Foreign Direct Investment (FDI) in Bosnia and Herzegovina

Foreign Direct Investment (FDI) in Bosnia and Herzegovina Merjema Aletic Introduction The very definition of Foreign direct investment is controlling ownership in a bussiness enterprise in one country by an entity based in another country. The collapse of the former Yugoslav Federation, Croatia and Slovenia declared independence in 1991 while paramilitary origins from Serbia occupied several Bosnia and Herzegovina towns killing civil Bosniaks and Croat. In this clash of ethnic groups, BIH was confronted with serious humanitarian and social problems in which thousands of people died. The conflict lasted (1992-1995) until the Dayton Peace Agreement was signed in Paris in December 1995 between the counterparts (Malcolm 2002). With one confederation, two entities, ten cantons in the Federation, five administrative areas in the Serb Republic, a special Brcko district, plus municipalities and local government unit presents a very complex political system in the world which conceals meaningful barriers and bureaucratic obstacles that will need to overcome (Ilgun, 2009). Many aspects of the regulatory quality reforms have stagnated over a number of years, making BiH among the least competitive economies in the Europe and Central Asia (ECA) region. To enhance the prospects of the country as a destination for foreign investment further steps were taken, especially by establishing the Promotion Agency (FIPA), privatization and incentives for foreign investors. Literature review Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It has long been recognized that the benefits of FDI for the host country can be significant, including knowledge and technology transfer to domestic firms and the labor force productivity spillovers, enhanced competition, and improved access for exports abroad, notably in the source country (Demekas et al, 2005 and Botric, 2010). Due to the low domestic savings there is need for attraction of foreign direct investment for future economic growth (Botric, 2010).The consensus view in the literature is that the benefits of FDI tend to significantly outweigh its costs for host countries (Demekas et al, 2005). There are two types od FDI: Horizontal FDI (HFDI) is market-seeking investment, aimed primarily at the domestic market in the host country, when local production is seen as a more efficient way to penetrate this market than exports from the source country, and Vertical FDI (VFDI) is cost-mini mizing investment, when a multinational corporation chooses the location of each link of its production chain to minimize global costs (Demekas et al, 2005). As a result of these differences in motivation, a number of host country factors, such as market size, trade restrictions, and transport costs, can have different effects on HFDI and VFDI. Predictable policy environment that promotes macroeconomic stability, ensures the rule of law and the enforcement of contracts, minimizes distortions, supports competitiveness, and encourages private sector development can be expected to stimulate all private including foreign investment (Demekas et al, 2005). Among the macroeconomic and political environment factors it is the political stability as the most important factor that influences investment decision. Furthermore in the case of the institutional environment, protection of investors is one of the important factors. Those can be the tax systems, lack of corruption, the ease of starting up a company, law of contract, transparency, safeguarding of property rights and efficiency of justice (Ilgun, 2009). Although Serbia and Montenegro and Bosnia and Herzegovina are slightly lagging behind the other countries, they are on a good path to make further progress in this area of reform implementation (Penev and Rojec, 2004). High poli tical risks in the region in the past decade posed one of the greatest obstacles to FDI inflow although this varied amongst countries. Private foreign capital is very sensitive to any investment risk, so that the countries with an unstable political and economic environment are almost unattractive to private foreign investors (Penev and Rojec, 2004). After the political failure, BIH has also started a wide reaching process of reconstruction and development of its political, economic, social and legal systems of the country (Ilgun, 2009). All Southeastern European countries, each to a different degree, need to make further efforts to simplify complex tax and customs laws and regulations, facilitate access to land and construction permits, strengthen the judiciary, accelerate the resolution of commercial disputes, and eliminate remaining discriminatory provisions against foreign investors. It is found that high unit labor costs, a high corporate tax burden, and, to a lesser extent, a high level of import tariffs discourage FDI (Demekas et al, 2005), while a liberal foreign exchange and trade regime and advanced reforms in the infrastructure sector encourage FDI (Penev and Rojec, 2004). Reforms in Bosnia and Herzegovina related to FDI The role of FDI in economic growth and development is now widely acknowledged, and all countries are actively seeking to attract it. Several forms can be used for capital investing abroad: investment in a joint venture with a local firm, acquisition of a foreign firm (mergers acquisitions) or construction of a facility (wholly owned) (Ilgun, 2009). In order to create and improve bussiness climate Bosnia and Herzegovina accelerated Economic Reform process. The aim of BH is to eliminate legal and administrative obstacles for doing business in BH, as well as create the most attractive