Federal Accounting Standards Advisory Board

FASAB has been tasked with the job of developing accounting standards for federal agencies. The aim is to ensure that all financial reports are easy to read, relevant, and reliable. This agency is constantly working to improve the accounting systems within the organizations that fall under their control. The aim is not only to ensure that such government accounting complies with the law but that it is also as effective as possible.

Governmental Accounting Standards Board

GASB has the responsibility for developing standards which affect local and state organizations. Its role is very similar to FASAB but it is a private non-governmental body. The Financial Accounting Foundation oversees the work of GASB. It regularly provides technical updates and bulletins to ensure that accounting is as effective as possible at this level of public affairs.

How Government Accounting Works in Practice

Public sector entities not only have to consider their current funds but also any other money that will become available throughout the year. Most of this money will come from government funds or from local taxes. Decisions about how much money will be allocated to the different public sector departments will usually be made months in advance. It is important that these agencies are able to work out how much money they are going to need over a year so that they can know how much money they will need.

Budgets, Appropriations, and Encumbrances are the main method for splitting up government accounting and involve:

• Budgets are the money the public bodies will need for the year
• Appropriations refer to a particular amount of money that is set aside for a specific project. For instance, if there is a project to create a new back to work scheme there will be money set aside just for this. This money will then be considered separate from other funds as it will only be available for that one project. If there is a need to remove money from appropriations there will usually be a lot of paperwork involved.
• Government bodies will usually have costs associated with keeping them operating. This money is referred to as encumbrances. This fund could include things like payroll and purchases of new equipment.

Government accounting differs from the type of accounting used in an average business. It has to because it needs to because the environment is very different. This type of accounting faces special challenges because of the possibilities of waste. It is also a type of accounting that can come under a lot of scrutiny.

That may have been the way business intelligence used to be presented, but these days the concept is quite a different thing to the stereotype that most people imagine. Nowadays, business intelligence isn’t just for analysts and data techies to get their heads around. The growing demand for reliable, interpretable data that can help even the smallest of business owners in their decision making has led to some big changes in the way BI is presented and accessed.

The fact is that more and more business owners are realizing the crucial value of trustworthy data when it comes to marketing their products and services, and this has not gone unnoticed by business intelligence professionals.

The infographic below you’re about to look at (courtesy of DOMO) demonstrates how far it has come.

Created By DomoTechnologies, Inc.

It’s easy to see why the business intelligence community is heading in this direction (if we can call them that?). There’s a thirst for knowledge out there amongst small businesses and entrepreneurs, out of necessity in these economic times. Business intelligence equates to better decision making and bigger successes, so often the driving force for growth, but now especially – one of survival.

So What Are the Most Common Human Resources Issues?

The following issues are things that tend to come up frequently with human resource management:

• In order for a business to function at peak performance the right people have to be doing the right jobs. There can be a lot of competition to acquire the best people but these will be required if a business really wants to be sure of success. The HR department will regularly have vacancies that need to be filled. It is their job to ensure that this happens quickly and effectively.
• Just having the best people is not enough to ensure success. It is also vital that these individuals are productive. The human resources department needs to be able to find any blocks that are preventing people from doing their job correctly – they then have to rectify these problems. It is also important that they monitor employees to ensure that everyone is pulling their weight.
• In order for team members to do their job effectively they will need constant training. People will come into the world of work with qualifications but these are usually not enough to last a full career. Things change as we find better ways of doing things; in some industries things can change on an almost daily basis. It is also true that people can lose their skills if they are not receiving updates and refresher courses. It is up to the HR department to ensure that every member of the team received the proper training they need. There may also be mandatory courses such as lifting and handling along with fire safety.
• Nowadays there is a lot of emphasis on diversity within the workplace. This is needed to promote fairness and social cohesion. It can also greatly benefit a business to have team members from a variety of backgrounds. The human resources need to understand about diversity as well as any legal obligations the company may be under.
• It is now common practice for businesses to outsource a lot of their work. This will often work out to be the most cost-effective way of doing things. HR may play a role in deciding what gets outsourced to where.
• In order to keep team members productive and happy there needs to be incentives. Most business will have bonuses and benefits to reward staff members for their hard work.

