The Directors and Management of the Limited Company - Research Paper Example

Enterprise Resource Planning & International Management Accounting The Enterprise Resource Planning system refers to the system formulated for the enterprise-wide resources. The Enterprise Resource Planning has wide scope; previously it was confine to the manufacturing environment. The domain of the Enterprise Resource Planning is based upon the fundamental operations of the organization; the relevance is irrespective of the nature of activity practiced by the organization. The Enterprise Resource Planning is practiced and conducted by 'business, non-profit organizations, nongovernmental organizations, governments, and other large entities' (Thomas, 2002). The software package is required for the timely execution of the Enterprise Resource Planning system, which is able to provide functionality in a single package, from technical perspective the software package shall incorporate feature relevant to the payroll and accounting functions. The usage of the external interface is not relevant for the implementation of the Enterprise Resource Planning system, which has provided improved characteristics based upon standardization and lower maintenance (Thomas, 2002). The disadvantages of the Material Requirements Planning system has been its coherency with the data, therefore the flaws present in the inventory data, the bill of material, or master production schedule will be transparent in the output, to avoid such failure and malpractice the vendors adapted to Material Requirements Planning demand minimum ninety six percent data integrity. The Material Requirements Planning system requires the user to identify the period it will take for the establishment of the factory, from the ordered component parts. The Material Requirements Planning system further assume the period of establishment as lead time, which will share similar quantitative significance for every item, irrespective of the quantity produced, and other simultaneous operations conducted within the factory (Thomas, 2002). In comparison, the Enterprise Resource Planning system has been able to organize the inventory, and successful in the identification of the requirements of the individual factory. The system further ensures that the medium of communication exist between the units of the factory so that the redistribution off the components is achievable, which correspondingly 'serve the overall enterprise' (Thomas, 2002). The Material Requirements Planning system require that the corresponding system are intact, effective and efficient, the system is expected to result in failure if it handles the variety reduction and engineering in a manner through which the availability of the product can be ensured. The push system is considered to be the system which is based on factors of demands i.e. Customer Orders within the present and future scope. As per the system, the demand factor is taken into account on the basis of which the material and capacity planning is conducted. The Material Requirements Planning is based upon similar methodology, in which parallel systems i.e. JIT, Kanban are exercised. The Pull system is based upon the philosophy of Made to Order situation, where the flow of the material is in reverse direction relative to the flow of the documents and other formalities. The real demand i.e. the received orders are taken into account in this system, whereas the Material Requirements Planning system is based upon the concept of expected orders. The Material Requirements Planning system continues however the design might get further modifications, whereas in Enterprise Resource Planning system require a system based on coding parts which is expected to determine the tracking and requirement analysis. The products are booked into and out of the yard in a more regular manner, and the Material Requirement Planning system has failed to catch-up with the pace of such modifications. The implementation of the Enterprise Resource Planning system is expected to result in the best practices, for this purpose the organization has to select between 'customizing the software or modifying their business processes' as per the standards of the best practices. The extent of the implementation of the Enterprise Resource Planning system, and the subsequent exercise of the best practices is applicable on the large organizations, in particular those organizations where the IFRS, Sarbanes-Oxley or Basel II have been adopted. The adoption is for the reason being that features of the Enterprise Resource Planning system are coherent with the legislative or commodity content. The Enterprise Resource Planning system is however considered to be complex, and is responsible for the imposition of the major changes on the work practices of thee employees. The Enterprise Resource Planning system has been successful in the achievement of the cost-effective project (Doug, 2006). The Material Requirement Planning system has been incorporated in different by different manufacturers in particular the medium and large scale industries, with the passage of time, soon after the evolution of the efficient and effective procurement and managerial techniques, the advent of Enterprise Resource Planning took place. The weakest link of the Material Requirement Planning system has been its relevance with the push system; however the latest version of the Material Requirement Planning system has incorporated the accounting and relevant business processes aimed at the improvement of the system. Previously the system specialized in bill of materials and routing, the purchase orders needed, and the shop orders to build products. Some of the companies have expressed their reluctance towards Material Requirement Planning system with reference to the production planning, the production schedule is performed through report contents of the Material Requirement Planning system, and however the system can be regarded as suitable with manufacturing activities (Doug, 2006). Bond Market & International Management Accounting The bond market risk are associated with the occurrences when the agents allocate the funds towards the bond market without any evaluation and analysis of the purchasing and selling price of the bond afterwards. Such concerns are imminent because asset markets are considered to be incomplete and segmented. The risk within the bond market based on the supply of the bonds is experienced when the agents and dealers are willing to invest their resources in the trade market. The