...ADMINISTRATION Examination Questions 1. Describe the three levels of competition permitted under the Competition in Contracting Act (CICA). Give an example of each. a. Full and open competition; Full and open competition means that all responsible sources are permitted to submit sealed bids or competitive proposals on the procurement. It is the preferred form of contracting and includes contracting by sealed bids, negotiation, and other procedures. Example: b. Full and open competition after exclusion of sources Full and open competition after exclusion of one or more sources is used when the U.S. Government excludes certain potential sources from consideration for a contract in order to establish or maintain alternative sources c. Other than full and open competition Under this method, a bid or proposal is solicited from one, or very few, sources. Detailed justification and approvals are required to document the choice of other than full and open competition as a means of acquisition. Example: The Department of Homeland Security, Office of Procurement Operations, proposes to enter into a contract on a basis other than full and open competition. DHS has a requirement on a sole source basis to upgrade and maintain proprietary software at an estimated cost of $7,550,000. List the name and address of the proposed contractor(s). 2. What is meant by the term “ratification” of a contract action? Who has the authority to ratify and give an example where ratification...
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...Examination Study Guide This study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination. Week One: The Legal System and the Legal Forms of Business Objective: Differentiate between the legal forms of business. 1. What makes a publicly held corporation different from a public corporation? a. x A publicly held corporation has had an IPO, and has many private shareholders rather than being a corporation owned by a governmental entity. b. A publicly held corporation is entitled to limited liability, but the public corporation is not. c. A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose d. They are two terms that have the same meaning. 2. If a corporation is properly incorporated in one state and wants to do business in a second state, the corporation a. must incorporate in the second state b. must do nothing because being incorporated in one state entitles the corporation to do business in all states c. register with the Interstate Corporation Commission d. x may be required to obtain a certificate of authority from the second state 3. Limited partners can lose their limited liability by a. investing too much in the partnership b. withdrawing from a limited...
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...be started to help people. • Other Experts. Other experts such as Milton Friedman look at corporations solely as a way to maximize profits and shareholder value. Principal and Agent • Principal. "'Principal' is a word used to describe a person who has authorized another to act on his account and subject to his control." • Agent. "'Agent' is a word used to describe a person authorized by another to act on his account and under his contro1. • Source: Restatement of Agency. Section 1. comments c and d. A.P. Smith Mfg. Co. v. Barlow • The board of directors voted to contribute $1,500 to Princeton University on the recommendation of the corporation's president. Hugh O'Brien. Some shareholders objected. • The corporation brought suit against the board of directors. Note: Barlow was on the board. • The court sustained the validity of the gift by the corporation. The court also found that the gift "was a lawful exercise of the corporation's implied and incidental powers under the common law principles and that it came within the express authority of the pertinent state legislation." • The case stands for the proposition that corporations have the legal authority to make charitable contributions. • Today, MBCA,Section 302(13) allows corporations to make donations for the public welfare or for charitable, scientific or educational purposes. • State laws generally allow corporations to make charitable gifts, • Political contributions are regulated differently and more vigorously...
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...Business Associations Outline 1. Agency a. Creating the Agency Relationship i. agent and principal enter into an agreement (not required to be in writing....no K required) in which the agent acts on the principal’s behalf in entering K’s etc…. 1. if done within the scope of the agency (enter into K, etc…) anything done by the agent is binding on the principal 1. principal may be liable in K, tort, property, etc…. (Vicarious liability) ii. question of agency is a factual matter to be determined as a “matter of fact” b. Res 3d Agency 1.01 (definition of “Agency”) i. Agency relationship created when (First Question to ask when dealing with agency) 1. The principal manifests assent to have the agent act on the principal’s behalf and under the principal’s control; and 2. The agent manifests assent or otherwise consents so to act 1. When agency exists the principles of attribution bind’s the principals to agents dealings with third parties 2. manifestation need not be by words (spoken or written), it may be created by conduct/actions i. Agent rx believes that Principal has manifested assent, and has rx accepted ii. (Notes….Legal Consequences of Agency) 1. Inward Looking Consequences: relate to the relationship between the principal and the agent and are largely governed by the contracts between the parties and by the law of fiduciary duties 2. Outward Looking Consequences: relates to the relationship among the principal, the agent, and a third party and are governed...
