...4 Information Systems at Travelers Insurance Executive Summary Management information systems allow a company to effectively manage their operations through the use of technology, people, and information.10 Travelers Insurance utilizes this system to manage its operations throughout the world. It has allowed the company to offer its customers many policy options and services. Without Travelers management information system, consumers would have been unable to enjoy the services offered by this expansive company. Through the use of management information systems, Travelers Insurance is able to provide its customers with the products and services they desire and their employees with the information they need. Introduction to Travelers Travelers Insurance is one of the largest holders of insurance policies in the country. As a Fortune 500 company, it is a business that is substantial to the U.S. economy. With an excellent information system, the company is able to maintain a large presence. What is Travelers Insurance? Travelers Insurance is one of the largest insurance companies in the nation. In 1864, the company developed in Hartford, Connecticut by James G. Batterson. Initially, the company sold life and accident insurance, but it has since broadened its products to include property, life, health, and several business policies among the other numerous products offered.1 The mission statement is stated from Company Statements and Slogans. “Travelers offers a wide...
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...these countries, which were part of what has been termed "the Asian miracle" and were able to eradicate so much poverty, are now undergoing severe economic contractions, with such harmful effects on their populations. A breakdown of information in financial markets is the key factor that has driven this crisis. After laying out an asymmetric information view of the Asian financial crisis, this paper goes on to use this framework to explore lessons from this crisis. 1. An Asymmetric Information View of the Asian Crisis The financial system plays a critical role in the economy because, when it operates properly, it channels funds from those who have saved surplus funds to those who need these funds to engage in productive investment opportunities. The major barrier to the financial system performing this job properly is asymmetric information, the fact that one party to a financial contract does not have the same information as the other party, which results in moral hazard and adverse selection problems. An asymmetric information view of financial crises, which I have described in more detail elsewhere in Mishkin (1996a, 1997), defines a financial crisis to be a nonlinear disruption to financial markets 1 in which the asymmetric information problems of adverse selection and moral hazard become much worse, so that financial markets are no longer able to efficiently channel funds to those who have the most productive investment...
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...these countries, which were part of what has been termed "the Asian miracle" and were able to eradicate so much poverty, are now undergoing severe economic contractions, with such harmful effects on their populations. A breakdown of information in financial markets is the key factor that has driven this crisis. After laying out an asymmetric information view of the Asian financial crisis, this paper goes on to use this framework to explore lessons from this crisis. 1. An Asymmetric Information View of the Asian Crisis The financial system plays a critical role in the economy because, when it operates properly, it channels funds from those who have saved surplus funds to those who need these funds to engage in productive investment opportunities. The major barrier to the financial system performing this job properly is asymmetric information, the fact that one party to a financial contract does not have the same information as the other party, which results in moral hazard and adverse selection problems. An asymmetric information view of financial crises, which I have described in more detail elsewhere in Mishkin (1996a, 1997), defines a financial crisis to be a nonlinear disruption to financial markets 1 in which the asymmetric information problems of adverse selection and moral hazard become much worse, so that financial markets are no longer able to efficiently channel funds to those who have the most productive investment...
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...Lecture 4: Credit risk The nature of banking is strongly related to the management and control of risks. This lecture gives an overview of the main risks to which banks are subject, namely interest rate risk/market risk, liquidity risk and credit risk, as well as broader systemic risks. We then examine economic issues relating to the core of banks’ traditional business, namely onbalance-sheet lending. We focus in particular on the various ways in which banks seek to control the risks arising from their loan books. This discussion includes a brief assessment of issue of credit rationing which is an issue of both microeconomic and macroeconomic significance. Bank risks – an overview What is risk? – danger that a certain unpredictable contingency can occur, which generates randomness in cashflow Risk and uncertainty – risks may be described using probability analysis (business cycle, company failures), while events subject to uncertainty cannot (financial crises, wars etc.) Risk and variability – variability alone may not entail risk as long as known for sure ex ante The nature of qualitative asset transformation- gives rise to risks because of mismatched balance sheet. Main forms of risk Credit risk – risk that party to contract fails to fully discharge terms of contract Interest rate risk – risk deriving from variation of market prices owing to interest rate change Market risk – more general term for risk of market price shifts Liquidity risk – risk asset owner unable to...
