Financial statements are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form, easy to understand, they include four basic financial statements accompanied by a management discussion and analysis: A balance sheet or statement of financial position, reports on a company's assets and owners equity at a given point in time. An income statement—or profit and loss report, or statement of comprehensive income, or statement of revenue & expense—reports on a company's income and profits over a stated period of time. A profit and loss statement provides information on the operation of the enterprise; these include the various expenses incurred during the stated period. A statement of changes in equity or equity statement, or statement of retained earnings, reports on the changes in equity of the company over a stated period of time. A cash flow statement reports on a company's cash flow activities its operating and financing activities over a stated period of time.
For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis. The notes describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements. "The objective of financial statements is to provide information about the financial position and changes in financial position of an enterprise, useful to a wide range of users in making economic decisions." Financial statements should be understandable, relevant and comparable. Reported assets, equity and expenses are directly related to an organization's financial position. Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently." Financial statements may be used by users for different purposes: Owners and managers require financial statements to make important business decisions that affect its continued operations.
Financial analysis is performed on these statements to provide management with a more detailed understanding of the figures. These statements are used as part of management's annual report to the stockholders. Employees need these reports in making collective bargaining agreements with the management, in the case of labor unions or for individuals in discussing their compensation and rankings. Prospective investors make use of financial statements to assess the viability of investing in a business. Financial analyses are used by investors and are prepared by professionals, thus providing them with the basis for making investment decisions. Financial institutions use them to decide whether to grant a company with fresh working capital or extend debt securities to finance expansion and other significant expenditures. Consolidated financial statements are defined as "Financial statements of a group in which the assets, equity, income and cash flows of the parent and its subsidiaries are presented as those of a single economic entity", according to International Accounting Standard 27 "Consolidated and separate financial statements", International Financial Reporting Standard 10 "Consolidated financial statements".
The rules for the recording and presentation of government financial statements may be different from those required for business and for non-profit organizations. They may use either of two accounting methods: accrual accounting, or cost accounting, or a combination of the two. A complete set of chart of accounts is used, different from the chart of a profit-oriented business. Personal financial statements may be required from persons applying for a personal loan or financial aid. A personal financial statement consists of a single form for reporting held assets and liabilities, or personal sources of income and expenses, or both; the form to be filled out is determined by the organization supplying the aid. Although laws differ from country to country, an audit of the financial statements of a public company is required for investment and tax purposes; these are performed by independent accountants or auditing firms. Results of the audit are summarized in an audit report that either provide an unqualified opinion on the financial statements or qualifications as to its fairness and accuracy.
The audit opinion on the financial statements is included in the annual report. There has been much legal debate over. Since audit reports tend to be addressed to the current shareholders, it is thought that they owe a legal duty of care to them, but this may not be the case as determined by common law precedent. In Canada, auditors are liable only to investors using a prospectus to buy shares in the primary market. In the United Kingdom, they have been held liable to potential investors when the auditor was aware of the potential investor and how they would use the information in the financial statements. Nowadays auditors tend to include in their report liability restrict
Conduit and Sink OFCs
Conduit OFC and Sink OFC is an empirical quantitative method of classifying corporate tax havens, offshore financial centres and tax havens. Rather than analyzing taxation and legal structures, called base erosion and profit shifting tools, to identify and classify potential tax havens, this approach analyses the ownership chains of 98 million global companies, relative to the size of countries of their incorporation; the technique gives both a method of classification and a method of understanding the relative scale – but not absolute scale – of corporate tax havens/offshore financial centers. The results were formally published by the University of Amsterdam's CORPNET Group in July 2017, identify two major classifications: 24 global Sink OFCs: jurisdictions in which a disproportional amount of value disappears from the economic system. 5 global Conduit OFCs: jurisdictions through which a disproportional amount of value moves toward sink OFCs. Our findings debunk the myth of tax havens as exotic far–flung islands that are difficult, if not impossible, to regulate.
