Make Or Buy Decisions
Make Or Buy Decisions
A Company may be producing a product by itself or receive an offer from an outside supplier to supply that product. Similarly, a firm may be buy a product from outside or may make/produced/manufacture that product in the firm itself.
Continuous Audit: Meaning, Advantages & Disadvantages Of Continuous Audit And Steps for Effectiveness
Continuous Audit
What is a Continuous Audit?
Continuous audit or a detailed audit is an audit which involves a detailed examination of books of accounts at regular intervals i.e. monthly, quarterly or yearly. The auditor visits clients at regular intervals during the financial year and checks each and every transaction.
An auditor checks the profit and loss account and the balance sheet at the end of the year. A continuous audit is not really useful to a small firm because its accounts can be audited at the end of the financial year without much loss of time. Banks conduct continuous audit which is otherwise known as concurrent audit in big branches.
Business where continuous audit is applicable:
1. Where it is desired to present the account just after the close of the financial year, as in the case of a bank.
2. Where the volume of the transactions is very large.
3. Where the statements of accounts is required to be presented to the management after every month or quarter.
4. Where no satisfactory system of internal check is in operation.
Advantages of Continuous Audit
1. Easy to quick discovery of errors
Errors and frauds can be discovered easily and quickly as the auditor checks the accounts at regular intervals and in detail. As a auditor visits the client after a month or two or so on, the number of transactions will be small and hence, the errors will be detected easily and quickly.
2. Knowledge of technical details
Since the auditor remains more in touch with the business, s/he is in a position to know its technical details and hence can be of great help to her/his clients by making valuable suggestions.
3. Quick presentation of accounts
As most of the checking works are already performed during the year, the final audited accounts can be presented to the shareholders soon after the close of the financial year at annual general meeting.
4. Keeps the client's staff alert
As the auditor visits the clients at regular intervals, the clerks are very regular in keeping the accounts up-to-date. They will see that there is no in accuracy or frauds as it would be detected by the auditor at the next visit.
5. Moral check on the client's staff
If the auditor pays surprise visit, it will have a considerable moral check on the clerks preparing the accounts as they do not know when the auditor may pay a visit to check. Moral check will be more valuable to make staff alert and careful.
Disadvantages of Continuous audit
1. Alteration of figures
Figures in the books of account which have already been checked by the auditor at previous visit, may be altered by a dishonest clerk and the frauds may be committed.
2. Disturbance of client's work
The frequent visits by the auditor may disturb the work if the client and cause inconvenience to the latter.
3. Expensive
Continuous audit is an expensive system of audit because an auditor devote more time. So, company needs to pay more amount as the remunerations of an auditor.
4. Queries may remain outstanding
The audit clerk may lose the thread of work and the queries which s/he wanted to make may remain outstanding as there might be a long interval between two visits.
5. Extensive note taking
Extensive note taking may be necessary in order to avoid any alteration in the figures after the audit.Steps to be taken to make continuous audit effective
1. The management should ensure that the books are not altered after the audit is completed. If necessary, any alteration can be made only after obtaining the approval of the auditor.
2. The auditor should use special ticks and marks during audit and the implication pf each mark should be kept confidential.
3. The audit notes, queries and remarks should be written date-wise and maintained. This will enable smooth flow of audit.
Computerized Accounting System VS Manual Accounting System
Differences Between Computerized Accounting System And Manual Accounting System
Computerized System:
1. Starts with the account balances in the ledger at the beginning of the period.2. Analyzes and classifies business transactions by type. Access appropriate menus for data entry.
3. Computer automatically posts transactions as a batch or when entered on-line.
4. The unadjusted balance are available immediately after each posting.
5. The trial balance, if needed, can be accessed as a report.
6. Enters and posts adjusting entries. Print the financial statements. Runs automatic closing procedure after backing up the period’s accounting records.
7. The next period’s opening balance are created automatically as a result of closing.
Manual System:
1. Starts with the account balances in the ledger at the beginning of the period.2. Analyses and journalise transactions as they occur.
3. Posts journal entries to the ledger accounts.
4. Computes the unadjusted balance in each account at the end of the period.
5. Trial balance is processing step leading to the statements.
6. Prepares the financial statements. Journalizes and posts the adjusting entries. Journalizes and posts the closing entries.
