied investors. Overall, the benefits and costs of disclosing this type of information are likely to be greater for the high-technology firm than for the low-cost retailer. Financial statement information will typically provide a better understanding of the low-cost retailer than the high-tech firm. Most of the retailers assets are tangible and its costs and performance re reasonably well captured by financial statements. A high-tech firms most significant assets are often intangible (e. G. , RD, patents, trade secrets, etc. L and financial statements have a more difficult time capturing these values. Thus, voluntary disclosure is likely more important to the understanding of the high-tech firm rather than the low-cost retailer. Of course, voluntary disclosure is also likely to be more costly for high-tech firms, since their key information is more likely to be proprietary. In addition, higher business uncertainty for high-tech firms potentially increases the risk of legal liability arising from laundry disclosure. 3. Management frequently objects to disclosing additional information on the grounds that it is proprietary. For instance, when the FAST proposed to expand disclosures on (a) accounting for stock-based employee compensation (issued in December 2002) and (b) business segment performance (issued in June 1997), many corporate managers expressed strong opposition to both proposals. What are the potential proprietary costs from expanded disclosures in each to these areas? It you conclude that proprietary costs are relatively low for either, what alternative explanations do you have for managements opposition? Expanded disclosure standards require firms to report using the same segments used for internal reporting and organization. This information potentially provides additional information to a companys competitors. More detailed business segment data offers a better picture of performance and profitability across a companys various business segments. It also provides insight into differences in cost Structures across components. Using this information, competitors could choose to compete head to head With the firms most profitable segments or where the firm was most alienable due to high costs. Thus, additional business segment disclosures are potentially quite costly to a company. It is more difficult to identify any significant proprietary costs related to expanded disclosure of executive stock compensation. Managements opposition to the ongoing debates about whether to record an expense for stock options can probably be better explained by managements concerns about providing stockholders with information about its stock compensation. Managements concerns are likely to he most severe when its compensation is difficult to justify given the performance of the firm. . In contrast to U. S. GAP, FIRS permits management to reverse impairment on fixed assets which have increased in value since the time toothier impairment. Revaluations are typically based on estimates of realizable value made why management or independent values. Do you expect that these accounting standards will make earnings and book values more or less useful to investors? Explain why or why not. How can management make these types of disclosures more credible? The usefulness of earnings and book values will depend on any information asymmetry between management and investors as well as managements incentives to manage reported performance using fixed asset revaluations. Consider the case where management has more precise information on the value of certain key assets than investors. Asset revaluations are one way for them to provide information to investors on these values. Of course, information asymmetry also provides management with the opportunity to use discretion in making revaluations to conceal poor performance, perhaps to increase compensation or job security, or to reduce the risk Of violating debt contracts. Hence, if there are effective institutional constraints on the abuse of management reporting discretion, such as monitoring by independent auditors and values, the press, the board of directors, and financial analysts, permitting management discretion in financial reporting Will increase the usefulness Of financial accounting reports. However, fetishes institutional constraints are ineffective, discretion will actually reduce the value of accounting data. S. Under a management buyout, the top management of a firm offers to buy the company from its stockholders, usually at a premium over its current stock price. The management team puts up its own capital to finance the acquisition, with additional financing typically coming from a private buyout firm and private debt, If management is interested in making such an offer for its firm in the near future, what are its financial reporting incentives? How do these differ from the incentives of management that are not interested in a buyout? Hove would you respond to a proposed management buyout it you were the firms auditor? What about if you were a member of the audit committee? If management is interested in making a buyout offer for the firm, its primary concern may be paying as low a price as possible, This goal may give management an incentive o use accounting discretion to make the firm appear to be under-performing. This bad news might lower the stock price and eventual purchase price. As a result, management may be able to arrange to purchase the firm at a price that is lower than its economic value. Of course, management interested in a buyout also has to be concerned about audiences other than current stockholders, such as bankers and bond investors. These parties Will be asked to lend management funds to buy the firm, and Will demand higher interest rates if they believe the firm is a poor performer. In contrast, if management is not interested in buyout, it probably has incentives to make financial reporting assumptions that increase earnings, thereby increasing its