buyers are the expected beneficiaries when the bond-supply shock is positive, the positive effect is based on the lower prices of the bond as compare to the expected prices, and when the expected rate of return has been crossed. Therefore within the bond market business, the dealers are expected to make good fortune, and 'any real consequences are distributional because the shock has favored some agents at the expense of others'. The expansion and growth of the bond market is expected to determine the time period associated with the downgrade within the bond market the time is considered to be major dimension, and the expansion of the bond market is based on the 'relationship between the indicators and the downgrade'. In the case of banks, the relation between the market indicators which include rating changes, abnormal stock returns, and the proportion of equity owned by institutional investors and bank insiders and supervisory information have failed to explain the supervisory assessments and bond ratings, and for this purpose the equity indicators have been ignored. It was reported that the 'bond spreads with particularly poor supervisory assessments reducing spreads and vice versa', therefore market is based on the market discipline i.e. supervisory assessments. It was investigated that market prices incorporate additional information as compare with the accounting variables, and therefore influence the ratings of the respective bonds, however there is no variance in the future prospects and worth of the bond, it is the debt market indicators which have predictive power to influence the performance and operations of the bond market (John, 2004). In normal practices are dealer who offer successful bid 'in the course of their direct interactions with the New York Fed', as per the terms and conditions of the Treasury department is entitled to be announced as successful bidder, and the bonds are issued within the period of three days. It is expected that in bond market, some depository institutions, brokers and agents are expected to pay towards their successful bid on the date of issuance of the bonds, however there is an allowance, and some of the dealers and agents can pay at the time of 'submission and are either refunded excess balances or called upon to remit additional funds based upon the final auction price and security allocations'. The supply risk associated with the bond market is associated with residual supply risk. In cases where there is heavy demand of the Treasury Bills in the bond market, the demand in many of the cases is expected to surge due to the interests of the 'foreign financial institutions and international monetary authorities regarding whether to roll over their substantial and various holdings of bonds, such decisions are expected to influence the residual supply which is provided to the 'remaining traders because they count against the issue quantity stated in the auction announcement' (Boyan, 2001). The dealings by the foreign financial institutions are based on their status of noncompetitive bidders. It has been observed that within the bond market the dealers and agents have the allowance for offering noncompetitive bid, however the 'the quantities of such bids are restricted and thus more predictable'. Therefore within the bond market it can be expected that the supply risk might originate at the auction stage, and such situation can arise in contradiction with the announcement of the face values of the Treasury Bills by Treasury, which are expected to be issued shortly. It is speculated that the within the bond market the final auction price of the bond is less predictable and difficult to determine because public is unfamiliar about the rollover plans, and 'the randomness in these plans, from the perspective of the dealer' makes it difficult for the public to make serious efforts. Money Laundering: Injunctions of International Management Accounting The ethics shall be necessarily applied in the field of accounting, because it increases the opportunities aimed at detection of frauds. According to several professionals ethics has been regarded as the primary tool for the fraud detection through replication and peer review. The profession of accounting is extremely delicate, and slight manipulation of records can be responsible for the magnanimous nature of fraud, and irreparable loss for the individual or company. In the financial sciences, 'the debate over ethics has focused on the philosophical under-pinning of the world view of the accountants as being as much of a problem as the actual behaviors of the accountants. The key areas for accounting are divided into the gathering financial data and reporting and interpretation of the data. Before launching into a philosophical discourse on the underpinnings of the world view of accountants, replete with the discussion of epistemological concerns, hermeneutics, ontology, paradigms, and the political environment, it has been suggested that it is important to open p the dialogue and have meaningful exchanges. The professionals have made appeal for the meaningful knowledge creation: "financial development has evolved from the considerably more situational and inter-subjectively responsive skill of coming to know how to engage in exchange, to know when, why, how much to give in terms of the others' claims and needs and one's own, when all involved are deserving and all have a future together, invariably interacting and mutually needful and committed to each other which requires more inventiveness, fluidity, and flexibility are required in economic dialogues and resolutions' (Edward, 2006). The money-laundering phenomenon has motivated many accountants towards unethical and immoral behavior, where the focus of the accountant is to fetch money irrespective of fact that the secured money has been obtained through legal channels, with appropriate documentation required for acceptance. The ethics play crucial and significant role in the development of the local and international economy, however the practices of unethical norms have greatly 'diminished the productivity of the U.S. and worldwide economies', in particular the money laundering issues which 'has become a major concern of regulatory and law enforcement authorities charged with ensuring the integrity of business practices and the business environment'. It is agreeable that 'accountants are vulnerable to series of ethical challenges', and it is the responsibility of the accountants to respond to such ethical dilemma without any regret and