business environment in the SEE (FIPA). Many aspects of the regulatory quality reforms have stagnated over a number of years, making BiH among the least competitive economies in the Europe and Central Asia (ECA) region. BiH currently ranks 131st out of 189 economies on the Doing Business indicators for 2014 (World bank). The business environment in BiH is the least friendly in the region, as it is burdene d by a large and complex public administration system and layers of administrative approval authorities which increases costs (World bank). World bank (2013) supports BiH’s business environment reforms and includes areas such as reducing the time and cost for registering a business, streamlining procedures for obtaining construction permits, and facilitating trade across borders shown in Figure 1. Based on IAB results (2010), countries tend to attract more FDI if they allow foreign ownership of companies in a variety of sectors, make start-up, land acquisition, and commercial arbitration procedures efficient and transparent, and have strong laws protecting investor interests. For instance, studies have shown that 70% of countries miss out on foreign investment due to deficiencies of investment promotion institutions in providing potential investors with accurate and up-todate information (IAB, 2010). These policies target improving BiH’s competitiveness, helping to facilitate the country’s dialogue with the EU on accession, and promoting economic growth. The May 2014 floods are estimated to have caused around US$2.9 billion in damages and losses, the equivalent of nearly 15 percent of GDP in 2014. Figure 1. Fastest and slowest countries for starting a foreign business. BiH is in a delicate position, caught between the â€Å"middle-income trap† (too poor to be a world-class innovator and service provider, but too rich to compete for low-cost manufacturing) and legacy issues on the one hand, and having the potential and opportunities to improve the business environment and attract more investment on the other (world bank, 2013). The main goal of BH is EU membership. Bosnia and Herzegovina is a potential candidate country for EU accession and BH has signed the Stabilization and Association Agreement with the European Union, which is a step toward EU membership (FIPA, 2012). Bosnia and Herzegovina has signed the Central European Free Trade Agreement (CEFTA), creating a free trade zone with access to a large consumer market. Also,the process of negotiation to join the World Trade Organisation is underway. Privatization in Bosnia and Herzegovina is an overall process, through which attractive investment opportunities are opened up to foreign investors in sectors such as the energy sector and telecommunications. Bosnia and Herzegovina is accelerating the privatization process for companies of strategic importance in order to increase economic growth and enhance the volume of foreign investment. The existence of free zone as part of the customs territory of Bosnia and Herzegovina, which is specially fenced and marked and where business activities are carried out under special conditions in accordance with the Law on Customs Policy of BH and the Law on Free Zones of BH (FIPA). Any industrial, commercial or service activity, (banking, insurance and reinsurance of property and persons, etc.), can be carried out in the free zone. The users of free zone do not pay VAT and import customs, so investment in the free zone, transfer of profit and transfer of investment are free of charge. One of t he main reasons for investing in BH is also favorable tax system. Bosnia and Herzegovina has one of the lowest rates of VAT (17%) in the region and Europe, as well as the very acceptable corporate tax rates that are also among the lowest in the region and Europe (10%) (FIPA). Bosnia and Herzegovina has Agreements on avoidance of double taxation with the following countries: Albania, Algeria, Austria, Belgium, China, Croatia, Czech Republic, Cyprus, Denmark, Egypt, Finland, France, Germany, Hungary, Iran, Ireland, Italy, Jordan, Kuwait, Malaysia, Moldova, Montenegro, Netherlands, Norway, Pakistan, Poland, Qatar, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Sri Lanka, Turkey, United Arab Emirates, United Kingdom and Northern Ireland (FIPA). Agreements on Avoidance of Double Taxation, which mean that companies only have to pay tax in their home country, accelerate the flow of investments into the signatory countries, encourage joint ventures, create more investment opportunities, expedite the transfer of technology and constitute a legal framework to bolster economic cooperation and enhance strategic economic partnership (FIPA). With the purpose of facilitating trade, creating preconditions for the increase in exchange of goods (and particularly expor t), the creation of a favorable environment for domestic and foreign investments, Bosnia and Herzegovina concluded certain number of bilateral/multilateral free trade agreements. Bosnia and Herzegovina has signed the Central European Free Trade Agreement (CEFTA), in effect as of November 2007, with the following countries: Albania, Serbia, Croatia, Macedonia, Moldova, Montenegro, UNMIK/Kosovo (FIPA). BH has also signed a Free Trade Agreement with Turkey which provides additional free access to this consumer market with 70 million people. Bosnia and Herzegovina has 40 Agreements on Promotion and Protection of Investments with the following countries: Albania, Austrua, Belgium and Luxemburg, Belarus, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Finland, Germany, Greece, Hungary, India, Iran, Italy, Jordan, Kuwait, Lithuania, Macedonia, Malaysia, Moldova, Netherlands, OPEC