own compensation job security. Alternatively, if management is concerned about establishing credibility in the capital market, it may report in an unbiased fashion, or perhaps even smooth performance, to ensure earnings reports do not surprise investors. Management incentives for reporting prior too management buyout should be of interest to the external auditor and audit committee because they could affect the firms reporting. If management has incentives to understate performance, to e able to acquire the firm at a low price, the auditors and audit committee would want to pay close attention to those areas where managers have room to manage earnings, 6, You are approached by the management of a small start- up company that is planning to go public. The founders are unsure about how aggressive they should be in their accounting decisions as they come to the market. John Smith, the CEO, asserts: We might as well take full advantage of any discretion offered by accounting rules, since the market will be expecting us to do so. What are the pros and cons of this strategy? As the partner of a major audit firm, what type of analysis would you perform before deciding to take on a new start-up that is planning to go public? Pros Generate better-looking financial statements. More aggressive accounting decisions could make the firms performance appear better than it would otherwise. Facilitate a future initial public Offering. If aggressive accounting decisions lead to higher earnings, etc. , it may be easier for the company to go public With higher earnings than lower, all Other things equal. Promote interest in the firm. With higher earnings due to aggressive accounting decisions, the company may capture a higher profile in the media. Press coverage about the firm could lead to greater investor interest in the company and facilitate a subsequent initial public offering. Cons Difficulties with auditors. The firms auditors would have to approve the aggressive accounting decisions by the firm. If the auditors did not sign off on some of the firms choices, then the firm would have to make less aggressive accounting choices or change accounting firms. Either of these changes could serve as a warning about the firm to potential investors. Difficulties with underwriters. Even it auditors approved to the firms accounting decisions, the rims underwriters will also evaluate their accounting choices during the due diligence process before the firm goes public. An underwriter that is not confident about a firms accounting may delay or cancel an underwriting rather than be embarrassed by poor firm performance subsequent to an underwriting. Less accounting discretion going forward. By making the most aggressive accounting choices today, the firm will have less flexibility in the future to change its accounting without generating considerable investor scrutiny. Increasingly skeptical investors. Firms that make more aggressive accounting choices may appear riskier to investors. As a result, underwriters and investors Will require greater compensation for that risk, increasing the firms cost of going public. 7. TWO years after a successful public offering, the CEO Of a biotechnology company is concerned about stock market uncertainty surrounding the potential of new drugs in the development pipeline. In his discussion With you, the CEO notes that even though they have recently made significant progress in their internal R efforts, the stock has performed poorly. What options does he have to help convince investors of the value of the new products? Which of these options are likely to be feasible? The CEO could potentially take advantage of the following options to provide information about the value of the firms new projects: ; Analysts meetings ; Voluntary disclosure of internal efforts ; Initiating or increasing its dividend ; Stock repurchases ; Sale to a block of stock to a pharmaceutical company or other knowledgeable firm While each of these options could he used to communicate directly or signal managements private information about the value of the firms new projects, the firm may be either unable or unwilling to undertake some of these options. Stock purchases and initiating/increasing the dividend are likely to be infeasible. Both of these strategies require cash that the firm probably does not have. The typical biotech firm does not turn a profit for several years after going public. In fact, it often returns to the capital markets for additional resources to support it while products are developed and the firm waits for regulatory approval. Hence, these high-cost strategies are probably not realistic options for the firm. Analysts meetings and increased voluntary disclosure are more likely actions for the firm. These represent efficient ways for the firm to provide detailed information about its new projects. If management information is not considered to be credible, investors and analysts may not pay attention to information provided in this manner. Furthermore, management may be reluctant to provide detailed information to the diverse group Of shareholders and analysts because of critical information it could provide to competitors. Sale off block of stock to a pharmaceutical company or other knowledgeable firm would also be feasible for the firm to do. It would signal to outsider investors and analysts that a very knowledgeable player with access to sensitive company information about the rims new projects has decided to make a substantial investment in the firm. The firm may prefer not to sell a block of stock in this manner for reasons of corporate control, If the potential placeholder sees the private information and decides that the firm is undervalued, it may decide to try to acquire the firm outright. Furthermore, the firer may not want to disclose the information to a potential competitor. However, there may be legal arrangements between the fir-n and a potential placeholder that could limit the likelihood of any of these events. 