Many offshore financial centers are developed countries with strong regulatory environments. The CORPNET report has been praised, in March 2017, the EU has adopted its approach into some of their policy frameworks. Research by Gabriel Zucman published in June 2018, showed using Orbis database connections, underestimates Ireland, which the Zucman–Tørsløv–Wier 2018 list shows is the largest corporate Conduit OFC in the world. However, CORPNET's Conduits and Sinks, still reconcile with the world's top ten tax havens; the lack of an accepted definition for identifying corporate tax havens/offshore financial centres, results in different lists, including: Academic leaders in tax haven research, namely: James R. Hines Jr. Dhammika Dharmapala, Gabriel Zucman. There are common "classic" tax haven locations amongst these lists which some global regulators have either blacklisted, or have issued formal warnings/threat of sanctions against, unless transparency is increased. A key difference between the lists regards the major corporate tax havens, like Ireland the Netherlands and Luxembourg.
Major regulators like the EU and the OECD don't regard them as tax havens, point to their transparency and compliance with international regulations. Academics and other non–governmental organizations, point to their role in major corporate tax avoidance from base erosion and profit shifting schemes, like the double Irish, the single malt and the dutch sandwich, they regard them as major tax havens in their definitions of tax havens. This disconnect regarding corporate tax havens is discussed here. A report published in Nature in 2017 on the analysis of offshore financial centres "Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network" explains the disconnect between these two sets of contrasting views, provides a more scientific approach to classification; the report was the result of a multi–year investigation by political economists and computer scientists in the CORPNET research group at the University of Amsterdam. CORPNET is a European Research Council funded group at the University of Amsterdam investigating networks of corporate control.
The report used the Moody's Orbis corporate database to examine 98 million global companies and their 71 million ownership connections to identify 5 global Conduit OFCs. These are countries of high financial reputation, but who have "advanced" legal and tax structuring vehicles that help route funds to the 24 tax havens, without incurring tax in the Conduit OFC; the work builds on methods established in the "Offshore–Intensity Ratio", in particular the understanding activity relative to the scale of the domestic economy in a country. At its crudest level, the Offshore-Intensity Ratio explains why the countries at the top of global GDP per capita lists are tax haven types; the EU Parliament's Policy Department on Economic and Scientific Policies included the research in its findings for the EU Committee on Money laundering, tax avoidance and tax evasion, by tabulating against existing EU–IMF–FSI tax–haven lists, showed material gaps in EU understanding of conduits. CORPNET's top 5 Conduits and top 5 Sinks are 9 of the 10 largest tax havens identified in 2010 by one
Real estate is "property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water. Also: the business of real estate, it is a legal term used in jurisdictions whose legal system is derived from English common law, such as India, Wales, Northern Ireland, United States, Pakistan and New Zealand. Residential real estate may contain either a single family or multifamily structure, available for occupation or for non-business purposes. Residences can be classified by. Different types of housing tenure can be used for the same physical type. For example, connected residences might be owned by a single entity and leased out, or owned separately with an agreement covering the relationship between units and common areas and concerns. Major categoriesAttached / multi-unit dwellings Apartment or Flat – An individual unit in a multi-unit building; the boundaries of the apartment are defined by a perimeter of locked or lockable doors. Seen in multi-story apartment buildings.
Multi-family house – Often seen in multi-story detached buildings, where each floor is a separate apartment or unit. Terraced house – A number of single or multi-unit buildings in a continuous row with shared walls and no intervening space. Condominium – A building or complex, similar to apartments, owned by individuals. Common grounds and common areas within the complex are shared jointly. In North America, there are rowhouse style condominiums as well; the British equivalent is a block of flats. Cooperative – A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. Semi-detached dwellings Duplex – Two units with one shared wall. Detached dwellings Detached house or single-family detached house Portable dwellings Mobile homes or residential caravans – A full-time residence that can be movable on wheels. Houseboats – A floating home Tents – Usually temporary, with roof and walls consisting only of fabric-like material.
