Alternative energy mutual fund is a pool of; business angels, venture capitalists, and other investors who trust their money in hand of fund managers with the mandate of investing in startups that promise to invest in alternative source of energy. Alternative energy mutual funds were developed with the principal aim of saving and preserving our environment most especially now that we are all moved by the threat of global warming and the devastating effects of oil spill. Take the recent Gulf of Mexico’s oil spill as an example. Renewable energy funds and ethical mutual funds are some other examples of green funds.

WHAT IS RESPONSIBLE INVESTMENT?

Responsible investing are those investments that are made with the interest of the masses at hand while still not losing sight of profitability which is a major objective of business and investment. Those investments that are made after taking into consideration the side effects and positive impacts of investment opportunity are known as responsible investment or responsible investing. Social responsible investment is a process that involves some of the best practices in business and investment activities. Some of the activities and qualities that make an investment green are briefly looked at below:

COMMUNITY INVESTMENT: investing in the community where a business operates is an important non-financial factor of capital budgeting that every future oriented company should be concerned about. Community investment is not only a social responsibility of a business but also a protective measure taken by modern businesses. The environment of a business will take care of her in time of trouble if the business can react responsibly to the plight of the community.

GREEN ENERGY: responsible companies make use of as much green energy as they can lay their hands on. Green energy is a phrase used to represent company’s activities as far as energy generation is possible. Green energy according many experts is one step in the right direction that every business should put into their normal day to day activities if we truly want to combat the number of threats posed to our economy by non-green energy. If you are a business executive that is thinking about investing responsibly, you must invest in green energy equipment and sources.

GREEN STOCKS: green stocks are those stocks whose trading activities do not affect the climatic condition. They can either be blue-chip stocks or penny stocks. Many countries of the world have taken serious step to ensure that all stocks are as green as they can be. This is done by involving paperless process in the stock trading process. Part of the qualities that makes stocks green is the stocks ability to be traded online. Online trading stocks are fast becoming huge industry with great investment potential

SOCIAL CONSCIOUSNESS: being socially conscious is a vital step towards being socially responsible in your investment. Social responsibility is the key to sustainable investing. No wonder ACCA is hammering on sustainability reporting. Sustainability investing is the act of making investments that will withstand anticipated problems and challenges. Companies carryout what is known as capital budgeting or investment appraisal in order to determine the sustainability of the investment proposal(s).

It is clear from this article that green funds are not the only form of green investment and responsible investment that can be made towards contributing in the campaign of preserving our environment. We should all endeavour to make our activities as responsible as we can so as to meet our goal of investing responsibly. One interesting thing I have come to realise is that we have more investment opportunities in green activities sector than most other industries that we all crowd ourselves in.

To the protection of our environment!

Church business has become a large industry with investments that is worth billions if trillions of dollars and as such needs to be treated with utmost care hence, the importance of accounting in churches. Before I go on bringing out the importance of accounting in the church, I would like to firstly give a working definition of the term accounting.

Accounting is the process of; collecting, collating, recording, analyzing, interpreting, and communicating financial data and other datum with economic values to the end users (in this case, the church committee members and other stakeholders in the church) in a format this understood by them. This makes the accountants finance communicators.

BENEFITS OF ACCOUNTING FOR CHURCH’S PROPERTIES

To promote holiness: accounting in church will promote holiness as people will have it at the back of their mind that they may be caught if church’s property is mismanaged and misappropriated. If accounting in traditional businesses can help deter fraud, why can’t it then do same in the church?

For accountability: there are people whose ‘self imposed duty’ in the church is to monitor peoples way of life and when they see that a particular responsible officer is living well, they will conclude and spread the news that such officer is using finance that is meant for running the affairs of the church, in order to curb this, accounting for the property of the church is the only way to enthrone the desired transparency in the church.

To give to the government: because churches have recently been classed as profit making ventures, there is the need for proper books of account to be maintained in the church. Failure to keep proper account of the activities of the church oftentimes leads to the church being fined just like other business ventures.

To stimulate growth: accounting information provided by the church administrators will act as a basis for planning growth and other developmental projects of the church. Just like accounting has roles to play in the development of the economy, it equally has roles to play in the development and growth of the church.

To protect the churches properties: it is an established fact that internal control is the best method of protecting assets and deterring fraud. If this holds, it will equally hold that proper accounting is the backbone of good internal control.

Gone are the days when people erroneously assume that the church being a place of worship is and should be free from misappropriation and embezzlement. In fact, the devil (in the form of human beings) has now entered the church to steal and further enrich them-selves thereby making it even more important to accurately account for the assets of the church.

If you are among those that have believed that the importance of accounting in the church shouldn’t be an issue, I hope that this article will give you food for thought and change your thinking?

THOSE THAT USE ACCOUNTING INFORMATION SYSTEM

Designers of AIS: designers of accounting information system are the main users of accounting information system. Some people call these classes of people ‘the systems analysts’. What ever name you call them does not matter what matters is that they are the primary users of AIS in the modern business environment.

Auditors: auditors make use of AIS in the bid to carryout their duties effectively. AIS enables the auditor to gather the information that are necessary to; plan, develop and implement audits as it is suppose to be done.

Managers:  as business environment become more complex by the day, managers tend to rely more on the information supplied to him or her on a real-time basis to make informed decisions that have the capability of making or marring a business. AIS is a one stop shop for financial information that business managers need just like MIS (marketing information system) serve the marketing manager in analyzing and interpreting marketing situations.

Regulators: government of the modern society are increasingly becoming aware of the importance of having a comprehensive database of the required activities of companies that operate within its jurisdiction and have placed greater reliance on AIS to supply the bulk of this information as they are primarily concerned with financial information.

