The Big 4 accounting firms, once considered resilient to global economy slow down and credit crunch, have started to laid off its staffs. Apparently, it's not only the bankers are affected, but also the auditors/ consultants.
It's reported that Ersnt & Young Australia has sacked nearly 100 staffs recently.
Just yesterday, Treasuer of Australia Wayne Swan reported that Australia economy fell in to a recession trap, as evidenced by GDP shrank by 0.5 percent in 4th Quarter 2008. The economy is contracting for the first time in 8 years.
What about other Big 4 ( namely: Pricewaterhouse Coopers, KPMG, Deloitte & Touche)? Are they retrenching ?
Please feel free to comment on the blog, or drop us an email at myauditing@gmail.com.
Thursday, March 5, 2009
Tuesday, March 3, 2009
#71- Automotive Giant, General Motor- Going Concern Issue
America automotive giant, General Motor has highlighted in its earning release section that the Company anticipates receiving a “going concern” opinion from its auditor, Deloitte & Touche. The General Motor’s management has to determine whether there is substantial doubt about General Motor’s ability to continue as a going concern.
IAS 1 states that: “when preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. Financial statements shall be prepared on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, those uncertainties shall be disclosed. When financial statements are not prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the financial statements are prepared and the reason why the entity is not regarded as a going concern.”
General Motor's businesses are severely affected by the recent market downturn and its financial results have dropped drastically. The outlook for the global automotive industry remains gloomy and pessimistic. The Company is actively looking for funding, including request for additional fund from Treasury department of United States.
IAS 1 further required that: “In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date. The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, a conclusion that the going concern basis of accounting is appropriate may be reached without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.”
IAS 1 states that: “when preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. Financial statements shall be prepared on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, those uncertainties shall be disclosed. When financial statements are not prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the financial statements are prepared and the reason why the entity is not regarded as a going concern.”
General Motor's businesses are severely affected by the recent market downturn and its financial results have dropped drastically. The outlook for the global automotive industry remains gloomy and pessimistic. The Company is actively looking for funding, including request for additional fund from Treasury department of United States.
IAS 1 further required that: “In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date. The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, a conclusion that the going concern basis of accounting is appropriate may be reached without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.”
Small business accounting- Cash
Generally, the small business comprises:
- Cash on Hand
- Cash in Bank
Generally, the cash on hand amounts are not material, while significant amount of the businesses’ cash are kept in bank. What will be the accounting entries for cash receipt and cash disbursement (i.e. payment).
Upon receiving of cash from debtors:
Dr. Cash in Bank
Cr. Trade Debtors
Upon disbursement of cash (i.e. outflow of cash) for expenses
Dr. Trade Creditors/ Expenses
Cr. Cash in Bank
For bank charges on the bank account deducted from bank account directly:
Dr. Bank charges
Cr. Cash in Bank
It’s important to note that: a online bank account enable the small business to track the transaction on a real time basis. Conventionally, small business is required to check the cash inflow and outflow while they have received the monthly bank statement from the bank. With online banking account, the small business is allowed to view the transactions on a timely basis.
- Cash on Hand
- Cash in Bank
Generally, the cash on hand amounts are not material, while significant amount of the businesses’ cash are kept in bank. What will be the accounting entries for cash receipt and cash disbursement (i.e. payment).
Upon receiving of cash from debtors:
Dr. Cash in Bank
Cr. Trade Debtors
Upon disbursement of cash (i.e. outflow of cash) for expenses
Dr. Trade Creditors/ Expenses
Cr. Cash in Bank
For bank charges on the bank account deducted from bank account directly:
Dr. Bank charges
Cr. Cash in Bank
It’s important to note that: a online bank account enable the small business to track the transaction on a real time basis. Conventionally, small business is required to check the cash inflow and outflow while they have received the monthly bank statement from the bank. With online banking account, the small business is allowed to view the transactions on a timely basis.
Monday, March 2, 2009
Small Business Accounting
Small business accouting, in general, are non-complex and straight forward. The fundamental is that the owner of the small business must develop certain level of undertanding of accounting before they could really appreciate the value and necessities of accounting.
Our blog has specially dedicated a separate section to educate our blog readers on basic accounting entries, specifically suits for small business.
Prior to introduction on accounting entries, we would like to highlight to business owner that it's important, convenient and cost-effective to use accounting software to perform daily book-keeping. There are already a few accounting softwares in the market, e.g. Microsoft Office Accounting Express, SAP small business accounting software.
An accounting software is considered imperative in today business environment.It reduces the time spent on book-keeping, prevent 'un-balance' entries, and provide the business owner an effective insight of the Company's financial position and results on a timely basis.
Our blog has specially dedicated a separate section to educate our blog readers on basic accounting entries, specifically suits for small business.
Prior to introduction on accounting entries, we would like to highlight to business owner that it's important, convenient and cost-effective to use accounting software to perform daily book-keeping. There are already a few accounting softwares in the market, e.g. Microsoft Office Accounting Express, SAP small business accounting software.
An accounting software is considered imperative in today business environment.It reduces the time spent on book-keeping, prevent 'un-balance' entries, and provide the business owner an effective insight of the Company's financial position and results on a timely basis.
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