...Features of a publicly traded company A publicly traded company, in essence, is a company that that trades its stocks in the public market. Examples of the public market are the stock exchange and over the counter market. A publicly traded company is also known as a public company. In a public company, the shares and stocks are not limited to a particular group of people; the stocks can be bought by anyone from the public. A public company is however required to have a minimum of two directors and an unlimited number of shareholders; in addition, this company should have a minimum share capital. Such companies can easily raise more capital when compared to private companies since they can legally offer liquidity to the shareholders. These companies, nevertheless, have to abide to strict Securities Exchange Commission regulations and have to give clear and accurate data to the investors. Publicly traded companies also have to provide all information to the public without bias be issuing their prospectus the number of times the law requires them to. A public company is also its own legal entity meaning that the company and the owners are legally two separate things. Therefore, the company’s existence does not depend on the owners or directors. In these types of companies, the people with the highest number of shares and stocks are the ones who have the most say in deciding the company’s policies. These policies are generated at least once a year in their annual general meeting...
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...Auditing a Publicly Traded Company ACC/541 June 8, 2015 MEMO TO: Manager FROM: DATE: SUBJECT: Auditing a Publicly Traded Company ________________________________________________________________________ An objective of any publicly traded corporation is to make a return. There are many influences, which can be contributed in completing this goal. The most significant factor is compliance with the accounting governing bodies, such as GAAP (Generally Accepted Accounting Principles). As an accounting firm, it is vital to examine your financial statements on a constant basis. You will need to look for the accounting handling of share-based payment and accounting consolidation theory, as it pertains to special purpose entities and consolidations (Schroeder, Clark, & Cathey, 2011). Share-Based Payments are another way for a publicly held company to offer compensation to his or her employees or other parties, without using the company’s assets. These compensation awards are usually a set number of stocks within the organization. There was already a system in place to account for these transactions, but a revision to the Statement No. 123 was made in 2004. This statement was geared toward Share-Based Payments and was released December 16, 2004, with the original Statement being published in 1995. This revision was created to provide more accurate financial information to users of publicly traded entities, such as our client. Costs incurred by share-based transactions...
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...Identifying and Describing the Ethical Issue The ethical issue that Mr. Normand faced was producing fraudulent financial statements. Mr. Normand had to decide whether to trust his Chief Financial Officer, Scott Sullivan, and add a journal entry that would misrepresent the capital WorldCom owned. By misrepresenting the capital, WorldCom would be overstating their profit and lying to their shareholders. Mr. Normand had to decide whether he was going to do what was being asked of him or do what was right and not commit the fraud. Mr. Normand testified that in the meeting held between him, other individuals in the corporate reporting department, David Myers, and Scott Sullivan, Mr. Sullivan continuously stated that he did not believe what he was asking them to do was wrong and if it were illegal he would take the blame for it. At that point, Mr. Normand should have recognized that what Mr. Sullivan was asking for was questionable. The purpose of financial statements is to provide internal users and external users with relevant and reliable information. The lack of reliable information that was provided during the time period that they were altering journal entries, gave users unreliable information that prevented them from making informed decisions. Explaining Alternative Courses of Action and Related Trade-Offs In the case of Mr. Normand, I believe that he acted improperly. He seemed uncertain about the legality of what he did but he suspected that it was wrong. Mr...
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...Introduction As the LJB Company moves forward with their vision of becoming a public company they must look at the different changes that they need to undertake. Not everything about the way that they conduct themselves needs to change. There are some very good attributes about the company that they should be very proud of. Along with the good there are also some things that do need to change. All of the aspects of the LJB Company, whether good or bad, will be pointed out and brought to the forefront. Do Not Change the Good Every company has their share of things that work for them. LJB Company is no exception to this. One of the greatest aspects that the company has going for them is that they are a lean organization and have a great deal of faith in their long-term employees. This shows that not only do people like the company that they are working for, but that the company also respects the employees. The owner and accountant also show that they have a lot of trust in the employees with the current petty cash scenario. The accountant is also taking the right steps toward maintaining some internal controls by using pre-numbered invoices. The use of the pre-numbered invoices makes it easier to record the invoices and also maintains some order to the system that he is trying to establish. He has expressed interest in purchasing an indelible ink machine to print the checks. The use of indelible ink to print the company’s checks would be a great step towards...