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...of global financial markets, and of the investors who entrust their financial present and future to those markets, depends directly on the information financial statements and disclosures provide. The following framework is intended to enhance effectiveness in financial reporting. Guiding Principles • The primary financial statements must provide the information needed by equity investors, creditors, and other suppliers of risk capital. • In financial reporting, standard-setting as well as statement preparation, the entity must be viewed from the perspective of an investor in the common equity issued by the company. • Fair value information is the most relevant information for financial decision making. • Recognition and disclosure must be determined by the relevance of the information to investment decision making and not based upon measurement reliability alone. • All transactions and events must be recognized as they occur in the financial statements. • Investors’ information requirements must determine the materiality threshold. • Financial reporting must be neutral. • All changes in net assets, including changes in fair values, must be recorded in a single financial statement, the Statement of Changes in Net Assets Available to Common Shareowners. • The cash flow statement provides information essential to the analysis of a company and should be prepared using the direct method only. • Changes affecting each of the financial statements...
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...CHEAT SHEET PMP Exam Cheat Sheet The purpose of this is to help you memorize information to dump onto scrap paper prior to starting exam. It is important that information used on this sheet is information that will be helpful to you on the exam. Every time you sit down to study, start by writing out your “cheat sheet” to see how much you remember. You will remember more each time. This document is an example of what I used for the test and includes step by step instructions to create each piece. You should come up with whatever tricks work for you. I make no guarantees that this will work for you or that there are no errors in here. All I can say is that it worked for me and I hope this helps you find something to work for you. Most of the benefit is in learning to create the spreadsheet not in actually using it. However, it’s a nice feeling to start the test by documenting things you know instead of starting by answering a question you don’t! Good luck and happy studying. By PMPExamPrep 1 CHEAT SHEET Part A: Process group and Knowledge Area Matrix from P 38 PMBOK 2000 Edition Process Groups Step 1: Fill in negative C0 Knowledge space with X (cells with I P E C^ Areas no processes). • Starting at the top X PIM X of Closing – go down 6 and over 1 S X X • Skip space in X T X X Closing and do “Down and up” C X X X • From top of Q X X Executing drop one and do 3 in a HR X X X row. • In inititating, block Comm X out all except Risk X X X Scope Proc X X Step 2: You need a...
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...5 The Balance Sheet and Financial Disclosures CHAPTER LEARNING OBJECTIVES OVERVIEW LO1 LO2 LO3 LO4 LO5 Chapter 1 stressed the importance of the financial statements in helping investors and creditors predict future cash flows. The balance sheet, along with accompanying disclosures, proAfter studying this chapter, vides relevant information useful not only in helping you should be able to: investors and creditors predict future cash flows Describe the purpose of the balance but also in the related assessments of liquidity sheet and understand its usefulness and limitations. and long-term solvency. Distinguish between current and noncurrent The purpose of this chapter is to provide assets and liabilities. Identify and describe the various balance sheet an overview of the balance sheet and asset classifications. notes to the financial statements and to Identify and describe the two balance sheet liability classifications. explore how this information is used by Explain the purpose of financial statement decision makers. disclosures. LO6 Explain the purpose of the management discussion and analysis disclosure. LO7 Explain the purpose of an audit and describe the content of the audit report. LO8 Identify and calculate the common liquidity and financing ratios used to assess risk. FINANCIAL REPORTING CASE What’s It Worth? “I can’t believe it. Why don’t you accountants prepare financial statements that are relevant...
