The Failure Of The Economic Collapse Of Flint, Michigan

As metropolitans continue to grow at exponential rates, the collapse of industrial cities such as Flint, Michigan have been a result of the destructive nature of three economic policy initiatives: The North American Free Trade Agreement, the repeal of the Glass-Steagall Act, and welfare reform. In this paper I will examine the ways in which federal economic policies have served as a catalyst to the economic stress that led one of America’s historical industrial cities to be faced with a contaminated water supply due to a disparity in marginal benefit, private benefit and social cost. In April of 2014 news broke that when Flint, Michigan changed its water source from the treated Detroit Water and Sewerage Department to the Flint River that†¦show more content†¦Following the enactment of NAFTA, Flint would take on another economic burden as a result of the repeal of the Glass-Steagall Act. The Glass-Steagall Act was an act passed by the U.S. Congress in 1933. This piece of legislation functioned as a banking act that prohibited commercial banks from participating in the investment of banking business (source). It also created the Federal Deposit Insurance Corporation (FDIC), the Federal Open Market Committee (FOMC) and Regulation Q, institutions that served the purpose of maintaining the essence of the legislation. Essentially, the Glass-Steagall Act was passed as an emergency measure to counter the effects of the Great Depression by stopping bank runs and to restore confidence in the banking system. In 1999 President Clinton repealed the act in an effort to â€Å"modernize† financial regulation, this deregulated financial derivatives by effectively eliminating financial regulations. The repeal of the Glass-Steagall act was notably one of the most potent factors that almost led America into its second economic collapse. As a result, between 1999 and 2009 unemployment rates had quadrupled from roughly 4% to 17% in Flint, Michigan. In the same turn, President Clinton had not only attempted to modernize financial regulations, but he had also set out to change welfare as we knew it. In doing so, President Clinton decided to replace the Aid to Families with Dependent Children Program (AFDC) with the Temporary Assistance for NeedyShow MoreRelatedGm Bankruptcy11472 Words   |  46 Pageswas founded on Wednesday, September 16, 1908, in Flint, Michigan, as a holding company for Buick after he signed a 15 year contract in Canada with the exchange of 500,000 shares of Buick stock for 500,000 shares of McLaughlin Stock and Dr. Campbell, W Durant’s son in-law put 1,000,000 shares on the stock market in Chicago Buick (then controlled by William C. Durant). Durant s company, the Durant-Dort Carriage Company, had been in business in Flint since 1886, and by 1900, was producing over 100Read MoreGeneral Motors Analysis Essay8283 Words   |  34 PagesGeneral Motors Analysis I. Executive Summary II. Company Overview and History III. 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Those Winter Sundays Free Essays

Those Winter Sundays Historical Context/Info about Author: Robert Hayden grew up in a poor African-American section of Detroit known as Paradise Valley. At a young age, his parents separated and his mother could no longer afford to keep him so he was sent to live with a foster family. His adoptive father was a strict Baptist and manual laborer and while he was a stern man, he always attempted to care for and nurture Hayden’s love of literature. We will write a custom essay sample on Those Winter Sundays or any similar topic only for you Order Now Summary: The poem, composed in 1962, is a tribute to Hayden’s stepfather in an effort to express both his gratitude for all the hard work he had done for him as well as the regret that he feels for not appreciating him more during his lifetime. The poem’s power is emphasized through the technique of using flashbacks from his childhood and juxtaposing them against the knowledge and newfound respect he now has as a man. This short, simple poem touches on topics such as family relationships, coming of age, and sacrifice for loved ones. Literary Devices Used: Symbolism Imagery – Those Winter Sundays has many symbols and imagery that are well utilized in order to convey Hayden’s message. He refers to his stepfathers â€Å"cracked hands†, which in this case, is used to symbolize the hard work this father was willing to go through for the love of his family. Another symbol present in the poem is his â€Å"polished good shoes† which is another symbol used to express the indirect nature of a fathers love. Even though he was strict and withdrawn he would take the time to make sure that his son would have a better life than he had. Syntax/Structure- In order to emphasize the labored existence of his father, the author repeatedly uses the â€Å"c† sound, which kind of adds the element of pain. Examples of this alliteration include, cracked, banked, thanked, and chronic. The overall structure of the poem also attributes to the underlying tone. It is constructed very simply which may help to express the simplicity of the love between a father and son. They did not lead an extravagant lifestyle and his father didn’t do go out of his way in order to show affection towards his son, but the point was he did what needed to be done even if it was hard, without calling for any appreciation and that was enough to show his love for his family. The poem also ends with a rhetorical question, â€Å"What did I know, what did I know of love’s austere and lonely offices? which helps to show the regret and change in heart the man has had through his own personal growth. Tone- the poem’s tone shifts in the beginning from a cold, harsh tone to a warmer comforting tone by the seventh line. Although by line nine the poem’s tone shifts again to a negative uncomfortable tone. The cold, harshness of the tone described in the first stanza reflects through the coldness of the house, the Father’s cracked achy hands and the fact that no one has ever thanked him. This fluctuation of tone indicates the uncertainty the son feels about his father and whether or not he truly does care for him, which of course as a man he realizes he always had. How to cite Those Winter Sundays, Papers