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...Case Study 2 Solution Date:-08/10/2014 LJB Company :- Internal control No | Particular | Page no | 1 | Introduction | 1 | 2 | Topic 1 Explanation | 1-2 | | Internal control requirement | | 3 | Topic 2 Explanation | 2-3 | | Internal control requirement | | 4 | Topic 3 Explanation | 3-4 | | Internal control requirement | | 5 | Summary of recommendation | 5 | 6 | conclusion | 6 | case study 2 solution Dear president of LJB Company, * If the LJB Company should decide to become a publicly traded company, a few internal controls should be implemented to comply with the Sarbanes-Oxley Act (SOX). Management will need to provide periodic quarterly reports to evaluate the effectiveness and reliability of LJB’s internal controls over financial reporting procedures. Management should certify the accuracy and fairness of presentation of their financial statements. Independent auditor(s) outside of LJB will need to attest to management’s assessment of said internal controls. Additionally, non-audit services between these two parties (LJB and said independent auditor) are prohibited. * There are a few internal control measures that LJB already has in effect and are better for it: the use of pre-numbered invoices by the accountant and your (the President’s) involvement in the approval and hiring process of new employees. I also recommend the purchase of the indelible ink machine as per the accountant’s request...
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...LJB Company Going Public To: The President of LJB Table of Contents * Introduction * Sarbanes-Oxley requirements with publicly traded companies * Effective procedures currently being used * Conflicts and recommendations * Conclusion * Bibliography To: President of LJB Company After reviewing the information provided on LJB Company I have concluded that there are internal controls that must be in place according to Sarbanes-Oxley before taking the company public. The company is on track with some of the procedures that were listed; however, there are also many procedures that need to be put into place to eliminate conflicts. LJB Company has much to work on with internal control before becoming a successful public company. After so many scandals came to light in the early 2000s many new regulations were created to help protect investors. The Sarbanes-Oxley Act of 2002 was created to prevent and detect fraud within public companies. SOX requires that public companies maintain an adequate system of internal controls in the company. “Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.” (Kimmel 337) LJB Company would need to set in place internal controls that would be acceptable per SOX prior to taking the company public. LJB Company is taking a few...
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...$360 billion USD for accounting and $500 billion USD for law. The top publicly traded firms have been experiencing positive growth, both organically and by merger & acquisitions. The following table lists the top 10 global engineering firms based on consulting and design (C&D) revenue: Table 1: 2010 revenue of top 10 firms providing consulting engineering (C&D) and design Rank | Firm | C&D Revenue US$m | Total Revenue US$m | C&D Revenue as % of Total | 1 | AECOM | 5,920 | 6,546 | 90.4% | 2 | URS | 5,039 | 9,177 | 54.9% | 3 | Jacobs | 4,748 | 9,916 | 47.9% | 4 | WorleyParsons | 3,651 | 5,048 | 72.3% | 5 | CH2M HILL | 3,603 | 6,300 | 57.2% | 6 | AMEC | 3,399 | 4,565 | 74.5% | 7 | Fluor | 3,128 | 20,849 | 15.0% | 8 | Fugro | 3,001 | 3,022 | 99.3% | 9 | SNC-Lavalin | 2,849 | 6,001 | 47.5% | 10 | ARCADIS | 2,653 | 2,655 | 99.9% | Source: Beaton Capital Where are consulting engineers heading? May 21, 2012 During the last ten years, there has been a strong trend for large American and International firms to acquire Canadian engineering consulting firms at a high rate. According to a KPMG spokesman, 40 merger and acquisitions (M&A) deals were expected to be concluded in the building/construction/engineering sector, worth an estimated $1.55 billion in 2013. The drive for acquiring engineering and architectural professional service firms by large publicly traded American and International firms is due to: * The stable healthy Canadian...