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...Share-Based Payment and Special Purpose Entity Purpose We compiled the information presented to address concerns surrounding the audit of McDowells, a publicly traded company. The memo explores both share-based payment and special purpose entities. It details the proper accounting methods for each item. Finally, we offer suggestions and guidelines to ensure McDowells complies with GAAP on these matters. CONFIDENTIAL Share-based payment and SPE The transactions related to the share based payment are defined as the proceedings in which any bodies attain or get the products or services by fulfilling the two vital requirements i.e. equity instruments of the entity or cash. In this transaction, the total sum is based on the entity's shares price. The financial statement on accounting for the share-based payment will furnish the full or more reliable information to the stakeholders such as investors, lenders or other users of financial statements. This will enable them to make an appropriate judgment based on the information given and also recognize the compensation cost referring to share-based payment dealings easily. This reporting portrays that in the financial statements making out the actual cost related to the share-based payments amends the comparability, reliability, and relevancy of that critical and valuable financial information of the company. It assists different users of financial information with understanding the dealings related to the economic conditions that...
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...to happen to make a company more efficient, the best way to get an inside look at the company and the information needed, would be to look at the financial statements. By looking at the income statement, balance sheet, and the statement of cash flow, the financial health of the company can be discovered. A shareholder or potential investor will certainly want to see if the company that they are investing in is going to give them a return on their investment. To get a clear picture of whether or not this concept is a possibility, the information would best be gathered from the income statement. Investopedia defines an income statement as “a financial statement that measures a company’s financial performance over a specific accounting period.” (Investopedia, 2013) One is able to look at the income statement to assess the financial summary of how revenue and expenses through operating and non-operating activities are incurred. It will show the reader any net profit or loss that has incurred over a year or fiscal quarter. An investor would look at the income statement because it provides information on revenue and expenses that correlate to regular business operations. Basically this is an indication of how profitable the company is which is why the income statement is sometimes known as a profit and loss statement. Most income statements will include detailed information regarding the company’s gains and losses, revenue, and expenses. By subtracting the company’s expenses...
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... Article discusses the issues in asset liability management and elaborates on various categories of risk that need to be managed. It also examines strategies for asset-liability management from the asset side as well as the liability side, particularly in the Indian context. It also discusses the specificity of financial institutions in India and the new information technology initiatives that beneficially affect asset-liability management. The rise in conglomerate financial services and their implications for asset-liability management are also being described. The research article which is descriptive in nature has been able to successfully describe the concept and application of ALM technique. Before going into the details of what ALM concept is all about, the article briefly discusses the banking reforms that took place in India in the last two decades and tries to emphasize on the changes that have happened in the Indian Banking Sector. ALM Concept ALM is a comprehensive and dynamic framework for measuring, monitoring and managing the market risk of a bank. It is the management of structure of balance sheet (liabilities and assets) in such a way that the net earnings from interest is maximized within the overall risk-preference (present and future) of the institutions. The ALM functions extend to liquidly risk management, management of market risk, trading risk management, funding and capital planning and profit planning and growth projection. Benefits of ALM...
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...Currency Hedging When companies conduct business across borders, they must deal in foreign currencies. Companies must exchange foreign currencies for home currencies when dealing with receivables, and vice versa for payables. This is done at the current exchange rate between the two countries. Foreign exchange risk is the risk that the exchange rate will change unfavorably before payment is made or received in the currency . For example, if a United States company doing business in Japan is compensated in yen, that company has risk associated with fluctuations in the value of the yen versus the United States dollar.[1] ------------------------------------------------- Hedge[edit] A hedge is a type of derivative, or a financial instrument, that derives its value from an underlying asset. Hedging is a way for a company to minimize or eliminate foreign exchange risk. Two common hedges are forward contracts and options. A forward contract will lock in an exchange rate today at which the currency transaction will occur at the future date.[2] An option sets an exchange rate at which the company may choose to exchange currencies. If the current exchange rate is more favorable, then the company will not exercise this option.[2] The main difference between the hedge methods is who derives the benefit of a favourable movement in the exchange rate. With a forward contract the other party derives the benefit, while with an option the company retains the benefit by choosing not to exercise...