Auditing Synonymous to Business

Question: Describe about the Auditing for Synonymous to Business. Answer: 1. Risk is synonymous to business. In addition, inherent risk is the risk that arises due to the very existence of business. These risks cannot be detected even after taking proper audit training and doing efficient audit procedures. These are risks that are more capable of getting missed by the audit procedures and internal control functions too. These can be mitigated to some extent but cannot be done away with fully. OneTel, a global telecommunication company is being talked about here. It had business all over the globe. Their business based on innovation and technology. It provided a wide range of integrated products and services to the customers and it was a leader in its business in Australia. Initially only OneTel was a market player. Gradually, more companies got into the industry and more than 35 network providers then entered the industry and joined the race of telecommunication service providing business (Monem, 2009). With more and smaller companies getting into the industry, the call rates and other communication services became cheaper. Competitive prices ruled the industry. More market competition led to more competitive prices of international and long distance calls, and telephony services. With all the scale of business, OneTel was capturing a major share of the market. However, gradually as companies began entering the industry, the market share began decreasing (Monem, 2009). Th e various factors which would have led to inherent risk assessment at financial reporting level are as follows: a. The financial statements of the company reflect that the shares of the company had been issued in the open market. From 355.6 million $ in 1999 it reached to 1225.6 million $ in 2000. Inherent risks arise when there is a high level of investment involved or when transactions are highly complex. Although dematerialization of shares has brought about high level of controls, still there are chances of inherent risks since there are millions of transactions involved and the entire system of share issue, money receipt and allotment of shares is complex. The procedure requires an increased inherent risk assessment. b. A purchase of license transaction in the year 2000 is depicted by the cash flow statement of the company. License purchasing, registration, capitalization, amortization, and maintenance of these accounts is a humongous task. It requires a lot of financial planning and aftermath. This requires inherent risk assessment of a higher degree. The valuations of intangible assets, their charges, are a few of the computations that need management intervention and fair play. There has to be a fixed amount of care and risk mitigation measure to be taken since these are transactions that are more prone to misstatements and mistakes. These are complex transactions involving management judgment and hence need inherent risk assessment procedures to be fully prevalent. As is evident from the financial statements, the company has taken up multiple loans and advances, from short term to medium term to long term. These transactions are much prone to misstatements and mistakes. There are chances of f rauds that can be mitigated and controlled by control risk assessment measures. However, if not for frauds, the natures of risks associated with these transactions involve many inherent risk assessment measures. The company has taken borrowings, issued shares. These attract inherent risk assessment procedures to be in place. c. There are abnormal items in the financial statement. These abnormal items require that there should be risk assessment procedures in place that risks assessed well before time, their impact to be assessed and mitigate. There are huge accumulated losses for the year both at entity level and at consolidated financial statement level. The computation and maintenance, writing off, etc. of accumulated losses is a complex transaction that requires management intervention and hence inherent risk assessments becomes imperative here. There was an increase in the value of plant and machinery. Evidently, there was purchase of plant and machinery. Purchase of assets is a purely management decision making. Discretion of management works. What to purchase, from where to purchase, how to purchase, how to manage finances, the actual requirements should meet with the asset purchased, etc. this needs inherent risk assessment procedure to be in place. Strategic risks are those risks that are crucial to the ongoing of a business and require attention and care as a continuous and long-term effort. Loose ends can be left open if strategic risks have to be mitigated (Cook, 2001). Strategic risks are those that exist at the top most level of management related to incorrect decision making. These risks exist because the management might take a wrong decision or might not be able to implement significant decisions and plans. All planning risks as mentioned above, such as the risks arising because of issue of shares, or purchase of rights and licenses identified at strategic risk assessment level itself (Matthew, 2015). Risk assessment has a top down approach. Risks assessed from the management level and going down they are assessed at the individual transaction level in the name of inherent and control risks. 