offense. It is therefore important for the accountants to 'evolve such strategies that accounting professionals can use to avoid becoming entangled in situations that pose ethical and moral hazards for those professionals, based upon most basic ethical tenets or principles of the accounting profession' (Ronald, 2003). The accountants are urged to comply by such laws which shall take into consideration the rules of conflicts of interests. The authorities including controlling shareholder, effective controller, director, or senior manager of a company in case found guilty of taking advantage of relationship, that affects the company's performance and growth, shall be liable to punishment and inquiry. In many of the cases the shareholders feared about the initiatives and plans of the directors, the law shall bar the directors and accountants from their active participation in the issues, which are of any interest or gain for these directors. Such strategies can favor and support of the withdrawal of the unethical implications of the profession. The international trends in the corporate laws shall be included in the company law. Such regulation is the manifestation of the international practices with reference to the corporate law applicable on accountants. The scope and application of these formalities is considered to be limited. This requires the efforts and involvement of the court in deliver and guide the accountants through submission of proposals and substantial concepts. In the entire exercise the ethical practices are fundamental (Leonard, 2000). The ethics has resolved the misconceptions and misinterpretation of the shares' status. The contribution of the shares towards registered capital was previously unclear; the approved law has partially resolved certain ambiguities; however it is the ethical responsibility of the accountants to ensure its compliance. However ethics has failed to deliver the structuring reforms required by the company's share capital to be later categorized into common and preferred shares. The ethical practices, as per the interpretation of the law has allowed the establishment of the company owned by single shareholder, such regulations can be exploited in the best interest of the accountant, but the personal ethics has barred the accountant from the execution. The establishment of domestic limited liability company has been supported by the law; the established company has been allowed to be operated by the single share holder. Thus ethical laws have provided the local share holder with ample opportunity to broaden the horizon of his planning and investment, and have opened the scope of activities, and further making the accountant more responsible towards the execution of their tasks with ethical and moral justification (Edward, 2006). Such regulations have provided additional opportunity to the customers and the shareholders to authorize the limit of any investment by the company in other companies, thus restricting the domain of the accountants. The regulation shall be strict and forcible such that the influence of these regulations shall infuse the ethical and moral values in the accountancy practices. The ethical practices have barred the accountants from the approval of invested entity's debts through the undertaking of joint liability. The ethics has introduced required provisions with reference to the enhancement of security. According to the law, the accountant has the right to protect the liabilities of the shareholders / customers, and in other case, the shareholders / customers have the right to secure the liabilities of the company, after getting approval of the board of directors of the company, or through the approval of the non-interested shareholders at general meeting. The ethics has protected the rights of the shareholders / customers, the party has been provided with the provisions, in case of their opposition towards any agreement of acquisition and merger. In case if the shareholders contradict the disposal of major asset, the minority shareholder has the right to pressurize the company for the repurchase of their shares. Such regulations have catered for the abuse of authorities inherited by the accountants, making these professionals accountable towards the law and society (Ronald, 2003). The ethical interpretation of the law has barred the directors and management of the limited company from the violation and contradiction of their official duties and responsibilities towards the company. According to the law, in case of any mismanagement or financial manipulation, it is the controlling shareholder, director or senior manager, who is personally responsible for their failure to handle conflict of interest situation. The approach has been responsible for the lifting of corporate veil. Such regulations have encouraged the accountability process, and has recommended strong action against the culprits, if found guilty of abusing the profits and benefits of limited liability (Leonard, 2000). References 1. Leonard J. Brooks. Business and Professional Ethics for Accountants. South-Western College Publishing. 2000. pp. 154. 2. Edward Ketz J. Accounting Ethics: Critical Perspectives on Business and Management. Cornell University Press. 2006. pp. 87. 3. Ronald F. Duska, Brenda Shay Duska. Accounting Ethics. Blackwell Publishing. 2003. pp. 76. 4. Doug Bartholomew. Material Requirements Planning: 9 Lives and Counting. Industry Week Publication. May, 2006. http://www.industryweek.com/ReadArticle.aspxArticleID=11783. 5. Thomas F. Wallace, Michael H. Kremzar. ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning. John Wiley and Sons Publication. 2002. 6. Reint Gropp, Jukka Vesala, Giuseppe Vulpes. Equity and Bond Market Signals as Leading Indicators of Bank Fragility. Journal of Money, Credit & Banking, Vol. 38. 2006 7. Boyan Jovanovic, Peter L. Rousseau. Liquidity effects in the bond market. Economic Perspectives, Vol. 25. 2001. 8. Richard Berg, Nicholas Betzold. Handicapping the bond market. ABA Banking Journal, Vol. 88. 1996. 9. John Krainer, Jose A. Lopez. Incorporating Equity Market Information into Supervisory Monitoring Models. Journal of Money, Credit & Banking, Vol. 36, 2004. 10. John Krainer, Jose A. Lopez. Incorporating Equity Market Information into Supervisory Monitoring Models. Journal of Money, Credit & Banking, Vol. 36, 2004. 11. Gibb. Small and Medium Enterprise Development; Borrowing from Elsewhere A Research and Development Agenda. Journal of Small Business and Enterprise Development. 2000. Pp. 189-209. Read More