The size of an apartment or house can be described in square meters. In the United States, this includes the area of "living space", excluding the garage and other non-living spaces; the "square meters" figure of a house in Europe may report the total area of the walls enclosing the home, thus including any attached garage and non-living spaces, which makes it important to inquire what kind of surface area definition has been used. It can be described more by the number of rooms. A studio apartment has a single bedroom with no living room. A one-bedroom apartment has a dining room separate from the bedroom. Two bedroom, three bedroom, larger units are common. Other categoriesChawls Villas HavelisThe size of these is measured in Gaz, Marla and acre. See List of house types for a complete listing of housing types and layouts, real estate trends for shifts in the market, house or home for more general information, it is common practice for an intermediary to provide real estate owners with dedicated sales and marketing support in exchange for commission.
In North America, this intermediary is referred to as a real estate broker, or a real estate agent in everyday conversation, whilst in the United Kingdom, the intermediary would be referred to as an estate agent. In Australia the intermediary is referred to as a real estate agent or real estate representative or the agent
A commodity market is a market that trades in the primary economic sector rather than manufactured products. Cocoa and sugar. Hard commodities are mined, such as oil. Investors access about 50 major commodity markets worldwide with purely financial transactions outnumbering physical trades in which goods are delivered. Futures contracts are the oldest way of investing in commodities. Futures are secured by physical assets. Commodity markets can include physical trading and derivatives trading using spot prices, forwards and options on futures. Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management. A financial derivative is a financial instrument whose value is derived from a commodity termed an underlier. Derivatives are either over-the-counter. An increasing number of derivatives are traded via clearing houses some with Central Counterparty Clearing, which provide clearing and settlement services on a futures exchange, as well as off-exchange in the OTC market.
Derivatives such as futures contracts, Exchange-traded Commodities, forward contracts have become the primary trading instruments in commodity markets. Futures are traded on regulated commodities exchanges. Over-the-counter contracts are "privately negotiated bilateral contracts entered into between the contracting parties directly". Exchange-traded funds began to feature commodities in 2003. Gold ETFs are based on "electronic gold" that does not entail the ownership of physical bullion, with its added costs of insurance and storage in repositories such as the London bullion market. According to the World Gold Council, ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity. Commodity-based money and commodity markets in a crude early form are believed to have originated in Sumer between 4500 BC and 4000 BC. Sumerians first used clay tokens sealed in a clay vessel clay writing tablets to represent the amount—for example, the number of goats, to be delivered.
These promises of time and date of delivery resemble futures contract. Early civilizations variously used rare seashells, or other items as commodity money. Since that time traders have sought ways to standardize trade contracts. Gold and silver markets evolved in classical civilizations. At first the precious metals were valued for their beauty and intrinsic worth and were associated with royalty. In time, they were used for trading and were exchanged for other goods and commodities, or for payments of labor. Gold, measured out became money. Gold's scarcity, its unique density and the way it could be melted and measured made it a natural trading asset. Beginning in the late 10th century, commodity markets grew as a mechanism for allocating goods, labor and capital across Europe. Between the late 11th and the late 13th century, English urbanization, regional specialization and improved infrastructure, the increased use of coinage and the proliferation of markets and fairs were evidence of commercialization.
The spread of markets is illustrated by the 1466 installation of reliable scales in the villages of Sloten and Osdorp so villagers no longer had to travel to Haarlem or Amsterdam to weigh their locally produced cheese and butter. The Amsterdam Stock Exchange cited as the first stock exchange, originated as a market for the exchange of commodities. Early trading on the Amsterdam Stock Exchange involved the use of sophisticated contracts, including short sales, forward contracts, options. "Trading took place at the Amsterdam Bourse, an open aired venue, created as a commodity exchange in 1530 and rebuilt in 1608. Commodity exchanges themselves were a recent invention, existing in only a handful of cities."In 1864, in the United States, corn and pigs were traded using standard instruments on the Chicago Board of Trade, the world's oldest futures and options exchange. Other food commodities were added to the Commodity Exchange Act and traded through CBOT in the 1930s and 1940s, expanding the list from grains to include rice, mill feeds, eggs, Irish potatoes and soybeans.