Fund, Pakistan, Portugal, Qatar, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Switzerland, Sweden, Turkey, Ukraine, United Kingdom and USA OPIC (FIPA). Foreign investors concerned about risks of transfer restrictions, expropriation, war and civil disturbances and denial o f justice, can be insured against these risks with the European Union Investment Guarantee Trust Fund for Bosnia and Herzegovina, administered by the Multilateral Investment Guarantee Agency (MIGA, member of the World Bank Group). According to the Central Bank of BH (CBBH) annual data shown in Figure 2. And Figure 3., total amount of Foreign Direct Investment (FDI) in Bosnia and Herzegovina till December 2013 was 11,044 million BAM or 11 billion BAM (5,647 million EUR or 5.6 billion EUR). The inflow of FDI in 2013 amounted to 418 million BAM (214 million EUR). Figure 2. Foreign currency reserves, in million euro Source: FIPA Figure 3. Flow of FDI in Bosnia and Herzegovina, by years, million â‚ ¬ Source: FIPA; *preliminary data withouth reinvested earnings The biggest amount of investments in BIH was made by companies from Austria (27.1 %) and Serbia (15.6%). Croatia (11.7%), Slovenia (11.4%), Switzerland (6.8%), Germany (5.5%), Russia (5%), The Netherlands (2.5%), Italy (2.1%), USA (1.9%), Turkey (1.3%), and other countries (9.1%) follow them (Table 1). Table 1. Top investor countries in BiH, Country Amount (Million Euro) Percent Austria 1,446 27.10% Serbia 832 15.60% Croatia 626 11.70% Slovenia 610 11.40% Switzerland 364 6.80% Germany 294 5.50% Russia 268 5.00% The Netherlands 134 2.50% Italy 114 2.10% USA 99 1.90% Turkey 68 1.30% Other Countries 487 9.10% TOTAL 5,300 100% Source: FIPA – Foreign Investment Promotion Agency of Bosnia and Herzegovina (2012), Investment Opportunities in Bosnia and Herzegovina, February 2012, Sarajevo. A part of the efforts aimed at attracting foreign investors, the Bosnia and Herzegovina Parliamentary Assembly adopted the Law on Foreign Direct Investments, which established political directions for favorable treatment of foreign investors and protection of their interests. Foreign investors enjoy the following benefits (APF 2009; FIPA 2012): Exemption from customs duties on investments; Unlimited right to open and keep an account in all commercial banks in the entire territory of Bosnia and Herzegovina, in domestic or any other foreign convertible currency; The right of free and undisturbed foreign transfer of all income realized by investments in Bosnia and Herzegovina in all convertible currencies; Equal property rights with all citizens of Bosnia and Herzegovina; Protection from nationalization, expropriation, requisition, or measures with similar consequences; The right to employ foreign citizens in accordance with Bosnia and Herzegovina laws on labor and immigration. International Development Agency (IDA) and Investment Guarantee Agency (IGA) provide guarantees for protection from political risks for short term and medium term commercial transactions between Bosnia and Herzegovina companies and foreign companies, suppliers and banks. Conclusion The main advantage of FDI is its contribution to economic growth in host countries. The extent of such growth enhancing responses depends on country specific characteristics such as liberal trade regimes, accumulation of human and physical capital and macroeconomic stability (ilgun, 2009). Bosnia and Herzegovina is accelerating the privatization process for companies of strategic importance in order to increase economic growth and enhance the volume of foreign investment. BiH’s business environment reforms includes areas such as reducing the time and cost or registering a business, streamlining procedures for obtaining construction permits, and facilitating trade across borders. With the purpose of facilitating trade, creating preconditions for the increase in exchange of goods (and particularly export), the creation of a favorable environment for domestic and foreign investments, Bosnia and Herzegovina concluded certain number of bilateral/multilateral free trade agreements. Due to the good reputation and long industrial tradition of Bosnia and Herzegovina, the manufacturing sector received the largest amount of FDI (32%). A significant share of investment has been in banking sector (22%). References APF Agency for Privatization in Federation of Bosnia and Herzegovina, (2009), http://www.apf.com.ba Botric, V. (2010). Foreign Direct Investment in the Western Balkans: Privatization, Institutional Change and Banking Sector Dominance. Economic Annals. Voolume LN, No. 187. The Institute of Economics, Zagreb. Demekas, D.G., Horvath, B., Ribakova, E., Wu, Y. (2005). Foreign Direct Investement in Southeastern Europe: How (and How Much) Can Policies Help? IMF Wroking Paper. European Department. FIPA – Foreign Investment Promotion Agency of Bosnia and Herzegovina (2012). Investment Opportunities in Bosnia and Herzegovina. March 2012, Sarajevo. Investing Across Borders. (2010). Investment Climate Advisory Services. World Bank Group. Ilgun E., Coskun A. (2009). Foreign Direct Investments in Bosnia and Herzegovina: Banking sector example. Vol. 4. No. 2. Alatoo Academic Studies Malcolm, N. (2002). Bosnia: A short history, Pan Books, Pan Macmillian Ltd. London Penev, S. Rojec, M. (2004). Foreign Direct Investment and Investement Climate in South-East Europe. Economic Annals. Economic Institute, Belgrade. World Bank Group – Bosnia and Herzegovina Partnership: Country Program snapshoot. (2014). http://www.worldbank.org.ba 1

Audio Recording Essay -- audio sound