The Benefits of Backward Integration

The decision to choose backward integration is huge decision for any business. They need to be sure that such a maneuver is going to lead to increased profit. If they were to buy a supplier or vendor that wasn’t viable it could easily end up destroying both companies. The business then that is considering such a move will need to decide how it will be profitable. If it is one of their main suppliers then it may lead to huge savings in regards to these supplies. If the supplier has a good customer base then it may already be a good purchase because of the likelihood of continued profits.

If a supplier is charging too much for their products it can be another reason to choose backward integration. This is particular useful when the supplier has some type of monopoly over the supply in question – maybe they are the only business providing this product in a certain location. Rather than paying so much money for supplies the business may decide to buy the company. This way in future they can be sure of getting these supplies at a much more reasonable cost. Of course the company in question will need to agree to such an acquisition.

In some situations backward integration may involve a number of different businesses. This can occur when a supplier is struggling to stay in business and there is a risk that they could go bankrupt. If there are businesses that depend on this supplier then it may mean trouble for them should this supplier fail. It may not be feasible for one of these businesses to take over the supplier so instead a group of business may come together to acquire the supplier. That way they will all be sure of continued supplies without taking all the risk of buying the failing business. This type of backward integration can work out very well for everyone involved in it. The supplier will be able to make it through the tough period and those businesses that have acquired it will in future be able to get their supplies for a cheaper rate.

Some Final Thoughts on Backward Integration

There are many good reasons for why a business may decide to join forces with their suppliers or vendors. In many cases such backward integration will prove successful but there is always going to be at least some risk involved. This is especially true when a failing company is acquired unless the situation that is causing the poor performance is resolved.

How the Run Rate is Obtained

The run rate uses a formula that examines current performance and it also makes predictions about the future. It is based on an assumption that because the business has been performing at a certain rate that it will continue to do so in the immediate future. Of course, this means that such information will not be 100% reliable. It can be highly useful though, and this is why businesses will consider the run rate when deciding on important decisions.

The Limits of the Run Rate

The run rate is a formula that doesn’t take into account a number of different factors. One of the most important factors that it doesn’t include is the reality that demand for products and services tend to be seasonal. The run rate is usually produced half way through the year; it will use the performance of the company in the first half of the year to predict the second half. This might work well for some types of businesses but for others it will mean a misleading prediction. A good example of this would be a toy company that sells most of their products at Christmas time. It is likely that a run rate based on performance of the company in the first half of year will not be a reliable indicator for the second half of the year.

Another problem with the run rate is that it fails to take into account the whims of customers. Demand for products can go up and down depending on changes in the marketplace. Customers tend to be fickle and there is no guarantee that just because they both a product one time that they will want to keep buying it in the future. If a better product comes along in the future then this may attract many customers. If there are changes in the economy then this mean that people will have less money to spend. None of these factors can be predicted by the run rate.

Despite the limitations of the run rate it can be a very useful tool. This is why most businesses will continue to rely on it. So long as the limitations of such calculations are understood it will mean that business owners will be able to make wise decisions based on them. Sometimes the rate run will turn out to be way off the mark, but it is better to rely on it than pure guess work.

The Role of the Closing Agent

This individual is a neutral party in the sale; this means that they don’t work for either the buyer or the seller. They are also not a representative for the mortgage company or real estate agent. This neutrality is important to ensure that they are able to do their work impartially and fairly. This person will need to handle documentation from all the different people involved in the sale. They can ask to see a variety of different documentation related to the sale depending on the unique aspects of it. Sometimes they may require the input of attorneys representing the buyer and seller.