8. Why might the CEO of the biotechnology firm discussed in Question be concerned about the firm being undervalued? Would the CEO be equally concerned if the stock were overvalued? Do you believe that the CEO would attempt to correct the markets perception in this overvaluation case? How valued you react to company concern about market under- or overvaluation if you were the firms auditor? Or if you were a member of the audit committee? The CEO could be concerned about the firm being undervalued for several reasons. First, an undervalued firm makes a good takeover target. Once another firm discovers that the firm is undervalued, it may try to acquire the firm. If successful, the acquiring firm may fire the CEO. Second, undervaluation makes raising equity capital more expensive. Fifth firms shares are trading below their true value, the firm will have to sell a larger portion of the company to raise the same amount of new equity capital. Finally, the Coos compensation may be tied to firm value. It is unlikely if the firm is undervalued that the CEO will earn a substantial bonus. Moreover, the CEO may be rewarded if the stock price moves from being undervalued to being fairly valued. The CEO has different incentives to take action if he believes that the firm is overvalued, Equity capital is less expensive to asses it the firm is overvalued. Academic research suggests that there are more equity issues during periods when firms are likely to be overvalued. In addition, the Coos bonus may depend on the firms value. It the stock price falls as result of his actions, the CEO could lose his bonus as well as put his job at risk. The CEO also has an incentive to correct the overvaluation to reduce the firms legal liability, Assume the CEO has private information that suggests that his company is overvalued. Even if the CEO never discloses the information, at some point the market Avail learn the information and adjust the firms stock price. Dissatisfied shareholders may sue the company with the belief that the CEO manipulated the market by not revealing his private information sooner. Top management may also lose credibility with the market if they delay reporting bad news. Thus, it is unclear whether the CEO would attempt to correct the markets overvalued perception of the firm. 9. When companies decide to shift from private to public financing by making an initial public offering for their stock, they are likely to face increased costs of investor communications. Given this additional cost, why would firms opt to go public? Despite the increased costs Of investor communications, firms go public for many reasons, including: ;Improved access to capital markets. Some quickly growing firms find their growth outstrips the ability of their private funding sources. Some firms find it easier and less expensive to raise capital in public markets. Some investors (some types of mutual funds, retirement funds, trusts, etc. ) cannot invest in privately held companies. Thus, for a variety of reasons, firms go public to take advantage of greater access to public capital markets, ; A significant portion of employees wealth is the firms stock. Just like publicly held firms, many private firms compensate employees with stock or stock options. Over time, an employees stockholders may represent a large portion to her personal wealth. Illness the stock is publicly traded, it is difficult for employees to sell their stock to diversify their holdings, to raise cash to purchase a house, etc. , or even just to leave the fir-n for another job, ; Current owners want to cash out or reduce their holdings in the firm. This category could include managers of an LOBO who want to take the firm public again and receive compensation for their work. It could also include family-owned businesses where the family is no longer interested in running the company. Provide outside value for the firm. It is difficult to value the equity of a privately held firm. A company will often sell a share of its equity to get better information about the value of the remaining equity. Until Microsoft went public, it was almost impossible, even for people working within the firm, to begin to value the intangible assets that the firm had developed. It allows people Who owned stock when the firm was privately held to place a better value on their holdings. Easier evaluation Of firm performance. A firms publicly traded stock price provides one measure of its performance. Stock price and performance measures based on it can be used to compare the firm with itself, others in its industry, and the market as a whole. This information may be valuable to a firms managers as they make operating decisions and form plans for the future. Old. German firms are traditionally financed by banks, which have representatives on the companies boards. How would communication challenges differ for these firms relative to U. S. Firms, which rely more on public financing? German firms face a different set to communications challenges than American firms, due to variations in the ownership structure. Relative to American firms, German firms tend to have tar fewer individual investors and a greater level of holdings by financial institutions. In addition to their equity holdings, financial institutions are often represented on these companies boards of directors. These differences in ownership imply that German firms can communicate with their major owners through board meetings and informal channels, so that the major owners do not have to rely on published financial information. This reduces the information available to German firms competitors, a potential advantage over broad dissemination of information. As a result, major shareholders of German companies have the opportunity to have access to more detailed and proprietary information than LLC. S_ public shareholders. An interesting question is whether German firms actually take advantage of this opportunity. Some have argued that the German model Of capital market creates a COZY relationship between financial institutions and their clients, and that the board of directors provides limited oversight Of a firms management. Solutions Edition Essay Example Solutions Edition Paper What information could Amazons management provide to investors to clarify the change in inventory turnover? What are the costs and benefits to Amazon from disclosing this information? What issues does this change raise for the auditor? What additional tests would you want to conduct as Amazons auditor? Amazon had annulled sales of $51. 