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...report to Acme Company management on the accounting and reporting standards of the Financial Accounting Standards Board (FASB) and the impact that the FASB will have on Acme Company. This research covers the history and goals of the FASB, the requirements imposed by the FASB on public corporations, and the impact that the FASB has on the investment community and their satisfaction with the FASB standards. The FASB was formed in the early 1970s, when it became evident that there was a real need for a clear, concise, accurate, and uniform financial reporting system. The FASB standards are known as GAAP, or Generally Accepted Accounting Principles. Adherence to these principles by publicly traded companies is required by and enforced by the Securities and Exchange Commission (SEC). GAAP is based on consistency, reliability, relevance, and comparability which help to ensure that the reports provided to all investors and creditors contain credible and accurate information. The investment community relies heavily upon the SEC and the FASB to continually monitor financial reporting systems. As times change, reporting methods need to be updated accordingly, and one of the major roles of the FASB is to stay on top of these changes and implement these necessary updates in an expeditious manner. This diligent oversight helps to keep investor confidence high, allowing the investors to focus on making informed decisions, which allows more funding opportunities for public companies....
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...Oxley Act of 2002 Daniel Alvalle BUS 670 Legal Environment Instructor: Peter McCann 7/29/2013 If you were an investor would you want your money protected? Would you be skeptical about investing in companies since the securities fraud scandals that have happened recently? The answer is most likely, “yes”, to a certain degree. With the news about unethical business practices and companies not following regulatory guidelines, it is difficult to ignore the risk that is involved with trusting someone else with your investment. But there is an answer to help protect companies and shareholder, and it comes in the form of a regulatory organization that was put in place in 2002. That was put in place as a direct response to the corporate scandals of Enron and other scandals that followed, and was also put in place to help restore confidence in the financial market. SOX-Applies only to US companies on the US exchange, and is an Act put in place in 2002 to mandate all publicly traded corporations to maintain adequate internal control. SOX basically make sure that all US publicly traded corporation do what is in the best interest to protect the investment of stockholders. SOX-Sarbanes-Oxley Act of 2002 is an ACT that was put in place where all publicly traded U.S. corporations are required to follow certain guidelines and requirements. Basically, these systems were put in place because of securities fraud issues that came to light in the early 2000’s, and are put in place...
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...talked about ways that you can prevent fraud. The article basically looks at actions businesses can take to avoid accidently discouraging fraud reporting and instead promote whistleblowing. Using a third party admin. To oversee hotlines is considered the best practice that companies use to encourage whistleblowing. In 2009 a study based on interviews of more than 80 managers and published in Auditing: A Journal of practice and Theory, found that employees are more hesitant to report possible fraud to outsiders as opposed to using internal company reporting programs and resources, even if those internal programs don’t follow best practices similar to the external hotlines. Companies want to retain the use of an external reporting system, such as a hotline administered by a third party, rather than bringing it in house. It would be more cost effective and may offer whistleblowing if the third party maintained the hotline. A hotline should be something as a part of the company and not looked at something that’s separated. The name for your hotline should be something that your employees should feel comfortable using at any time and not just for emergencies. SOX requires audit committees of publicly traded companies to provide a whistleblowing option so that employees can anonymously report fraud. It’s used to make employees more comfortable and willing to do it. They wanted the employees to be able to say how they really felt and not worry about their word falling back on him. Internal...
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...whistleblower and they work for a vast number of publicly traded companies. A whistleblower is one who reveals wrong-doing within an organization to the public or to those in positions of authority or one who discloses information about misconduct in their workplace and they feel violates the law or endangers the welfare of others, or one who speaks out, typically to expose corruption or dangers to the public environment. Some whistleblowers are altruistically motivated utilitarian if they feel their company is doing something wrong to hurt the environment they feel they must communicate that with executive members. Another characteristic of a whistleblower is they are uninterested in altering their behavior. They see things in their own light and want the corporation to feel as they do and if the company does not the whistleblower are willing to tell. Whistleblowers also allow their own attitudes and beliefs to guide them. In the case of LAWSON ET AL. V. FMR LLC ET AL, FMR LLC was charged with fraud. They were giving their shareholders bad numbers. The employees felt an obligation to bring the wrong doing to the Board of Directors which pushed them aside telling them they were incorrect. Plaintiffs below, petitioners here, are former employees of respondents (collectively FMR); private companies that contract to advise ormanage mutual funds. As is common in the industry, the mutual funds served by FMR are public companies with no employees (Lawson. 2014). Both plaintiffs...