7. Prepare the post-closing trial balance. This trial balance steps 1 for the next period.
Taxation: Basis Period Of Assessment, Capital Allowance And Loss Relief
The following topics will be discussed in this series, those topics are: -
a. Basis period of assessment
b. Capital allowance
c. Loss relief.
Assessable Profit
The accounting profit arrived at in the trading, profit & loss account is not usually the same as “tax profit”. This is because in ascertaining the accounting profit some expenses which are not allowed for tax purposes may have been reported and some income included in the accounting profit are tax-free.
Taxation: Capital Allowance And Loss Relief
To read the previous article on basis period of assessment, please click here
CAPITAL ALLOWANCE
Definition
Capital allowance are a form of relief granted to any company which has incurred qualifying capital expenditure during a basis period in respect of fixed assets in use at the end of the basis period, for the purpose of a trade or business. Capital allowance is granted in lieu of depreciation. Capital allowance covers initial allowance, annual allowance, balancing allowance, balancing charges and investment allowance.
Difference Between Internal And External Recruitment
INTRODUCTION
Internal recruitment is concerned with recruiting people internally through transfer and promotion and external recruitment is associated with recruiting people externally through advertisement, employees referrals and other external sources.
A comparison between internal recruitment and external recruitment is as follows:
1. Internal recruitment: It is a quick process that involves the search of candidates internally.
External recruitment: It is a lengthier process that involves finding potential candidates externally or outside the organization.
2. Internal recruitment: This process is cheaper one as it does not involve any cost of contracting external sources.
External recruitment: This process is costly one as it bears extra cost for searching out the potential candidates.
3. Internal recruitment: Under it, there will be limited choice of candidates.
External recruitment: A wider choice of candidates is possible if external recruitment is used to get the people at work.
4. Internal recruitment: It motivates the existing staffs to improve their performance.
External recruitment: The existing staffs may feel dissatisfied if external recruitment is used to get the people at work.
5. Internal recruitment: The infusion of fresh talent is impossible in internal recruitment.
External recruitment: The infusion of fresh talent is possible in external recruitment.
External Recruitment: Sources, Methods, Advantages And Disadvantages
INTRODUCTION
External sources refer to recruiting employees from outside the organization. In fact, a pool of qualified candidates lie outside the organization. Firms cannot always get all required members from their current staff. In such a situation, an arrangement is made to attract qualified candidates from other sources.
An organization recruits employees from outside in order to fill the vacant position whose specification cannot be met by the present employees.
The following external sources of recruitment are used by most of the organizations:
1. Walk-ins
It is one of the most common and least expensive approaches of recruitment from outside the organization. Under it, the potential candidates visit office of the company and apply for jobs. Usually unskilled and semiskilled workers/supervisors are the candidates for walk-ins. It is relatively informal and less expensive method of external recruitment. It is concerned with direct recruitment and also known as factory gate recruitment.
2. Employment Agencies
Methods
External recruitment is concerned with generating a pool of qualified candidates through external sources of employment. Under it, following methods of recruitment are adopted.
1. Direct Recruitment
Direct recruitment refers to a process of recruiting qualified candidates from external sources by placing a notice of vacancy in an organization's notice board. The detail of the job will be specified on the notice board. this method is useful for the recruitment of blue-collar, white-collar, and technical workers. This method of recruitment is suitable when there is high supply of human resources in the market.
2. Casual Callers
This method of recruitment is concerned with using previously applied candidates as a source of recruitment. The applications already available in the employment office are used as sources of prospective candidates. In other words, applications from individuals who are already recorded in the employment list can be referred as new applicants and the best suited candidates are selected for the job. This method avoids the costs of recruiting people from other sources.
3. Advertising
Advertising is one of the most common and popular methods of external recruitment under which the job vacancy is announced through different print and electronic media. When the qualified and experienced employees are not obtained from other sources, advertisement method is used to attract the best qualified and experienced personnel. Usually, most of senior positions in organization are filled by this method.The job description and specifications are specified in the advertisement to allow self-screening.
4. Employment Agencies
Employment agencies run by private, public or government sectors are regarded as an important source of recruitment for unskilled, semi-skilled and skilled jobs. The agencies are likely to have a list of qualified candidates in their records, and they render their service as per the requirement from other organizations for employment.
5. Schools, Colleges And Universities
It is also known as campus recruitment. Under this method of external recruitment, educational institutions such as schools, colleges and universities offer opportunities for recruiting fresh candidates.Most educational institutions provide placement services where the prospective recruiters can review credentials and interview the interested graduates.