6 billion and an implied annulled inventory turnover rate Of 16. 1 at the end Of 2010 and $696 billion and 13. , respectively, at the end of 2011 Analysts could view this change in a positive manner if they anticipate that the increase in inventory is a signal that Amazon expects higher sales in the future. Once these higher sales are realized, the turnover rate will return to its prior level (unless the company anticipates notational sales increases, which certainly is a possibility with a company such as Amazon). Analysts could also view this change in a negative way. While sales have increased, inventories have increased faster, suggesting that Amazon is not managing its inventories well. Because Amazon has more resources tied up in inventory, it will have to cut back on spending related to improving its operations and developing new products such as the Kindle series to readers. To Clarita/ the reasons for changes in inventory turnover, Amazon could provide information about: ;The types of products in inventory. Is the inventory mainly old products that have not sold and will have to be deeply discounted or written- off or is it new, popular products that have not yet been released to the public? We will write a custom essay sample on Solutions Edition specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Solutions Edition specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Solutions Edition specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Forecasts of sales by product liana ; Technical specifications, marketing strategies and release dates for new product introductions. ; Changes in overall firm strategy that might be related to the increase in inventory. The costs of providing this type of additional information include: ; Disclosure Of proprietary information about the firm. Amazons competitors could use this information to adjust their business plans; ; Loss Of credibility if Amazons forecasts turn out to be incorrect. Investors and analysts will be more skeptical in the future; and ; Potential legal liability if Amazons forecasts turn out to be incorrect and disgruntled shareholders sue. The benefits of providing this type of additional information include: ; Provide analysts and investors with a better understanding of the firms plans: and ; Added credibility for the firm in the future if the current forecasts and information turn out to be correct. The firms auditors would be interested in answering the same types of questions as outside analysts. They would be especially concerned about whether the slower turns are attributable to old obsolete inventory that may have to be Mitten Off. This Will require tests that help clarify what type of inventory has increased, whether that inventory is for older lines or for new lines that are expected to be strong sellers next quarter/ year. 2. A. What are likely to be the long-term critical success factors for the following types Of firms? a high-technology company, such as Microsoft ; a large, low-cost retailer such as Wall-Mart Critical success factors for a high firm, such as Microsoft: ; Investment in search and development of new technologies and applications; ; Continual improvement of existing products to keep ahead of competitors: and ; Large installed base of customers, Provides a ready market for compatible products and upgrades and makes it harder for competitors to build market share. Critical success factors for a large, low-cost retailer, such as Wall-Mart: ;Maintenance of its low cost structure; ; Growth in sales per store; and ; Ability to open new stores in untapped markets. 2. B. How useful is financial accounting data for evaluating how well these two companies are managing their critical success factors? What other types of information would be useful in your evaluation? What are the costs and benefits to these companies from disclosing this bye of information to investors? For a high-tech firm, non-financial accounting types of useful information could include: ; Long-term strategy for the firm; ; Market share by product; ; Introduction schedules for new products and updates of existing ones; ; Profitability Of individual products: ; Forecasts of future performance; ; Third-party evaluations Of firms products; and ; Estimates of switching between firms products and those of its competitors. For a large, low-cost retailer, types of useful non-financial accounting information could include: ; Long. ERM strategy of the firm; ; Sales and profitability per store, per existing store, per new store, and by region of the country: Number and locations of new stores; ; Number and locations of closed stores; ; Management initiatives to reduce costs; ; Disclosure of volume discounts negotiated with major suppliers; ; Understanding to how firm manages its value chain through use of technology; and ; Sales and cost projections. In general, both types of firms will benefit from greater disclosure by increasing analysts and investors understandings of the firm. They Will both bear costs related to the release of proprietary information to competitors, decreased credibility if subsequent actions and results do not match the disclosure, and legal liability from dissatisfied investors. Overall, the benefits and costs of disclosing this type of information are likely to be greater for the high-technology firm than for the low-cost retailer. Financial statement information will typically provide a better understanding of the low-cost retailer than the high-tech firm. Most of the retailers assets are tangible and its costs and performance re reasonably well captured by financial statements. A high-tech firms most significant assets are often intangible (e. G. , RD, patents, trade secrets, etc. L and financial statements have a more difficult time capturing these values. Thus, voluntary disclosure is likely more important to the understanding of the high-tech firm rather than the low-cost retailer. Of course, voluntary disclosure is also likely to be more costly for high-tech firms, since their key information is more likely to be proprietary. In addition, higher business uncertainty for high-tech firms potentially increases the risk of legal liability arising from laundry disclosure. 