2. Inherent risk is all about judgment. The judgment of individuals is associated with the measure of risk. Detection risk and control risks can be overcome but what remains is the inherent risk that requires judgment and far sightedness of the management. Inherent risk is present in the system irrespective of the risk management strategy. However, the impact of inherent is entirely based on various factors.The various factors are as under: Given the nature of business, the first and obvious factor that contributes to increased inherent risk is the existence of a large network of companies. The existence of a large number of companies as subsidiaries, holdings, associates, joint ventures, partnerships, all contribute to an increase in the inherent risk. More wide the network, more the number of companies in the network, higher are the chances of risks. There can be many more entities the company has to manage off balance sheet as well. As complexity of management grows, the capabilities of the management to void inherent risks reduce. b. Abnormal events, transactions or any non-routine activity add to inherent risks increased. Abnormal activities require speculations and adjustments that invite inherent risks. Any transaction that involves management estimates and ideas are prone to inherent risks, this is because of the subjectivity of the situation. The transactions or events, their management and measurement, all require estimates and idea of the management that may and may not always hold good for the business (Kaplan, 2011). There is always a risk. Determination of fair value, computation of estimates, etc. pose a risk, the inherent risk. Related party transactions are another factor that increases the inherent risks. This is because of the obvious emotional bias of the management towards the transaction. Thus, a related arty transaction is another fair factor that can increase the inherent risks of an organization. Potential debt covenant violations are another factor which ad to inherent risks. In the given case itself, we see that OneTel has taken huge loans, and all loans come with covenants. Moreover, violations of corporate debt covenants can lead to serious consequences (Kruger, 2009). The company has made losses. Repayment of loans and its interest, or abiding by other covenants is not a cakewalk. A risk of management override is always there. If the management tries to over play, the risk might never be mitigated or even detected. The stronger the audit team the weaker are the risks (Vause, 2009). As we talk about the company and its transactions, we tend to miss the fact that the inherent risks caused by the incompetence of audit personnel as well. An incompetent audit team act as another contributor to inherent risks. Hence training, expertise and knowledge of audit personnel is another prerequisite to mitigate and detect risks. 3. A businesses is started with an obvious thought in mind that it shall run for lifetime. It shall generate profits and run forever. Any activity of business, which can disrupt this thought, needs immediate action against it. The most fundamental accounting assumption is that the business is going to run forever, in the fairest possible way any transaction, decision or event that threatens the possibility of this needs to be highlighted immediately (Manoharan, 2011). All stakeholders and investors expect the business to continue and keep generating profits. Any small activity that tends to threatens these needs to be taken care of (Geoffrey et. al, 2016). This is because it is not just management but expectation of other stakeholders as well (Brown et. al, 2006). Thus, it is very much agreeable that all activities going against the principle of going concern measured, as well as reported as high, medium, or low. It is important for directors and auditors to discuss at the earliest possible opportunity in the audit process any issues that could or do impact the company is going concern assessment. Uncertain or sudden economic crisis is beyond control but all controlled decisions taken to avoid such a scenario. The various factors which cause a set back to the going concern assumption may be various. Such as a major debt repayment failure, non-fulfilment of creditors covenants, indications of withdrawal of credit support, or withdrawal or loss of keep management personnel without replacement, companys inability to face competition, or con tinuous losses, or the companys continuous erosion of assets and consecutive losses. All the above-mentioned factors can lead to considerable losses of finance, and reputation and hence hit the going concern assumption of the company (Douglas et. al, 2015). However, to avert such situation, the management needs to lay a special interest so that there is less room for error. Some factors are under the control of the company and management while some are beyond control. Sudden change of trend, newer products introduced in the market and the company not being fast enough to cope, sudden disrupt or fail in market, a natural calamity etc. are scenarios which affect the going concern of an entity but the entity has no control over these (Wood, 2011). Therefore, there needs to be a parameter that can reflect to the management the gravity of the situation and how immediately it needs to be address. Thus an indicator of high medium and low, to judge how bad or easily manageable the situation is and how fast an action is to be taken is a safe play idea which can be adopted by many. This will help in understanding the overall scenario of the organization and lead to a better action. References Brown, J.W., Chasek, P. Downie, D.L 2006, Global Environmental Politics, Boulder, CO:Westview Press. Cook, T 2001, Collapse of Australia's fourth largest telco adds to growing list of corporate failures viewed 16 September 2016, https://www.wsws.org/en/articles/2001/06/onte-j08.html Douglas M.B, Todd, D.F Hermanson, D.R 2015, The Effects of Internal Audit Report Type and Reporting Relationship on Internal Auditors' Risk, Judgments.Accounting Horizons, vol. 29, no. 3, pp. 695-718. Geoffrey D. B,Joleen K,K. Kelli SDavid A. W 2016, Attracting Applicants for In-House and Outsourced Internal Audit Positions: Views from External Auditors, Accounting Horizons, vol. 30, no. 1, pp. 143-156. Kaplan, R.S., 2011, Accounting scholarship that advances professional knowledge and practice, The Accounting Review, vol. 86, no. 2, pp. 367383. Kruger, C 2009, Numbers finally start to add up as operators go back to basics, viewed 19 September 2016, https://www.smh.com.au/business/numbers-finally-start-to-add-up-as-operators-go-back-to-basics-20110121-19zy6.html Matthew S. E 2015, Does Internal Audit Function Quality Deter Management Misconduct?, The Accounting Review, vol. 90, no. 2, pp. 495-527 Monem, R 2009, The Life and Death of OneTel, Griffith University. Manoharan, T.N., 2011, Financial Statement Fraud and Corporate Governance, The George Washington University. Vause, B 2009, Guide to Analysing Companies, Bloomberg Press Wood, D A 2011,The Effect of Using the Internal Audit Function as a Management Training Ground on the External Auditor's Reliance Decision, The Accounting Review, vol. 86. No. 6