6. Labor Contractors
Labor contractors are an important source of recruitment under which workers are recruited through contractors. However, this method of recruitment is not used by many business firms and organizations.
7. Recommendations
Advantages
External recruitment sources and methods have following advantages:
1. Wider Choice
With the availability of large pool of qualified candidates, the selection process becomes more competitive in choosing the best suited candidate.
2. Qualified Personnel
External sources of recruitment provide a pool of talented candidates for selection purpose. With the large pool of potential candidates, it introduce new blood in the organization.
3. Fresh Talent
External recruitment facilitates the entry of fresh talents in an organization. It encourages the inflow of new ideas, knowledge and skills required to perform the tasks.
4. Competitive Spirit
External recruitment creates an environment for healthy competition in between internal employees and external members, who are supposed to be more trained and efficient.
5. Environmental Adaptation
Since external recruitment encourages the entry of new skills, knowledge and ideas in the organization, it helps in accompanying environmental changes.
6. Fairness
Disadvantages
External sources and methods of recruitment have following disadvantages:
1. Expensive
External recruitment is expensive in the sense that it requires an extra cost for vacancy announcement, arrangement for employment office, etc.
2. Dissatisfaction
When the qualified employees are recruited from outside the organization, the existing employees may feel dissatisfied with their jobs and leave the organization.
3. Long Process
External recruitment follows a long process. Various activities such as vacancy announcement, application collection, review of application forms, selection process etc. need to be performed before the placement of the candidate.
4. Adaptability Problem
As the selected employees are new for the organization, they may face adaptability problem in the organizational environment. More time will be needed for them to be familiar with organizational arrangements.
5. Competition
The existing employees think the new comers as their competitive. As a result of which, organization faces a great loss of productivity and quality.
6. Uncertain Response
The fresh candidates may not be suitable for the job due to the limited information about outsiders.
7. Poor Moral
Internal Recruitment: Aspects, Methods And Advantages
Internal Sources Of Recruitment
Introduction
Internal recruiting refers to recruiting employees from within the organization. In deciding requirement of employees, initial consideration should be given to a company's current employees, which is concerned with internal recruitment.
Recruitment: Definition, Processes And Factors Affecting It
INTRODUCTION
Recruitment is a process of identifying and preparing potential candidates to fill the application form. It is an initial phase of employment process. Recruitment inspires the potential candidates to fill the application form for employment. After estimating the need and requirement of human resource in an organization, the HR manager proceeds with identification of sources of HR, which is termed as recruitment.
Job Evaluation: Importance And Processes
JOB EVALUATION
Introduction
Job evaluation is the process of establishing values of different jobs. Job evaluation provides a basis for ranking different jobs and developing a pay structure for them. Evaluation of job is the process of describing the duties, authority relationships, skills, condition of work and other relevant information related to jobs. It supplies useful data and information to develop job description and specification documents.
Accounting Treatment Of Consignment
Valuation Of Unsold Stock In Accounting For Consignment Of Goods
Introduction
The stock lying in the hands of consignee at the end of accounting year is valued at cost or market price whichever is less. The cost of unsold stock or closing stock should be valued at cost to the consignor plus proportionate non-recurring expenses incurred by the consignor and consignee.
Introduction To Consignment Account
INTRODUCTION
Maximization of profit is the main objective of each and every business. For the fulfillment of this objective, the firm has to increase the sale of goods. For this purpose, the firm has to push its sales by all possible means. The sales can be increased by opening different branches within the territory or abroad. Opening a branch is a costlier affair. Instead of it, the business house may appoint some agents in various areas. The agent sells the goods on behalf of the sender of goods against commission.
Preparation Of Liquidator's Final Statement
INTRODUCTION
The liquidator is required to keep proper books to record receipt and payment which is known as liquidator's final statement, in every mode of winding up. The liquidator has to submit a report together with the audited final accounts to the CRO. The liquidator has to submit the statement to the court in the case of compulsory liquidation and to the company in the case of a voluntary liquidation.
Meaning Of Liquidation, Reasons For Liquidation And Calculation Of Liquidator's Remuneration
LIQUIDATION
Meaning Of Liquidation
A company is an artificial person or body created by law and only the law can dissolve it. The legal procedure by which the corporate life of a company can be brought to an end is known as liquidation. The liquidation of company is defined as " the termination of legal existence of company by closing its business". Liquidation is as well known as "winding-up" a company.