3. Management frequently objects to disclosing additional information on the grounds that it is proprietary. For instance, when the FAST proposed to expand disclosures on (a) accounting for stock-based employee compensation (issued in December 2002) and (b) business segment performance (issued in June 1997), many corporate managers expressed strong opposition to both proposals. What are the potential proprietary costs from expanded disclosures in each to these areas? It you conclude that proprietary costs are relatively low for either, what alternative explanations do you have for managements opposition? Expanded disclosure standards require firms to report using the same segments used for internal reporting and organization. This information potentially provides additional information to a companys competitors. More detailed business segment data offers a better picture of performance and profitability across a companys various business segments. It also provides insight into differences in cost Structures across components. Using this information, competitors could choose to compete head to head With the firms most profitable segments or where the firm was most alienable due to high costs. Thus, additional business segment disclosures are potentially quite costly to a company. It is more difficult to identify any significant proprietary costs related to expanded disclosure of executive stock compensation. Managements opposition to the ongoing debates about whether to record an expense for stock options can probably be better explained by managements concerns about providing stockholders with information about its stock compensation. Managements concerns are likely to he most severe when its compensation is difficult to justify given the performance of the firm. . In contrast to U. S. GAP, FIRS permits management to reverse impairment on fixed assets which have increased in value since the time toothier impairment. Revaluations are typically based on estimates of realizable value made why management or independent values. Do you expect that these accounting standards will make earnings and book values more or less useful to investors? Explain why or why not. How can management make these types of disclosures more credible? The usefulness of earnings and book values will depend on any information asymmetry between management and investors as well as managements incentives to manage reported performance using fixed asset revaluations. Consider the case where management has more precise information on the value of certain key assets than investors. Asset revaluations are one way for them to provide information to investors on these values. Of course, information asymmetry also provides management with the opportunity to use discretion in making revaluations to conceal poor performance, perhaps to increase compensation or job security, or to reduce the risk Of violating debt contracts. Hence, if there are effective institutional constraints on the abuse of management reporting discretion, such as monitoring by independent auditors and values, the press, the board of directors, and financial analysts, permitting management discretion in financial reporting Will increase the usefulness Of financial accounting reports. However, fetishes institutional constraints are ineffective, discretion will actually reduce the value of accounting data. S. Under a management buyout, the top management of a firm offers to buy the company from its stockholders, usually at a premium over its current stock price. The management team puts up its own capital to finance the acquisition, with additional financing typically coming from a private buyout firm and private debt, If management is interested in making such an offer for its firm in the near future, what are its financial reporting incentives? How do these differ from the incentives of management that are not interested in a buyout? Hove would you respond to a proposed management buyout it you were the firms auditor? What about if you were a member of the audit committee? If management is interested in making a buyout offer for the firm, its primary concern may be paying as low a price as possible, This goal may give management an incentive o use accounting discretion to make the firm appear to be under-performing. This bad news might lower the stock price and eventual purchase price. As a result, management may be able to arrange to purchase the firm at a price that is lower than its economic value. Of course, management interested in a buyout also has to be concerned about audiences other than current stockholders, such as bankers and bond investors. These parties Will be asked to lend management funds to buy the firm, and Will demand higher interest rates if they believe the firm is a poor performer. In contrast, if management is not interested in buyout, it probably has incentives to make financial reporting assumptions that increase earnings, thereby increasing its own compensation job security. Alternatively, if management is concerned about establishing credibility in the capital market, it may report in an unbiased fashion, or perhaps even smooth performance, to