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...Corporate governance refers to the system by which corporations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs. Governance provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment. Governance is a mechanism for monitoring the actions, policies and decisions of corporations. Governance involves the alignment of interests among the stakeholders.[ Contemporary discussions of corporate governance tend to refer to principles raised in three documents released since 1990: The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002). The Cadbury and OECD reports present general principles around which businesses are expected to operate to assure proper governance. The Sarbanes-Oxley Act, informally referred to as Sarbox or Sox, is an attempt by the federal government in the United States to legislate several of the principles recommended in the Cadbury and OECD reports. * Rights and equitable treatment of shareholders:[15][16][17] Organizations should respect the rights of shareholders and help shareholders...
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...and criminal laws. Gaining access to federal databases is a violation of the:: Federal Computer Fraud and Abuse Act. GATT is an example: of a multilateral treaty. GATT stands for the General Agreement on Tariffs and Trade, and is: an agreement among 100 countries to increase trade by reducing tariffs. 2. 25. 3. 26. 27. 28. 4. 5. 6. 7. A consent decree is comparable to: a nolo contendere plea A consent decree:: is the same as a plea of nolo contendere. A default in a lawsuit is like: a forfeit in sports. A federal district court has subject matter jurisdiction over cases in which: the United States is a party. A juror can be eliminated from a jury panel:: because one of the attorneys feels uncomfortable about the juror or his attitude. 29. 30. 31. 8. 32. 33. 9. A law that requires a review of the work of an agency and its effectiveness before the agency will be permitted...
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...Chapter 12 and 13 1. Type of damages: compensatory, punitive etc. Compensatory damages are used to compensate or reimburse a plaintiff for actual losses. The goal is to put him in the same position that he would have been if the tort had not occurred. The compensatory damages are generally broken down into special damages and general damages. Special damages compensate the plaintiff for quantifiable monetary losses (medical expenses, lost wages).General damages compensate individuals (not companies) for the nonmonetary aspects of the harm suffered, such as pain and suffering( physical and emotional pain and suffering, loss of companionship, loss of reputation..) Punitive damages are appropriate only when the defendant’s conduct was particularly egregious (reprehensible). Usually, this means that punitive damages are available in intentional tort actions and only rarely in negligence lawsuits. 2. What is defamation? Defamation of character involves wrongfully hurting a person’s good reputation. The law imposes a general duty on all persons to refrain from making false, defamatory statements of fact about others. Breaching this duty in writing or in another permanent form involves the tort of libel. Breaching this duty orally involves the tort of slander. 3. What is fraudulent misrepresentation? What is appropriation of one’s likeness? A misrepresentation leads another to believe in a condition that is different from the condition that actually exists. Although person...
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...SEniNG IN PERSPECTIVE The author examines the need tor a single body to set rules. by Michael H. Granof The problems of financial reporting by governmental units are unique and as a consequence the models for standards are not necessarily comparable nor can parallels always be drawn between governmental and corporate reporting. This article examines the differences between user requirements and explores the necessity for standard setting by a single body. First of ali, the sources from which investors derive information regarding securities of municipalities appear to be different from those of other types of organizations. Although there have been few research efforts to identify the factors which influence investor decisions to buy or sell specific municipal issues, it is believed that the bond rating assigned by Moody's or Standard & Poor's is the single most significant element. Available statistical evidence indicates a close correlation between the rating assigned to a bond and the price at which it is sold in the market. An improvement of one grade on the rating scale has been associated with a reduction in interest rate from 28 to 40 basis points (hundredths of a percent in interest rate).' Moreover, government securities are 1 Derived from tables in John E. Petersen, The Rating Game (New York: Twentieth Cenlury Fund, 1974), p.44. MICHAEL H. GRANOF, CPA. PhD., is associate professor of accounting at the University of Texas at Austin. He is currently teaching and conducting...