Successful commodity markets require broad consensus on product variations to make each commodity acceptable for trading, such as the purity of gold in bullion. Classical civilizations built complex global markets trading gold or silver for spices, cloth and weapons, most of which had standards of quality and timeliness. Through the 19th century "the exchanges became effective spokesmen for, innovators of, improvements in transportation and financing, which paved the way to expanded interstate and international trade."Reputation and clearing became central concerns, states that could handle them most developed powerful financial centers. In 1934, the US Bureau of Labor Statistics began the computation of a daily Commodity price index that became available to the public in 1940. By 1952, the Bureau of Labor Statistics issued a Spot Market Price Index that measured the price movements of "22 sensitive basic commodities whose markets are presumed to be among the first to be influenced by changes in economic conditions.
As such, it serves as one early indication of impending changes in business activity." A commodity index fund is a fund whose assets are invested in financial instruments based on or linked to a commodity index. In just about every case the index is in fact a Commodity Futures Index; the first such index was the Commodity Research Bureau Index, which began in 1958. Its construction made; the first investable commodity futures
An audit is a systematic and independent examination of books, statutory records and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an "Audit Society"; the auditor perceives and recognises the propositions before them for examination, obtains evidence, evaluates the same and formulates an opinion on the basis of his judgement, communicated through their audit report. Any subject matter may be audited. Auditing is a safeguard measure since ancient times. Audits provide third party assurance to various stakeholders that the subject matter is free from material misstatement; the term is most applied to audits of the financial information relating to a legal person.
Other areas which are audited include: secretarial & compliance audit, internal controls, quality management, project management, water management, energy conservation. As a result of an audit, stakeholders may evaluate and improve the effectiveness of risk management and the governance process over the subject matter; the word audit is derived from a Latin word "audire" which means "to hear". During the medieval times when manual book-keeping was prevalent, auditors in Britain used to hear the accounts read out for them and checked that the organisation's personnel were not negligent or fraudulent. Moyer identified. Chatfield documented that early United States auditing was viewed as verification of bookkeeping detail. An information technology audit, or information systems audit, is an examination of the management controls within an Information technology infrastructure; the evaluation of obtained evidence determines if the information systems are safeguarding assets, maintaining data integrity, operating to achieve the organization's goals or objectives.
These reviews may be performed in conjunction with a financial statement audit, internal audit, or other form of attestation engagement. Due to strong incentives to misstate financial information, auditing has become a legal requirement for many entities who have the power to exploit financial information for personal gain. Traditionally, audits were associated with gaining information about financial systems and the financial records of a company or a business. Financial audits are performed to ascertain the validity and reliability of information, as well as to provide an assessment of a system's internal control; as a result of this, a third party can express an opinion of the person / organisation / system in question. The opinion given on financial statements will depend on the audit evidence obtained. Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements – a concept influenced by both quantitative and qualitative factors.
But the argument that auditing should go beyond just true and fair is gaining momentum. And the US Public Company Accounting Oversight Board has come out with a concept release on the same. Cost accounting is a process for verifying the cost of manufacturing or producing of any article, on the basis of accounts measuring the use of material, labor or other items of cost. In simple words, the term, cost audit means a systematic and accurate verification of the cost accounts and records, checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants, cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting."In most nations, an audit must adhere to accepted standards established by governing bodies. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements or other subjects on which the auditor expresses an opinion.
The audit must therefore be accurate, containing no additional misstatements or errors. In the US, audits of publicly traded companies are governed by rules laid down by the Public Company Accounting Oversight Board, established by Section 404 of the Sarbanes–Oxley Act of 2002; such an audit is called an integrated audit, where auditors, in addition to an opinion on the financial statements, must express an opinion on the effectiveness of a company's internal control over financial reporting, in accordance with PCAOB Auditing Standard No. 5. There are new types of integrated auditing becoming available that use unified compliance material. Due to the increasing number of regulations and need for operational transparency, organizations are adopting risk-based audits that can cover multiple regulations and standards from a single audit event; this is a new but necessary approach in some sectors to ensure that all the necessary governance requirements can be met without duplicating effort from both audit and audit hosting resources.
The purpose of an assessment is to calculate a value for it. Although the process of producing an assessment may involve an audit