ensure earnings reports do not surprise investors. Management incentives for reporting prior too management buyout should be of interest to the external auditor and audit committee because they could affect the firms reporting. If management has incentives to understate performance, to e able to acquire the firm at a low price, the auditors and audit committee would want to pay close attention to those areas where managers have room to manage earnings, 6, You are approached by the management of a small start- up company that is planning to go public. The founders are unsure about how aggressive they should be in their accounting decisions as they come to the market. John Smith, the CEO, asserts: We might as well take full advantage of any discretion offered by accounting rules, since the market will be expecting us to do so. What are the pros and cons of this strategy? As the partner of a major audit firm, what type of analysis would you perform before deciding to take on a new start-up that is planning to go public? Pros Generate better-looking financial statements. More aggressive accounting decisions could make the firms performance appear better than it would otherwise. Facilitate a future initial public Offering. If aggressive accounting decisions lead to higher earnings, etc. , it may be easier for the company to go public With higher earnings than lower, all Other things equal. Promote interest in the firm. With higher earnings due to aggressive accounting decisions, the company may capture a higher profile in the media. Press coverage about the firm could lead to greater investor interest in the company and facilitate a subsequent initial public offering. Cons Difficulties with auditors. The firms auditors would have to approve the aggressive accounting decisions by the firm. If the auditors did not sign off on some of the firms choices, then the firm would have to make less aggressive accounting choices or change accounting firms. Either of these changes could serve as a warning about the firm to potential investors. Difficulties with underwriters. Even it auditors approved to the firms accounting decisions, the rims underwriters will also evaluate their accounting choices during the due diligence process before the firm goes public. An underwriter that is not confident about a firms accounting may delay or cancel an underwriting rather than be embarrassed by poor firm performance subsequent to an underwriting. Less accounting discretion going forward. By making the most aggressive accounting choices today, the firm will have less flexibility in the future to change its accounting without generating considerable investor scrutiny. Increasingly skeptical investors. Firms that make more aggressive accounting choices may appear riskier to investors. As a result, underwriters and investors Will require greater compensation for that risk, increasing the firms cost of going public. 7. TWO years after a successful public offering, the CEO Of a biotechnology company is concerned about stock market uncertainty surrounding the potential of new drugs in the development pipeline. In his discussion With you, the CEO notes that even though they have recently made significant progress in their internal R efforts, the stock has performed poorly. What options does he have to help convince investors of the value of the new products? Which of these options are likely to be feasible? The CEO could potentially take advantage of the following options to provide information about the value of the firms new projects: ; Analysts meetings ; Voluntary disclosure of internal efforts ; Initiating or increasing its dividend ; Stock repurchases ; Sale to a block of stock to a pharmaceutical company or other knowledgeable firm While each of these options could he used to communicate directly or signal managements private information about the value of the firms new projects, the firm may be either unable or unwilling to undertake some of these options. Stock purchases and initiating/increasing the dividend are likely to be infeasible. Both of these strategies require cash that the firm probably does not have. The typical biotech firm does not turn a profit for several years after going public. In fact, it often returns to the capital markets for additional resources to support it while products are developed and the firm waits for regulatory approval. Hence, these high-cost strategies are probably not realistic options for the firm. Analysts meetings and increased voluntary disclosure are more likely actions for the firm. These represent efficient ways for the firm to provide detailed information about its new projects. If management information is not considered to be credible, investors and analysts may not pay attention to information provided in this manner. Furthermore, management may be reluctant to provide detailed information to the diverse group Of shareholders and analysts because of critical information it could provide to competitors. Sale off block of stock to a pharmaceutical company or other knowledgeable firm would also be feasible for the firm to do. It would signal to outsider investors and analysts that a very knowledgeable player with access to sensitive company information about the rims new projects has decided to make a substantial investment in the firm. The firm may prefer not to sell a block of stock in this manner for reasons of corporate control, If the potential placeholder sees the private information and decides that the firm is undervalued, it may decide to try to acquire the firm outright. Furthermore, the firer may not want to disclose the information to a potential competitor. However, there may be legal arrangements between the fir-n and a potential placeholder that could limit the likelihood of any of these events. 