Thomas Edison was responsible for the first audio recording back in 1877, using a phonograph to record the impressions into a tin-wrapped cylinder. He promptly applied for a patent, and was granted one the next February. This first model held the field for a few years, until 1881, when Charles Tainter in Volta Labs developed the first lateral-cut records (similar to the vinyl records we’re familiar with). Unfortunately, he had not developed a method of playback, just recording. This held until 1885, when Tainter cooperated with Chichester Bell to create vertically-cut cylinders coated in wax as the medium for the new recording practice. These had the unfortunate downside of being exceedingly fragile. Finally, in 1887 Emile Berliner developed another gramophone using a lateral-cut medium. This method had the added bonus of being easily duplicated through electroplating. These three models competed in the market until later that year, when Edison developed a battery-powered version of his gramophone. That same year, Berliner developed his means of mass-production, copying onto hard rubber. All gramophones at this point had a capacity of a few minutes per disc. In 1889, the Columbia Phonograph Company was organized (grandpappy to the modern Columbia Music), who was also the first publisher of a music catalog. The next year saw the fielding of the first jukebox, which pulled in over $1000 (in 1890!) in its first six months. 1893 saw the boom of Berliner’s model, to which ends he incorporated the Berliner Gramophone Co. A few years later he discovered a new shellac that proved a better medium than rubber. Around the same time, 1894 to be exact, the world saw Marconi’s first radio, which he promptly took to America and... ...han PCM tend to be susceptible to data loss because they reference the previous measurement and merely indicate the change between them. This is typically solved by enclosing multiple copies of the data in a single file. Although it defies common sense, it is actually more efficient to record a particular sound byte in ADPCM and enclose, say, four copies, than it is to encode a single PCM copy. Sources: Digital Recording Techniques – http://www.digital-recordings.com/publ/pubrec.html Giancoli, Physics Principles with Applications, 5-E Chapter 12 -- Applications – http://cwx.prenhall.com/giancoli/chapter12/essay2/deluxe-content.html HyperPhysics Concepts - http://hyperphysics.phy-astr.gsu.edu/hbase/sound/soucon.html Recording Technology History - http://history.acusd.edu/gen/recording/notes.html Sound - http://www.smgaels.org/physics/sound_1.htm

The Moral Implications of The Pardoner?s Tale and The Nun?s Priest?s T

During the Middle Ages, England was a nation in social chaos. Deception of every kind was rampart throughout the lands. Many people felt that there was a great need for moral improvement in society. In Geoffrey Chaucer’s The Canterbury Tales he clearly brings to light his thoughts and concerns of â€Å"ethical cleansing.† No tale more fully expresses this idea than that of â€Å"The Pardoner’s Tale† and â€Å"The Nun’s Priest’s Tale.† â€Å"The Pardoner’s Tale† suggests a profile of the Pardoner as a moral man, a man of God. The narrator is viewed as a wise, gentle, and truthful man who wants to share his story in a respectful tone. His story reveals his message, which is that greed leads to destruction and the corruption of all things good. The Pardoner appears to have beliefs that are consistent with the moral of the story. As he describes the journey of the three riders, he recognizes the evils of being greedy. â€Å"For it was utterly the man’s intent/ To kill them both and never to repent†(255). He is perceived as a holy man who values truth and honesty. His tale describes the downfall in man’s pride and arrogance. This is demonstrated through the irony of the three riders as they seek Death, whom they find when they plot against each other for selfish reasons and kill one another. â€Å"They fell on him and slew him, two to one†¦He took a bottle full of poison up/ And drank and his companion drank from it also and they both perished† (256). The Pardoner’s prologue, however, reveals a man dedicated... The Moral Implications of The Pardoner?s Tale and The Nun?s Priest?s T During the Middle Ages, England was a nation in social chaos. Deception of every kind was rampart throughout the lands. Many people felt that there was a great need for moral improvement in society. In Geoffrey Chaucer’s The Canterbury Tales he clearly brings to light his thoughts and concerns of â€Å"ethical cleansing.† No tale more fully expresses this idea than that of â€Å"The Pardoner’s Tale† and â€Å"The Nun’s Priest’s Tale.† â€Å"The Pardoner’s Tale† suggests a profile of the Pardoner as a moral man, a man of God. The narrator is viewed as a wise, gentle, and truthful man who wants to share his story in a respectful tone. His story reveals his message, which is that greed leads to destruction and the corruption of all things good. The Pardoner appears to have beliefs that are consistent with the moral of the story. As he describes the journey of the three riders, he recognizes the evils of being greedy. â€Å"For it was utterly the man’s intent/ To kill them both and never to repent†(255). He is perceived as a holy man who values truth and honesty. His tale describes the downfall in man’s pride and arrogance. This is demonstrated through the irony of the three riders as they seek Death, whom they find when they plot against each other for selfish reasons and kill one another. â€Å"They fell on him and slew him, two to one†¦He took a bottle full of poison up/ And drank and his companion drank from it also and they both perished† (256). The Pardoner’s prologue, however, reveals a man dedicated...

