Archive for Accounting Principles
November 19, 2008 at 4:52 am · Filed under Accounting Principles
IN a move aimed at sensitising rural communities about the importance of keeping up-to-date and articulate financial records, especially where associations and cooperatives are concerned, the Swaziland Institute of Accountants (SIA) will soon engage in a rural financial exercise.
This exercise is aimed at creating an awareness on the importance of maintaining good financial records.
In an interview yesterday, SIA Executive Director Barnabas Mhlongo explained that as an accountancy institution, their mandate in part was to bring awareness to members of the public about the importance of accountability with finances at all times.
He observed that some good rural development initiatives, cooperatives and associations which would have otherwise been very viable projects in future had somehow been depleted because of the lack of financial accountability.
“Lack of accountability even at grassroots level is a serious cause for concern. In the country we have seen good partnerships crumbling down to nothing because there were never properly recorded books of account,” he said.
The institution has already paid a courtesy visit to Deputy Prime Minister Themba Masuku and it was during this meeting that the DPM was briefed on the functions of SIA. Masuku then invited the institution to take part in government’s decentralisation policy, through the sensitisation of rural communities on the importance of financial accountability.
The programme will soon be launched by the institution. Explaining, Mhlongo said people should not mistake decentralisation as being solely confined to government structures.
“In essence, decentralisation has a much wider scope because it also involves, to a large extent, the private sector, non-governmental organisations and other entities involved in service delivery,” he said.
Meanwhile, Mhlongo said people should understand that big companies were successful because they respect the principles of financial accountability. “Budding small and medium enterprises should also emulate the example set by big corporations because despite their small business scope, they still need to adhere to good financial principles,” the director said.
In this regard, he said during the exercise, SIA would also visit chiefdoms and constituencies, amongst others to impart basic knowledge on accountancy whilst encouraging the spirit of adopting good financial records.
SIA was incorporated in terms of the Accountants Act No:5 of 1985, and the institution is also a member of the International Federation of Accountants (IFAC) and the Eastern Central and Southern African Federation of Accountants (ECSAFA).
http://www.observer.org.sz/main.php?id=48567§ion=Business
November 17, 2008 at 6:23 am · Filed under Accounting Principles
While most marketers talk about customer loyalty, the principles behind accounting for loyalty remain unclear. While customer loyalty is achieved over the long term, the sale & reward of points is treated as short term and have to be accounted for within the same financial year!
DNA Money in India had an interesting article from Rajiv Goyal( E&Y) on the lack of clarity in accounting loyalty earnings & expenditure.
Rajiv argues that according to ICAI( Institute of Chartered Accountants India):
* Accounting Standard 9 (AS-9) on Revenue Recognition does not specifically deal with accounting of discounts offered on sales. It only states that these should be deducted from the total sales. The generally accepted fundamental accounting assumption on the accrual concept of accounting holds that all costs should be recognised as incurred.
* The principle of prudence as per Accounting Standard 1 (AS-1) Disclosure of Accounting Policies requires that provision should be made for all known liabilities and losses on an estimated basis. Going by the concepts provided in AS-1, retailers would need to provide for the liability based upon estimates.
* However, there are some factors that may impair a retailer’s ability to make a reasonable estimate. These include- relatively long periods in which a particular rebate or refund may be claimed The absence of historical experience with similar types of sales incentive programmes or the inability to apply such experience because of changing circumstances.The absence of a large volume of relatively homogeneous transactions.
* There is no specific guidance in the Indian Accounting Standards on accounting for reward points or loyalty programmes. However, in the opinion of the expert advisory committee of the ICAI, in such a case, the seller should create a provision for the liability at an amount equivalent to the cost expected to be incurred on redemption of the outstanding reward points at any time in future by applying actuarial method.
As more and more companies go in for such programs, the need to come to a fair consensus on how to treat the reward of points( which is really a discount) is important as it has huge impact on investing marketing resources behind these programs.
The accounting principles behind these programs need to get a lot more customer-centric.
http://customerworld.typepad.com/swami_weblog/2008/11/loyalty-math—how-clear-are-the-accounting-principles.html
November 14, 2008 at 1:57 am · Filed under Accounting Principles
IN a move aimed at sensitising rural communities about the importance of keeping up-to-date and articulate financial records, especially where associations and cooperatives are concerned, the Swaziland Institute of Accountants (SIA) will soon engage in a rural financial exercise.
This exercise is aimed at creating an awareness on the importance of maintaining good financial records.
In an interview yesterday, SIA Executive Director Barnabas Mhlongo explained that as an accountancy institution, their mandate in part was to bring awareness to members of the public about the importance of accountability with finances at all times.
He observed that some good rural development initiatives, cooperatives and associations which would have otherwise been very viable projects in future had somehow been depleted because of the lack of financial accountability.
“Lack of accountability even at grassroots level is a serious cause for concern. In the country we have seen good partnerships crumbling down to nothing because there were never properly recorded books of account,” he said.
The institution has already paid a courtesy visit to Deputy Prime Minister Themba Masuku and it was during this meeting that the DPM was briefed on the functions of SIA. Masuku then invited the institution to take part in government’s decentralisation policy, through the sensitisation of rural communities on the importance of financial accountability.
The programme will soon be launched by the institution. Explaining, Mhlongo said people should not mistake decentralisation as being solely confined to government structures.
“In essence, decentralisation has a much wider scope because it also involves, to a large extent, the private sector, non-governmental organisations and other entities involved in service delivery,” he said.
Meanwhile, Mhlongo said people should understand that big companies were successful because they respect the principles of financial accountability. “Budding small and medium enterprises should also emulate the example set by big corporations because despite their small business scope, they still need to adhere to good financial principles,” the director said.
In this regard, he said during the exercise, SIA would also visit chiefdoms and constituencies, amongst others to impart basic knowledge on accountancy whilst encouraging the spirit of adopting good financial records.
SIA was incorporated in terms of the Accountants Act No:5 of 1985, and the institution is also a member of the International Federation of Accountants (IFAC) and the Eastern Central and Southern African Federation of Accountants (ECSAFA).
http://www.observer.org.sz/main.php?id=48567§ion=Business
November 10, 2008 at 7:19 am · Filed under Accounting Principles
I have read, over my business career, well over 10,000 different articles and lists about how anyone can be successful with a small business be it an independent business or a franchise. Many well intentioned and intelligent consultants I have come across professionally believe that a great idea with a great marketing scheme and superior desire can make anyone successful. Do yourself a favor and tell the next person spewing this nonsense that they are absolutely wrong!
The success or failure of the vast majority of all small businesses has little to do with the desire, marketing scheme or the great idea that created the business. While these three items must be present in every successful business, solid fundamental management principles will allow a small business to prosper and succeed. Every successful company, be it a small, medium or large business, uses the same set of management principals. The size of the business determines the individuals principals used and the sophistication of the principle. As an example, a small business normally has informal and perhaps even unwritten employee hiring guidelines. A medium sized company has a legally approved, comprehensive employee manual with employee hiring guidelines as a separate section. A large global business has an entire department writing several employee manuals in several languages with employee hiring guidelines based upon legal and social issues in each country. However, the common sense management principal that all companies should have a fair, consistent and applicable employment program must be used by every company.
As I have spent the vast majority of my career with small and medium sized businesses, here is a simple and select set of management principles that every small and medium business should follow to ensure success and profitability:
http://bookkeeping2outsource.wordpress.com/2008/11/08/essential-management-principles-for-every-small-business/