8. Why might the CEO of the biotechnology firm discussed in Question be concerned about the firm being undervalued? Would the CEO be equally concerned if the stock were overvalued? Do you believe that the CEO would attempt to correct the markets perception in this overvaluation case? How valued you react to company concern about market under- or overvaluation if you were the firms auditor? Or if you were a member of the audit committee? The CEO could be concerned about the firm being undervalued for several reasons. First, an undervalued firm makes a good takeover target. Once another firm discovers that the firm is undervalued, it may try to acquire the firm. If successful, the acquiring firm may fire the CEO. Second, undervaluation makes raising equity capital more expensive. Fifth firms shares are trading below their true value, the firm will have to sell a larger portion of the company to raise the same amount of new equity capital. Finally, the Coos compensation may be tied to firm value. It is unlikely if the firm is undervalued that the CEO will earn a substantial bonus. Moreover, the CEO may be rewarded if the stock price moves from being undervalued to being fairly valued. The CEO has different incentives to take action if he believes that the firm is overvalued, Equity capital is less expensive to asses it the firm is overvalued. Academic research suggests that there are more equity issues during periods when firms are likely to be overvalued. In addition, the Coos bonus may depend on the firms value. It the stock price falls as result of his actions, the CEO could lose his bonus as well as put his job at risk. The CEO also has an incentive to correct the overvaluation to reduce the firms legal liability, Assume the CEO has private information that suggests that his company is overvalued. Even if the CEO never discloses the information, at some point the market Avail learn the information and adjust the firms stock price. Dissatisfied shareholders may sue the company with the belief that the CEO manipulated the market by not revealing his private information sooner. Top management may also lose credibility with the market if they delay reporting bad news. Thus, it is unclear whether the CEO would attempt to correct the markets overvalued perception of the firm. 9. When companies decide to shift from private to public financing by making an initial public offering for their stock, they are likely to face increased costs of investor communications. Given this additional cost, why would firms opt to go public? Despite the increased costs Of investor communications, firms go public for many reasons, including: ;Improved access to capital markets. Some quickly growing firms find their growth outstrips the ability of their private funding sources. Some firms find it easier and less expensive to raise capital in public markets. Some investors (some types of mutual funds, retirement funds, trusts, etc. ) cannot invest in privately held companies. Thus, for a variety of reasons, firms go public to take advantage of greater access to public capital markets, ; A significant portion of employees wealth is the firms stock. Just like publicly held firms, many private firms compensate employees with stock or stock options. Over time, an employees stockholders may represent a large portion to her personal wealth. Illness the stock is publicly traded, it is difficult for employees to sell their stock to diversify their holdings, to raise cash to purchase a house, etc. , or even just to leave the fir-n for another job, ; Current owners want to cash out or reduce their holdings in the firm. This category could include managers of an LOBO who want to take the firm public again and receive compensation for their work. It could also include family-owned businesses where the family is no longer interested in running the company. Provide outside value for the firm. It is difficult to value the equity of a privately held firm. A company will often sell a share of its equity to get better information about the value of the remaining equity. Until Microsoft went public, it was almost impossible, even for people working within the firm, to begin to value the intangible assets that the firm had developed. It allows people Who owned stock when the firm was privately held to place a better value on their holdings. Easier evaluation Of firm performance. A firms publicly traded stock price provides one measure of its performance. Stock price and performance measures based on it can be used to compare the firm with itself, others in its industry, and the market as a whole. This information may be valuable to a firms managers as they make operating decisions and form plans for the future. Old. German firms are traditionally financed by banks, which have representatives on the companies boards. How would communication challenges differ for these firms relative to U. S. Firms, which rely more on public financing? German firms face a different set to communications challenges than American firms, due to variations in the ownership structure. Relative to American firms, German firms tend to have tar fewer individual investors and a greater level of holdings by financial institutions. In addition to their equity holdings, financial institutions are often represented on these companies boards of directors. These differences in ownership imply that German firms can communicate with their major owners through board meetings and informal channels, so that the major owners do not have to rely on published financial information. This reduces the information available to German firms competitors, a potential advantage over broad dissemination of information. As a result, major shareholders of German companies have the opportunity to have access to more detailed and proprietary information than LLC. S_ public shareholders. An interesting question is whether German firms actually take advantage of this opportunity. Some have argued that the German model Of capital market creates a COZY relationship between financial institutions and their clients, and that the board of directors provides limited oversight Of a firms management.