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...RISK PM595 Initial information used in phase 1 of the assessment process is based on project documents and the request for tender itself. Information for Phase 2 is derived from individual tenderer’s response. In phase 1, an appropriate system or element structure for examining the tender is developed and semi-quantitative approach is used to assess the likelihood of risks arising in each element and their consequences and then derive a baseline priority for each element and the project. In phase 2, the evaluation is modified according to the detailed approach each tenderer intends to adopt, and that tenderer’s capabilities. According to the text book some of the objectives of the risk assessment in tender evaluation are to provide an initial indication of where the major risks might arise in the project, prior to receipt or detailed examination of tender responses, based on a set of credible assumptions about how the project might be conducted. It also develops a risk baseline against which individual tender responses can be compared. It assist the project team to focus on potential risk areas, it provides a risk profile for each tender offer submitted and provides a documented audit trail. In Phase 1 a baseline is established against which tenders can be assessed before bids are received. In Phase 2 each submitted tender offer is compared with the baseline to develop a comparative risk assessment for each one. In phase 1 the structured and documented risk assessments...
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...can transfer but the operating lease is not completely transferred that it cannot record in the balance sheet. This is seriously affecting the quantity of accounting. So, ISAB want to change the lease accounting terms, which make accounting information become reliable. This essay will describe ED242terms of lease accounting provisions of the benefits of changing. Introduction A lease accounting terms is ED242. ISAB think it not only provides complete information about 12 months later, indicated that it for the company to provide within 12 months of operating leases the assets and liabilities of information. Compare with other lease accounting terms, they only consider the intangible of the lease, and the balance sheet will not be recorded within 12 months. For the ED 242 term, it uses the method of the lessor acknowledge to underlying assets of the underlying assets under the terms of the lease contract, which is the subject of the liability under the lease contract, to confirm the use of the right of use (Vivien, 2006, P86). The result will require all of the leases, including the current classified as operating leases, will be shown on the balance sheet (include within 12 months). The ISAB believes that the operating lease the balance sheet will be accountability and transparency, and to provide investors with information on the integrity of a company's assets and liabilities. And this essay will explain the benefits of ED242...
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...Employee, who is the company’s primary assets, is the secret in the sauce and the glue that holds the corporation together (Back, 2010). However, despite the importance of the employees, the companies do not include them as an asset in the balance sheet where all the other assets are being recorded (Kaye, 2012; McGrath, 2010). Employees are considered as an intangible asset to the company (Back, 2010). There are some reasons why employee is not or should not be include in the balance sheet as an asset. Many intangibles such as employees are not owned by the company in the first place (Adams, 2010; Kaye, 2012). Adams (2010) also stated that, a company can only put assets for which it has a clear ownership right on its balance sheet where employees do not meet that test. Furthermore, since there is no financial transaction creating the intangibles, the dollar value of intangibles can be difficult to identify (Adams, 2010). In basic accounting, we can see that accounting entries are made when there is money involve such as when the firm buys something, money is deducted from bank and the expense get booked to an expense or investment (Adams, 2010). However in most cases, intangibles are created outside the monetary system. McGrath (2010) mentioned that, value is created when employees learn something, but other than the employee’s salary, there is no financial transaction. Moreover, valuing employees or human capital is a very difficult task (McGrath, 2010; Weatherly, 2003). Weatherly...
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...rate risks in connection with the process of Asset Liability Management. Failure to identify the risks associated with business and failure to take timely measures in giving a sense of direction threatens the very existence of the institution. It is, therefore, important that the strategic decision makers of an organization assume special care with regard to the Balance Sheet Risk management and should ensure that the structure of the institute’s business and the level of Balance Sheet risk it assumes are effectively managed, appropriate policies and procedures are established to control the direction of the organization. The whole exercise is with the objective of limiting these risks against the resources that are available for evaluating and controlling liquidity and interest rate risk. Asset Liability Management (ALM) can be defined as a mechanism to address the risk faced by a bank due to a mismatch between assets and liabilities either due to liquidity or changes in interest rates. Liquidity is an institution’s ability to meet its liabilities either by borrowing or converting assets. Apart from liquidity, a bank may also have a mismatch due to changes in interest rates as banks typically tend to borrow short term (fixed or floating) and lend long term (fixed or floating). A comprehensive ALM policy framework focuses on bank profitability and long-term viability by targeting the net interest margin (NIM) ratio and Net Economic Value (NEV), subject to balance sheet constraints...
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