C. S. Lewis’s We Have No Right To Happiness :: We Have No Right To Happiness

Everybody in this world has the right to happiness. However, I don’t think we should seek our happiness by all means. I don’t agree that people should be selfish in order to get whatever they want. I’m not saying that there aren’t any selfish people in this world, but some people are more selfish than others. So we need to have some balance in what we want and what would make us happy. Also we need to make sure that we don’t burden ourselves for the sake of others’ happiness. Therefore, I’m not convinced that Mr. A and Mrs. B did the right thing; also, I know that sometimes we may give up our right to happiness to please others, and sometimes we have to do whatever it takes to meet our happiness. First, I didn’t agree with Mr. A and Mrs. B’s actions in C. S. Lewis’s essay, "We Have No 'Right To Happiness". Therefore, I don’t think that Mr. A should have left his wife because she was not beautiful any more. Of course, maybe there is another side of the story that made him leave his wife. Also I didn’t think that Mrs. B should leave her husband, when he lost everything. However, the way Lewis presented his story is to convince me that they are very bad people. Overall, they justify their behavior simply by saying they have the right to happiness. Even though Lewis presented them very badly in his story, I’m not in a position to judge others’ actions. However, I’m not totally convinced that these are the people to leave their spouses. So no matter where they go, they may still find the same situation. Because that is life, and life can change any time. I also know that sometimes I need to give up my right of happiness for others. For example, there was a man on a boat along with other men. And there was a quarrel on the boat. As a result, everyone was given a place. So the man decided to dig a hole at his place, justifying that by saying that is his right and place. So if they allowed him, they all would be in danger. And if they prevented him, they would have denied his right .In this case, I personally think that man should give up his right for the sake of others. Of course, you may not agree or consider the right to dig a hole at that man’s place, but

Bad Decisions Essay

I have realized recently that friends should not have any affect at all on the decisions you make in life. It does not matter whether you are a middle school student, high school student, college student, or even a grown and mature adult. Making a wrong decision at the wrong time can have many negative affects on life, I know because I’ve been there. A wrong decision might only affect you temporarily or it could stay with you for the rest of your life. It could cost you a job or could keep you from getting into the college you dreamed of going to your whole life. The bad decisions are too much to risk. In a way, decisions should be made & held responsible only by the person making them. You should always think of how they will affect yourself and others. Never let a friend or anyone else force you to make a choice that could wind up hurting yourself or anybody. Always be careful, it could be something that could stick with you for life. Even think about how it could affect your family and friends. Would they be embarrassed by this choice? Would they be proud to tell other people about what you have done? Decision making can be seen as hard but also a very important skill. Some people may view it as an easy everyday thing, but to some it is harder. It is not always naturally apparent to some. My grandfather would say some people are born leaders and easily make decisions and some just are just not gifted in those areas. People should just make sure to evaluate the situation previous to making a decision that could hurt you or others. Taking advice from friends can be helpful, just think it through and make sure it is really the best thing for you too. But, keep in mind friends don’t always know what is best for you. Sometimes they don’t realize how it can affect you and they don’t even do this on purpose. I can even admit seeing myself doing it sometimes. Then again, this picture will fade when having fun, but make sure you always have it at reach in the back of your head. You never know when something could go wrong and ruin your life and opportunities. It is very important to always think of your future and what you want to do later in life. If you have always dreamed to go to medical school and become a OB/GYN don’t go out and under-age drink at a party and then go driving. You think now that you would never do anything like that, but in the moment you never know. Lots of people get caught in the moment and make a mistake thinking that most people get away with it. But if you go out there and drive drunk and kill a perfectly responsible person who has good judgment and makes good decisions you will be forced to live with that for the rest of your life. You will have to face their family face to face and tell them that you are the reason they lost their loved one. You also have to say how it was because of a bad decision. You just got caught up in the moment and wound up killing someone perfectly innocent. It goes from talking or being funny in class to something as serious as killing someone. Just imagine yourself in that scenario. When it comes to situations like this , nothing is funny anymore, it serious. It might seem that when you are young there is nothing to worry about, that you’re untouchable and nothing will happen to you, but really everything you do affects your future. Not only because of your actions at that point but by getting use to making careless decisions some people never grow out of the habit. Before you know it, at 21 they are still the same people they were when they were 15. Bad decisions affect everybody , not just the person responsible but everyone around.