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...of corporate executives in the United States continues to be a hot-button issue. It is widely viewed that CEO pay has grown to exorbitant levels (at least in some cases). In response, in April 2007, the U.S. House of Representatives passed the “Say on Pay” bill. The bill requires corporations to allow a nonbinding shareholder vote on executive pay. (Note that because the bill applies to corporations, it does not give voters a “say on pay” for U.S. Representatives.) Specifically, the measure allows shareholders to approve or disapprove a company’s executive compensation plan. Because the vote is nonbinding, it does not permit shareholders to veto a compensation package and does not place limits on executive pay. Some companies had actually already begun initiatives to allow shareholders a say on pay before Congress got involved. On May 5, 2008, Aflac, the insurance company with the well-known “spokesduck,” held the first shareholder vote on executive pay in the United States. Understanding how a corporation sets executive pay, and the role of shareholders in that process, takes us into issues involving the corporate form of organization, corporate goals, and corporate control, all of which we cover in this chapter. 1.1 What Is Corporate Finance? Suppose you decide to start a firm to make tennis balls. To do this you hire managers to buy raw materials, and you assemble a workforce that will produce and sell finished tennis balls. In the language of finance, you...
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...used in the United States, and review their respective strengths and weaknesses. 3. Describe the typical organization of the financial function in a large corporation. 4. Explain why maximizing the current value of the firm’s stock price is the appropriate goal for management. 5. Discuss how agency conflicts affect the goal of maximizing stockholder wealth. 6. Explain why ethics is an appropriate topic in the study of corporate finance. I. Chapter Outline 1.1 The Role of the Financial Manager A. It’s All about Cash Flows • The financial manager is responsible for making decisions that are in the best interest of the firm’s owners. • A firm generates cash flows by selling the goods and services produced by its productive assets and human capital. After meeting its obligations, the firm can pay the remaining cash, called residual cash flows, to the owners as a cash dividend, or it can keep the money and reinvest the cash in the business. • A firm is unprofitable when it fails to generate sufficient cash flows to pay operating expenses, creditors, and taxes. Firms that are unprofitable over time will be forced into bankruptcy by their creditors. In bankruptcy, the company will be reorganized, or the company’s assets will be liquidated, whichever is more valuable. If anything is left after all creditor and tax claims have been satisfied, which usually does not happen, the remaining cash, or residual, is distributed to the owners...
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...world that have been subsequently enacted with the Sarbanes-Oxley Act and conclude with the debates over the perceived benefits and costs from both opponents and proponents. The following research paper will prove to be useful for any executive running a public corporation. After reading this research paper, one will come to discover and understand the new standards implemented for corporate accountability as well as the new penalties for acts of wrongdoing. Body The Sarbanes–Oxley Act of 2002, also known as the “Public Company Accounting Reform and Investor Protection Act” by the Senate and “Corporate and Auditing Accountability and Responsibility Act” by the House of Representatives and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law passed on July 30, 2002, which set new or enhanced standards for all United States public company boards, management and public accounting firms. It received its name after U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH). The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies...
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...INTRODUCTORY PRINCIPLES 2 A.) Efficiency and Other Concepts 2 B.) Agency and Partnership Law 2 II.) INTRODUCTION TO THE CORPORATE FORM 16 A.) Formation and Structure 16 B.) Debt, Equity, and Valuation 22 III.) CONTROL OF CORPORATE DECISIONS 32 A.) The Role of the Shareholder 32 B.) Management Obligations 50 1.) Duty of Care 51 2.) Duty of Loyalty 56 3.) Duty of Fairness: Parent-Subsidiary Relationships 63 4.) Duty of Good Faith 64 5.) Management Obligations Under Federal Securities Laws 67 C.) Shareholder Litigation 76 IV.) Structural Changes 85 A.) Transactions in Control 85 B.) Mergers and Acquisitions 86 1.) Mergers 87 2.) Sale of Assets 93 3.) Asset Purchase or Tender Offer 94 C.) Public Control Contests 96 1.) The Poison Pill 100 2.) Enhanced Review When Business is Up for Sale 103 3.) Proxy Contests for Corporate Control 106 4.) Protecting the Deal: Shareholder Lockup Agreements 109 I.) INTRODUCTORY PRINCIPLES • Definitions o Corporate Law: The allocation of rights and power within a corporation; the internal body of law ▪ Addresses the creation of economic wealth through the facilitation of voluntary, ongoing collective action ▪ Flexible- expectation that market discipline will weed out what is not working ▪ Principle aim- reduce agency costs of all sorts o Securities Law: Regulates capital markets that corporations use to obtain funding o Firm: A form of business relation...