If the buyer needs to secure a mortgage the closing agent will be involved in this too. This neutral party will want to ensure that the mortgage is progressing smoothly and that the funds are going to be ready to put into the seller’s bank account. It is important for them to see all the documentation pertaining to the mortgage so that the buyer can be reassured that the money will get to them when the sale is finalized. This agent will keep the money in escrow so that it can be released when the time is right.

Just before the sale is finalized there will be a meeting between the agent, the buyer, and he seller as well as any representatives. At the meeting the final documents pertaining to the sale will be signed and witnessed. There is also an important document called the ‘Truth-in-Lending’ that needs to be finalized. Many of the documents will also need to be photocopied at this time so that everyone that needs to have them will have their own copy.

Once everything is in order it will be time to collect fees to pay for closing costs. Any money that needs to be paid will now be put into escrow and managed by the agent. Once the transaction is fully recorded then the money will be paid to the seller and the keys handed over.

Some Final Thoughts on the Job of a Closing Agent

For people who are buying or selling a property the role of the closing agent will be very important. It ensures that everything happens as it should and it protects everyone involved. If such work were to happen with this agent it could become really messy.

Two Elements of the Attrition Rate

The churn rate can be divided into customer base and employee turnover.

Customer Base

This is the number of contractual customers who will leave during the time period being considered. For instance, if a company offers some type of service that involves a subscription there will be a certain number of people who will drop out. If a lot of people are dropping out then this could be a sign that they are dissatisfied with the service. The more people who are unsubscribing the more the company will have to worry about. Sometimes this type of attrition rate can be confusing because some individuals may subscribe again after a short break. It is therefore helpful to sometimes consider net churn rate and gross churn rate.

Employee turnover

Some businesses can have a very high turnover of employees. This is usually viewed as a negative situation because it can take a lot of time and money to train new people to do the job. In some industries, such as fast food restaurants, there is always going to be a high employee turnover so the fact that the attrition rate is high may not be too much cause for concern. In an industry though, where employee turnover is fairly low it can be a huge warning sign if one company has a particularly high employee attrition rate.

The Importance of Attrition Rates  

Looking at attrition rates can be very useful for any business. If they seem to have a falling customer base they will want to know why this is happening and what can be done to resolve the situation. It could be that there are problems with the marketing strategy or that the product itself if flawed. One way to get the needed information as to why customers are abandoning ship would be to do a customer satisfaction questionnaire. The information provided by this could change the fortunes of the business and ensure an improved customer base in the future.

Employee attrition rates can also be used as a means to spur changes within the company. For most businesses their best assets will be the members of the team. It is therefore vital that these people can be kept as long as possible. A high turnover of staff has a bad effect on the rest of the team because it weakens solidarity and productivity. It is therefore important to investigate the reasons why people are leaving and to remedy the situation.

The Important of Office Temperature

If you can think back to those times when you have been very hot or very cold you will probably remember how it impacted your behavior. When we are too hot it is hard to concentrate and it can also make us feel very irritable – it makes us drowsy too. When the weather is too cold all we can think about is keeping warm; maybe cuddling up in a blanket. It is probably obvious to all of us that such extremes of temperature are not going t be good for office productivity.

Research into the Perfect Office Temperatures

There has been a lot of interest in finding the best temperature for increasing productivity. One study by Cornell University provided evidence that warm temperatures are more likely to encourage people to work hard. It was found that when the temperature was raised to 77 degrees Fahrenheit (that’s about 25 degrees Celsius) the productivity of office workers increased. There were also far less likely to make errors.

Cost Effectiveness of Heating the Workplace

Keeping the office temperature at about 77 degrees Fahrenheit is a lot easier to achieve in a warm climate. Trying to do the same in a colder climate or during winter can be quite expensive. Most businesses are trying to keep their heating bills down by lowering the temperature to a more modest amount. Even turning up the temperature by a few degrees can mean a leap in heating bills. It is often therefore necessary for businesses to conduct a cost benefit analysis before they make such a change. If the increased productivity created by turning up the heat isn’t enough to offset the heating bills then it will not be cost effective.