Easy Clean, Co: Evaluation of Internal Control Environment Essay

LEARNING OBJECTIVES Evaluate a new audit client’s control environment. Provide an initial evaluation of certain components of the client’s control environment Appreciate the judgment involved in evaluating the overall internal control environment based on interview data Provide support for your internal control assessments Ted is a manager in the Business Advisory and Assurance Services division of a national public accounting firm. He has been given the job of managing the audit of Easy Clean, Co., which provides industrial and domestic carpet steam-cleaning services. Easy Clean has never been audited. Thus, Ted does not have any prior-year working papers to review. Ted recently conducted a preliminary interview with Doug Dosio, who along with his brother, Phil, owns Easy Clean. Ted’s objective for the interview was to establish an understanding of the control environment. To prepare for his interview, Ted reviewed professional auditing standards. Those auditing standards (AU 319) indicate that the control environment â€Å"sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.† The standards state that control environment factors include the following: 1. Integrity and ethical values 2. Commitment to competence 3. Board of directors or audit committee participation 4. Management’s philosophy and operating style 5. Organizational structure 6. Assignment of authority and responsibility 7. Human resource policies and practices Based on the interview dialogue provided below, you will be asked to evaluate the seven components of the client’s control environment noted previously in order for you to make an evaluation of the overall internal control environment. Before reading the interview information, please spend a couple of minutes reviewing the assessments you will make. Based on the information provided in the interview that follows, you are to evaluate Easy Clean’s overall control environment. To assist you in making this overall assessment, you will find detailed descriptions of factors noted below that may weaken or strengthen each of the seven components comprising the overall control environment. INTERVIEW WITH CLIENT Ted:Doug, can you give me a little information on the background of Easy Clean? Doug: Easy Clean provides both a domestic and industrial carpet steam-cleaning service and sells a relatively small amount of inventory, such as spot removers and carpet fresheners. Our company provides this service throughout three counties, which cover over 40 townships in a densely populated area. Easy Clean is completely owned by Phil and me. Our business has grown steadily over the course of several years after starting out with just one car-pulled trailer over five years ago. Over the years, the business has gradually added 12 fully equipped vans, worth about $30,000 each. Now in our sixth year of business, we plan to purchase approximately one new van each year to meet the growing demand for our services. The company grossed just over $1,650,000 in revenues last year, about half of which was collected in cash. We feel our continuing success is due in large part to â€Å"word of mouth.† Ted: Can you tell me something about the day-to-day operations? Doug: Well, Mr. Day, our office manager, and I are in charge of a small sales force that goes out on leads to give estimates for new jobs. Mr. Day is paid a salary plus a percentage of the total sales each month. My brother, Phil, is usually out in the field managing the 20 employees who work as cleaners for Easy Clean. Phil also helps with managerial and operating decisions. Salespeople are paid on a commission basis, selling both the domestic and industrial jobs based on standard prices established by the owners. Salespeople may sometimes negotiate special cut rates during the slower spring and fall seasons. Of course, these are almost always subject to approval by me or Mr. Day. Large industrial jobs are typically booked well in advance of the actual work. The job commitments obtained by the salespeople are normally submitted to Mr. Day, who signs them to indicate his approval and then returns them to the salespeople. Sales people then forward job commitments to one of two data input clerks for processing. The computer processes each commitment by extending the number of jobs by the standard price stored on the pricing file, or in specially negotiated situations, by the price on the input document. The sales, accounts receivable, and commitment files are updated and invoices are produced. An exception report of special prices is produced and sent to the salespeople to ensure that the specially negotiated commitments to jobs were processed correctly. Mr. Day developed this sales system himself and it’s working rather well. He’s currently in the process of creating the user manual for the system. I’ve also noticed that he sometimes makes adjustments to improve the system, which makes the accounting process more efficient. We’ve agreed that he’ll reevaluate the process at least once every eight weeks. Ted: And how about your accounting department? How big is it, and who oversees the accounting process? Doug: The accounting department of Easy Clean consists of seven part-time clerks, including the two data input clerks, who are all paid an hourly wage. All except one are college students working toward their accounting degrees. Mr. Day trains all new accounting help when they are hired. Typically, they stay on with us until they graduate, which usually covers two full years. We keep them pretty busy around here, but everyone helps each other out and they always get the job done. Ted: What are your brother Phil’s responsibilities? Doug: Phil manages the service component of the business. He usually trains all newly hired cleaning employees and explains their specific duties and responsibilities. When he feels sure that the employee is ready, the new hire is teamed up with a more experienced worker and assigned to a truck unit. When additional help is needed, Phil places ads in the local newspaper. Phil is the expert at running that end of the business. Ted: What about employee turnover? Doug: We haven’t had a problem with employee turnover. Phil expects some turnover in this type of business and knows how to deal with it. We try to prevent any employee concerns by maintaining an open door policy and encouraging employees who have questions or concerns about their responsibilities to ask for help or to come talk with us. If a problem should arise that might affect others, Phil or I will immediately address the problem at the monthly office meeting, making all employees aware of the issue. Both Phil and I work hard to ensure that any problem is resolved promptly. Doug leaves to give an estimate and Ted continues his observations of the business. Later that day, after spending time with the accounting staff, Ted has a moment to ask Mr. Day a few questions. Ted:Mr. Day, I’m wondering if you could help me clarify some things regarding my brief observations of the accounting staff? Mr. Day:Sure, I’d be glad to. What can I do for you? Ted: I got the impression from the staff that they’re not always certain about their assigned functions. Are job responsibilities clearly defined? Mr. Day: In assigning office responsibilities, Doug says the main considerations are that work should be done by the people who are familiar with a task and who are capable of doing it. But, he also admits that availability has to be a consideration. Although this does lead to some overlap in duties, it doesn’t create any confusion in responsibilities. I carefully assign the daily duties and overview each day’s accounting records. This keeps the office running smoothly and in a well-organized manner. Ted: The staff mentioned that they’ve occasionally had problems processing collections of trade receivables. Do you prelist cash receipts before they’re recorded? Mr. Day: Well, we haven’t really experienced any need to. The system is set up so that we collect all of the checks at the end of the day, making it possible to record them all at one time. This way, we can be more efficient by avoiding the need to write them down twice. On those rare occasions when there is a collection processing problem, we resolve it immediately. Ted: Do you ever run into accounting policy problems? Mr. Day: Not very often. I usually handle any policy problems that do arise, although Doug will handle the situation if he feels strongly about the issue. Ted: Well, thank you Mr. Day. I need to talk to Doug before he leaves for the day. A few moments later, in Doug’s office†¦ Ted: Are you satisfied with the processing of trade receivables? Doug: Yes, definitely. Mr. Day is meticulous in his clerical operations, which is well systematized. He has excellent control over the trade receivables. In fact, it’s been over a year and a half since the bank accepted a list of pledged receivables as security for a loan. From then on, we’ve had access to a continually renewable loan based on a list that’s updated weekly. The loan is relatively small, and the contract allows the bank to access Easy Clean ‘s checking account in the unlikely event that collection of the loan seems doubtful. Perhaps I should add that although Phil and I have no formal accounting training and we have given Mr. Day full responsibility for the accounting duties, Phil and I are the only people allowed to sign company checks. Ted: One of the accounting clerks mentioned that you’re thinking about making a change in the accounting system. Doug: As a matter of fa ct, Mr. Day has been looking into using a new accounting software package that should make the bookkeeping process an easier task for the clerks. This package includes a budgeting system that should help control costs and identify those areas that need attention. Although I’ve always monitored the company’s expenses, I didn’t previously see the need for a formal budgeting system. If something didn’t seem right, Phil or I would bring the problem up at the informal monthly office meeting between all the employees and try to resolve the issue. Given our current success, the implementation of a more sophisticated budgeting system seems like a wise investment. Ted: I’m also interested in your security measures. How do you protect your accounting records and physical assets? Doug: After hours, the office door and windows are heavily bolted. Only Phil, Mr. Day, and I have keys to open the office. Although there haven’t been any problems, we’re considering locking up the file cabinets where the hard copies of the accounting records and data disks are stored at night. I’ve also be en meaning to see about having the computers bolted down to the desks. As for the vans, they’re kept in a fenced-in lot behind our office. Each driver gets a key to the gate lock so they can let themselves in or out for work. We have to do this because a lot of the commercial cleaning is done after hours, when the office is closed. As a precautionary measure, we change the lock regularly. Ted: That should about do it for now, until I can get in to do some preliminary audit work. But before I leave, I’d like to ask you a few more general questions. To start with, can you tell me what you feel is responsible for Easy Clean’s recent success? Doug: Well, Ted, because Easy Clean is using the newest steam-cleaning procedure, we provide a much better result than the traditional rotary shampoo methods used by our competitors. And, our customers can tell. Plus, Phil and I understand the business well, we are personable, and we pride ourselves on doing good work. Ted: Having an audit performed by our firm is a big step. Why did you decide to have an audit now? Have you ever been audited before? Doug: Phil and I are confident that Easy Clean is a truly viable concern. We feel that audited financial statements will corroborate our claim. We’re eager to learn what suggestions your firm can give us regarding the most professional way to record and present our financial statements. We also have an interest in learning how to increase the company’s credibility with the local business and banking community. Both Phil and I are excited about the success of our company and we’re motivated to continue strengthening the organization with the eventual goal of pursuing additional business opportunities and endeavors. We’ve never been audited before, although we have used a local tax preparer to fill out our tax returns ever since Easy Clean has been in business. We did ask another firm, about two years ago, to come in to do an audit. We decided not to have the audit performed, though, because the company’s fees were too high. Although I’d have to look up the audit firm’s name, Phil and I decided that Easy Clean would have to wait for an audit until we could reasonably afford the fees. We’ve come to the decision that now is the time. Ted: Are there any issues of concern that you have regarding the audit? Doug: Not really. I’m proud of Easy Clean. The company has had no record of serious problems and has rarely had a problem with bad debts, since most of our receivable balances are collected within two to three weeks. Ted: I understand that Easy Clean does not have an audit committee, which is typical of an organization this size. Can you tell me if Easy Clean has a board of directors and, if so, who serves on the board and how active the board is in overseeing important issues at Easy Clean? Doug: We do have a board of directors. It is somewhat informal, but Phil, I, and our wives function as directors. We do have at least one regularly scheduled meeting each year and we have met on other occasions as necessary. Obviously, Phil and I have a pretty good idea of what is happening at Easy Clean on a daily basis. We do not believe our company is yet at a stage that could effectively support a separate board comprised of outside directors. Maybe we’ll do that in a couple of years, if we keep growing. Ted: One final thing I’d like to ask—have you and your brother Phil set out any goals for the future? Doug: Phil and I have spent a lot of time talking about our goals and objectives, but we’ve never formally recorded them anywhere. Our long-term goals are fairly uncertain, but we’re hoping to build our nest egg to the point where we can potentially retire early. We both agree that our future plans include expanding our sales territory, increasing advertising, investing more help and additional equipment, and, I have to admit, taking a well-deserved vacation in Hawaii.

