Earnings Management (EM) is the term used to describe the process of manipulating earnings of the firm to meet management’s predetermined target. The flexibility of accounting standards may cause some variability in earnings to occur as a result of the accounting choices made by management. However, earnings management that falls outside the generally accepted accounting choice boundaries is clearly unethical. The intent behind the earnings management also contributes to the questionable ethics of the practice. Some managers use EM as a means of deceiving shareholders or other stakeholders of the organization, such as creating the appearance of higher earnings to increase compensation or to avoid default on a debt covenant. The intent to use EM to deceive stakeholders implies that it can be unethical, even if the earnings management remains within the boundaries of GAAP or IAS. Earnings management has been defined as management’s exploitation of accounting flexibility to meet Continue reading
Modern Business Concepts
Audit Committee – Meaning, History, Roles, and Responsibilities
Corporate governance plays an important role in disciplining the management of the company like transparency in financial reporting and having robust internal controls. Enormous responsibilities like audit committee, duty of the auditors and induction of non-executive directors to act independently have been inflicted on the management of the company and any deviations will be viewed seriously and action against directors can be initiated by the compliance authorities. Audit committee, which is a group of directors who are not concerned with day-today management of the company but supervising how business is administered, conducted and reported. A committee of directors which is entrusted with the precise duty to evaluate the yearly financial reports of the business is known as the audit committee. An audit committee acts as a link between the board of directors and the auditor which includes the evaluation of the statutory audit report, the suggestion of the auditors, the Continue reading
Stakeholder Engagement
Stakeholders refers to those individuals or a group who has vested interest in the outcome or the results of the body of a work in an organisation. The term “stakeholder engagement” is budding as a means of describing a broader, more inclusive, and continuous process. It takes place between the company and the potentially impacted stakeholders that encompasses a range of activities, approaches and, the entire span of a project. The change that is likely to occur reflects the broader change in the business and financial worlds. It increasingly recognizes the business and reputational risks that may occur as a result of poor stakeholder relations. It also places a growing emphasis on corporate social responsibility, transparency and reporting. Stakeholder engagement can therefore be defined as the process of effectively eliciting the stakeholders’ views on their relationship with the organization. Stakeholder engagement is increasingly becoming a part of mainstream business and Continue reading
The Concept of Hybrid Managers
A hybrid manager can defined as a person who possesses strong technical skills and adequate business knowledge or vice versa. He should have the required skills needed in the technical as well as the management aspect. Along with that, he should also possess the management competences like communication skills, negotiation skills and also he should be able to motivate others working under him. A Hybrid manager should be able to reduce the gap between the business and technical aspects of the organization and build it with his expertise. Any organisation which has business and technical department working in tandom with each other has an advantage over other organisations whose technical and business department is not integrated. And this role of integration of the business and technical department is performed by the Hybrid managers. Characteristics of a successful Hybrid Manager Self-motivated/like being challenged – A successful hybrid manager is self-motivated person. Continue reading
History and Development of Non-Governmental Organizations (NGOs)
Non-Governmental Organizations (NGOs) as we know them today are generally thought to have come into existence around the mid-nineteenth century. It was only about a century later that the importance of NGOs was officially recognized by the United Nations. At the UN Congress in San Francisco in 1968, a provision was made in Article 71 of the Charter of the United Nations framework that qualified NGOs in the field of economic and social development to receive consultative status with the Economic and Social Council. The development of modern Non-Governmental Organizations (NGOs) has largely mirrored that of general world history, particularly after the Industrial Revolution. NGOs have existed in some form or another as far back as 25,000 years ago. Since 1850, more than 100,000 private, not-for-profit organizations with an international focus have been founded. The growth of NGOs really took off after the Second World War, with about 90 international Continue reading
Major Drawbacks of Entrepreneurship
Entrepreneurs are persons who are creative and imaginative in finding ways and add them to their own wealth, power and prestige. Entrepreneurs innovate and introduce new quality of good which consumers are not familiar yet. Besides, they often launch new method of production and new market which have not been tested and existed before yet. Moreover, they also bring new source of supply of raw material or half manufactured goods. Likewise, they create monopoly position which is the carrying out of the new organisation of any industry. It is important to differentiate between two primary types of entrepreneurs to understand how economic development occurs. ‘The initiation entrepreneur” is responsible for unprecedented economic growth during 19th and 20th centuries; creating new products, new productive technologies or procedures which has not existed before. Whereas ‘the imitative entrepreneur’ is for economic advancement in developing countries today, where there is a more widespread and Continue reading