It is important to keep in mind that heating is only part of the overall equation when it comes to office productivity. Other aspects of the environment can also have a huge influence. If there is a lot of background noise then this can make workers less productive. If the lighting is too low it can make them tire more easily and may even lead to increased sickness due to eye strain. Another vital aspect of the environment will be the office furniture. If this isn’t ergonomic it may mean that the health of the workforce will be compromised. They will be less productive and spend more time off work as a result.

So What is Amway?

It is a type of multi-level marketing business that works like a pyramid. The company tries to distance itself from the pyramid selling label, but essentially this is a fair description of it. If somebody wishes to join they need to be sponsored by an existing member. They are then expected to pay a joining fee and a yearly fee to remain a member. They can then make commission on selling products but the big money is made by those on top of the pyramid. This is similar to how pyramid schemes work.

In the Amway pyramid the different levels are referred to as pin levels. The fact that it is a pyramid means that the higher an individual’s pin level the more people they will have working under them. These pin levels are given names based on precious materials such as diamond and platinum. Those who make it to diamond level can make a very good yearly salary while platinum level should provide enough earnings for people to live on. Of course the lower the level the less money members will be able to make.

Amway focuses mainly on health, beauty, and home care products. Those actually doing the selling are called Independent Business Owners (IBO). All the products sold by Amway have a point value and this amount determines how much commission the IBO can make. This point value actually works like an international currency because it is the same in all Amway operations no matter where they are situated in the world. Business volume is the amount of product sold in a given country. This number is used when determining the price of an item in a local currency – it also is used to help determine how much the IBO will make from a sale.

Criticisms of Amway

Like other types of pyramid selling there has been some criticism fired at Amway. It doesn’t have as poor a reputation as some pyramid schemes. There are definitely people who become members and go on to earn a lot of money.  One of the main criticisms is that Amway makes a lot of money from members rather than from actually selling products. They do this by selling books, audio, and video products to members with the promise that these will help them become a better seller. The company has also had allegations of tax and custom fraud. Despite these criticisms the company continues to make a lot of money and this shows no signs of changing soon.

So what is a Slush Fund?

In basic terms a slush fund is a reserve fund of money that may not have a designated purpose. A lot of companies like to put a bit of money aside to pay for parties and other types of entertainment. This is a perfectly legitimate practice and very common. The word slush fund though has become so associated with wrongdoing that many businesses will no longer refer to this legitimate reserve fund by that name.

What we now usually mean by a slush fund is money that is hidden and not legally accounted for. If a corporation has had huge profits they may decide not to declare it all. Instead they will hide a percentage of it as a slush fund. They may decide to do this in case profits are lower the in the following financial period; they will be able to create a rosier picture by adding the money that wasn’t declared the year before.

Slush Fund Riches

In many instances the purpose of slush funds will be to allow people to get rich illegally. There is probably billions of dollars hidden in this way and most people involved in this criminality seem to get away with it. The punishment for being caught can be severe, but the rewards are so high that a lot of people will be tempted. It isn’t only business and corrupt politicians who are involved in this activity; it can also involve whole governments. Slush funds are created by using false invoicing and misdirecting funds. The real worry is that this type of criminality can be extremely easy for those in power to pull off.

In the business world there is a tacit acceptance of slush funds. It may be illegal but a lot of people just accept it as the way things are done – there are many who even try to justify it as necessary. It is only on those rare occasions that somebody gets caught and sent to jail that people will show their disapproval at such practices. It can sometimes feel like the one who is caught is a martyr for the cause. It seems that so long as a regular fall guy can be found business is able to go on as usual. Most slush funds will never be discovered and only a tiny minority of those involved in this type of practice will ever be caught. This is why such practice is unlikely to ever go away.