Shampoo Assignment

a. How would you criticize the study in terms of its usefulness to you? In the first impression the product is creates an image as described below All Over Hair & Body Shampoo is a versatile product that works beautifully as a shampoo and body wash, making it extremely convenient for everyday use. The rich, cushiony formula can be used on any hair type, cleans hair in one application, and rinses easily with no build-up or even a hint of dryness!All Over Hair & Body Shampoo's fragrance-free formula is gentle enough for color-treated hair, sensitive scalp, and can be used on babies and children. It doesn't get much better than that! The FAQ desirability of â€Å"body† in a shampoo Is All Over Hair & Body Shampoo safe for color- or chemically-treated hair? Yes. If your hair is color-treated, permed, straightened, or relaxed we highly recommend following with Paula's Choice Smooth Finish Conditioner. I have acne on my chest/back. Will the ingredients in All Over Hair & Body Shampo o clog pores or make acne worse? In all likelihood, no.Although we refrain from making non-comedogenic claims for our products (because there are no standards in place to regulate that claim), All Over Hair & Body Shampoo does not contain heavy, thick, or oily conditioning agents and doesn't leave a film on skin. The water-soluble formula is gentle and rinses cleanly, prepping breakout-prone skin for subsequent anti-acne treatments. May I use All Over Hair & Body Shampoo to wash my infant and/or child? Yes, although as a general rule we always recommend asking your pediatrician before using any new product on an infant or child's skin.Paula's Choice All Over Hair & Body Shampoo is very gentle, and the fact that it is fragrance-free makes it a safer bet than most baby shampoos. Does All Over Hair & Body Shampoo work better as a shampoo or body wash? Both! We designed this product to be equally effective for shampooing hair and cleansing skin from the neck down. Is it OK to use All Ov er Hair & Body Shampoo to wash my face? Most likely, yes—especially if you have normal to oily skin. Generally speaking, our facial cleansers are the better options because we offer specific formulas to address the needs of various skin types.However, if you're pressed for time or want to multi-task as much as possible, give it a try and see how your skin responds! May I use All Over Hair & Body Shampoo to wash my dog? Yes. Always be sure to rinse thoroughly with warm water to remove all traces of shampoo from your dog's coat Shampoo and body wash/shower gel are two major classes of personal care cleansing products. Shampoos are specifically formulated to clean and take care of hair, whereas body wash is a liquid soap that is appropriate for cleansing the body. Most commercial shampoos and body washes are made as creams or gels.They are emulsions or gels of water and detergent base with added functional ingredients. Because the form or texture of both shampoos and body washes are creams or gels, many people may mistakenly use one as the other. Although there are some similar components inside both formulations, there are many differences from the view of a personal care formulator. The first difference is their target. Hair is actually a modified type of skin. The main difference between hair and skin is that skin is basically a living organ that replaces its outermost layer on a frequent basis.In contrast, hair is basically dead material derived from a few live cells deep within the skin surface. b. If you had the opportunity to design the pilot project from your viewpoint, what questions would you like to include in the questionnaire? How often do you wash your hair on average (please choose one only) Every day Alternate day Once a week Twice a week None of above Where do you buy your shampoo? (Please choose all that apply) Grocery store Salon Convenience store Beauty supply store Discount super stores (Big Bazar. ) Think about the reasons why you use a particular brand of shampoo.Many potential reasons are in the following list. We are interested in knowing the relative importance of these reasons in your purchase decision. Assume you have 10 points. Divide the points among the following reasons to indicate the relative importance of each reason. The more points you give something, the more important it is. You can give as many or as few points as you wish to each reason. Please make certain that your total equals 10 points. Smell Bottle design Moisturizing capabilities Clarifying capabilities Shine factor Shampoo colorVolumizing capabilities 0 Do Pantene advertisements correctly represent the product? Yes No How many different shampoos have you used in the past 6 months? (Please choose one only) 0 1 2 3 4 5 or more What is your classification? Freshman Sophomore Junior Senior What is your ethnicity? Caucasian Asian African American Hispanic 5. What is the primary factor that will influence your decision to purchase a shampoo? What is the primary factor that will influence your decision to purchase a shampoo? Price Brand Health associated benefits Smell/Lather/Moisturizing