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...been created to promote and protect the moral and ethical expectations of society. The primary sources of law are constitutional, statutory, administrative, and common---are found at federal, state, and local levels. Constitutional law is the foundation for all other law in the United States and is the supreme law of the land. Statutory law is created by a legislative body and approved or disapproved by the executive branch of government. Administrative law is the source of law that authorizes the exercise of authority by executive branch agencies and independent government agencies. Common law is essentially law made by the courts and that has not been specifically passed by legislature, and is based on the fundamentals of previous cases that had similar facts. There are also secondary sources of law which are intended to increase the level of uniformity and fairness across courts in all 50 states. Secondary sources of law have no independent authority of legally binding effect. The categories of law are as follows: Civil laws are designed to compensate parties for losses as a result of another's conduct. Criminal laws are a protection of society, and the violation of criminal laws results in penalties to the violator such as fines and imprisonment. Substantive laws provide individuals with the rights to create certain duties. s Public laws are those derived by some public entity. Private laws are...
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...Enron Sharon R. Duncombe Professor Jamila Harris Business Law I – LEG 100 May 2, 2010 1) Describe how Enron could have been structured differently to avoid such activities. One of the reasons why the corporate governance system failed at Enron was because of the lack of good communication between the Board of Directors (BOD) and Top Management in Enron’s affairs. Various committees of the BOD were not doing your job, by not overseeing effectively the action’s of the company. “A good example is that the BOD was not aware of Michael Kopper’s involvement in Chewco even though he participated in a conference call with the members of the Executive Committee of the BOD.” This just shows the lack of effective internal controls, or it might just show you there was no such thing as internal controls. Many transactions were not approved by top management because of the lack of communication. Top management was lacking a lot of characteristics of a good management team such as not properly implementing and operating effective internal controls. There are many things, which could have been done to prevent the failure of the corporate governance of Enron. The BOD deals a lot with top management, we are sure that they knew something was going on, and they claim not enough information was being shared with them. One of their jobs is overseeing the functioning of the corporation and its management; with effective internal controls a BOD that is complaining of not enough information...
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...FIDUCIARY DUTIES AND OTHER RESPONSIBILITIES OF CORPORATE DIRECTORS AND OFFICERS Morrison & Foerster LLP Christopher M. Forrester Celeste S. Ferber RR DONNELLEY EZ START XBRL We Tag. You Validate. We File. With the release of the proposed rule, the SEC will require the use of XBRL for financial reporting starting as early as 2009 for some companies. RR Donnelley is uniquely qualified to give you guidance on how your company can prepare for the SEC mandate. As the market leader in XBRL filings, we have been helping leading companies successfully tag and file XBRL financials since the inception of the SEC Voluntary Filing Program. RR Donnelley’s proven EZ Start XBRL full-service solution is designed to save you crucial time. With EZ Start, we do the initial tagging for you, reducing the time spent mapping and validating XBRL tags to under ten hours. Our goal is to transfer knowledge to your financial team to ensure a firm understanding of the taxonomies, mapping process and SEC requirements. To learn more, visit www.tryxbrl.com. FIDUCIARY DUTIES AND OTHER RESPONSIBILITIES OF CORPORATE DIRECTORS AND OFFICERS MORRISON & FOERSTER LLP Christopher M. Forrester Celeste S. Ferber RR Donnelley Global Capital Markets Copyright© 2008 Morrison & Foerster LLP (No claim to original U.S. Government works) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic...
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