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...a long day, but I felt good that all the products and services I'd used so far had come from companies where the employees were substantial or principal owners. Why Employee Ownership Is Popular There are a number of reasons for the popularity of employee stock plans. ESOPs provide attractive tax benefits. They allow companies to borrow money and repay it in pretax dollars. They provide a way for owners of closely held businesses to sell all or part of their interests and defer taxation on the gain. And they make it possible for companies to provide an employee benefit simply by contributing tax-deductible shares of their own stock, among other benefits. Broadly granted stock options do not provide special tax benefits but give growing companies a way to compensate employees with equity rather than more cash. Putting company stock in 401(k) plans provides a less expensive way for companies to match employee deferrals than matching in cash. Employee stock purchase plans (often called Section 423 plans, although not all such plans fall under this part of the tax code from which the name derives) allow employees to put aside part of their paychecks to buy stock, usually at a significant discount. Just as important, however, are potential productivity gains. Studies consistently show that when broad employee ownership is combined with a highly participative management style, companies perform much better than they otherwise...
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...industry analysis？ Be aided * Industry consolidation. Business environment becomes less favorable. It’s good for LNT to turn around based on the big scope and the existed structure. * Integrate internet. It’s good for LNT to build the online store * Globalization of the fashion. It’s good for LNT because of their differentiated products. Be hindered: * Slow increasing rate with intensely competition. The maturity of the U.S. market. * Industry consolidation makes the large companies stronger, but LNT fall behind some big companies like BBBY. So it’s hard to catch up. * Financial crisis. * Government policies affect the industry performance. e.g. interest rate adjustment. High interest rate, low purchase. 3. How had Bed Bath & Beyond come to surpass Linens’n Thins over time despite its similar initial founding in the early 1970s (in terms of strategy and execution)? * BBBY expanded inventory, no debt and promoted only from within the company, while relying on store managers for inventory control. However, LNT just focus on increase market share. They didn’t care about the efficiency. * BBBY’s merchandising innovation was better than LNT’s. and more flexibility than LNT....
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...Public Company Survive? Public companies are going to always available in one form or another. The greatest advantage of becoming a publicly traded company is it provides the company with needed cash flow that will increase operations without having to take out loans or sell bonds, essentially meaning they don’t have to pay the money back. It also allows a company to provide stock options to employees, incentivizing them to work hard for the company. Hard working employees equates to a more profitable company, a more profitable company equates to a better stock price. Also, increased prestige and visibility comes with becoming a public traded company. Public traded companies aren’t only good for the company itself, but also they are good for the general public. The general public can benefit from investing in these public traded companies. And investing with multiple public traded companies allows the general public to diversify their investment portfolios protecting their investments. Just to show how lucrative public trading is, eight of the ten richest people in the United States can attribute their wealth to starting of trading public companies (Forbes, 2014). The only two are not attributed to a public traded company are David and Charles Koch. The Chief Executive Officer and Executive Vice President of Koch Industries, America's second largest private company (Forbes, 2014). CargillCargill, Koch Industries, and Bechtel, three of the largest private companies in the...
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...Benefits of PTP’s IV. Conclusion Publicly Traded Partnerships (PTPs) and the passive loss limitations According to the IRS Publication 925, there are two sets of rules that may limit the amount of deductive loss from a trade, business, rental, or other income producing activity. These rules apply to individuals, estates, trusts, personal service corporations and closely help corporations. When it comes to PTP the rules must be applied separate to income or loss from a passive activity. In this essay I will tell what a PTP is and I will also give examples of some PTP’s. I will also tell what benefits these PTP’s claims will result from their investments. A publicly traded partnership (PTP) is a partnership between limited partners who provide the capital for the company and the general partners who manage the company. Limited partnership shares in the company are publicly sold by the partnership, offering equal equity or dividends of a public traded company. The publicly traded partnership must withhold tax on any actual distributions of money or property to foreign partners Real estate, energy (including alternative energy fuels), transportation and commodities are some of the PTP’s that the IRS restricts to limited partners. This matters because PTP’s combine the tax advantages of passing along tax liabilities to partners when distributions are made and the liquidity of a publicly traded company. For tax purposes, the distributions of income/dividends...
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