Investors: investors rely on AIS to produce financial statement that is true and fair. AIS are designed in such a way that the chances for financial statement fraud/ error to occur are slim thereby boosting the confidence of the investing community.

Business process owners: business process owners (BPO) are people that run the operation of businesses; they are not the owners of business except where business operations are done by owners. I took time to bring out this point as a lot of people have misunderstood this. AIS provide information that makes the life of workers a lot much easier. A sales representative will have instant access to a company’s stock database from a remote point while accepting orders and production managers simultaneously have access to information that will signal the need for more goods to be produced.

Accounting information system (AIS) has changed the face of accounting as a field; by introducing challenging but interesting elements into accountancy. If you have interest in pursuing a career in accounting and you are not giving AIS serious thought, you had better look elsewhere as accountancy may not be for you.

WHAT ARE RELEVANT CASH FLOWS?

Relevant cash flows are inflow and outflow of cash whose inclusion or exclusion from investment appraisal can affect the overall investment decision. What this means is that finance / funds that have already been committed will not be considered while performing your capital budgeting. Costs like R&D, market research costs, old (redundant) staffs’ salary, etc will not be included as projected cash flow of a project that will be considered for investment analysis purpose. The cost of feasibility studies for instance cannot be considered a relevant cost as the acceptance or rejection of the project will not reverse the cost.

Again, paper costs like depreciation and capitalized costs cannot affect your analysis of businesses and projects. Be sure to identify sunk costs and remove them from your analysis. Sunk costs are costs that have already been incurred without prospect. Understanding the principle behind the timing of cash flows will help you identify which cost is relevant and which one is not relevant. Below are clues on how to properly time your cash flows both for real life purpose and exam purpose.

TIMING OF CASH FLOW

Initial investment, working capital and tax cash flows are the ones that are mostly timed wrongly. Discounted cash flow: by discounted cash flow, we mean investment appraisal technique which takes into account both cash timings of cash flows and streams of cash flow over a projects life span. Discounting is clearly concerned with timing of cash flows. As a general rule, the following guidelines may be applied:

1. A cash outlay to be incurred at the beginning of an investment project (‘now’) occurs in year 0. The present value of one dollar ($1) now, in year 0, is 1$ regardless of the value of r (the discount rate).
2. A cash flow (inflow and outflow) that occurs during the period is said to all occur at the end of the period- year end. Suppose a company’s year end is November, receipt of $20,000 in March will be said to occur at the end of the year, which is November in this case.
3. A cash flow that occurs at the beginning of a period is taken to have occurred at the end of the previous year. This is to say that cash outlay of $15,000 at the beginning of year 2 is taken to have occurred at the end of year one.

Relevant cash flows is the key to any investment appraisal and capital budgeting.

Companies create value for the owners of a company by investing in projects that have positive NPV (net present value). The reason behind this is that by making superior investments with positive NPV, investors stand the chance of making more in the future.

INVESTMENT DECISION RULES

I will be stating the investment decision rules under different methods of project evaluation.

NPV: NPV is technically the superior investment appraisal tool, its investment decision is based on selecting investment or project with positive NPV. It is assumed that every project that has a positive NPV can be accommodated by the available fund. Under a period of cash shortage, a method known as (PI) profitability index will be used.
IRR: IRR is an acronym for internal rate of return. Its acceptance or rejection criterion is based on a set rate of return. The IRR method of investment appraisal is to accept projects whose IRR (the rate at which the NPV is zero) exceeds a target rate of return. The IRR is calculated through interpolation method. You accept project if it has a rate that is greater than the minimum required rate.
PI: profitability index is the ratio of the present value of a project’s future cash flows divided by the present value of the total capital investment. Note that there is difference between cash flow and profit.
Payback method: here, the investment rule is to accept projects with shortest period for the projects cash flow to be recouped.
If things are done right, investment appraisal should add value to business venture.

THE CAPITAL BUDGETING PROCESS

One thing I would like to point out here is that capital budgeting is a process and not a destination. This is so because of the loopy process of investment appraisal.

CREATION OF CAPITAL BUDGET: a capital budget is a long term document that contains a company’s overall strategic plan. Capital budget normally prepared to cover longer periods than sales, production and resource budgets as it usually ranges from three to five years. A good practice is to break this down into shorter periods to match other budgets. Capital budget must be a three dimensional document as it has to take into account the current production budget, future expected production level and the overall long-term development of the organization, and industry as a whole. Capital budget should be made to be flexible enough to allow for ongoing change.

INVESTMENT DECISION MAKING PROCESS: because of the fact that capital investment involves the outlay of large sum of fund, care is taken to make sure that the best mix of projects are selected. Investment decision making process has four steps that needs to be taken to fully get the best

• Origination of proposals: you don’t just wake up one morning and find investment opportunities knocking at your door. Investment opportunities have to be actively sought. When found, proposals should be prepared to this effect.
• Screening of projects: there is no way all identified projects can be profitably executed. A sort of selection and screening has to be done to invest in the best possible project.
• Analyzing and accepting projects: analytical tools like the ones you are probably seeing on this site are used to analyse investment opportunities and certain acceptance or rejection rules followed.
• Monitoring and reviewing of projects: you will quickly lose motivation and the zeal to succeed immediately you stop monitoring your progress. You will get vital information from this process. This is applicable also to investments.

An important concept that is very important to mention here. For a capital budget to be complete, care should be taken to ensure that only relevant cash flows are imputed into the process. I will make a detailed post on this next, so keep a date. Financial analysis is also a vital aspect that must be seriously taken into consideration.

I hope you will now agree with my initial assertion that capital budgeting is a process and not a procedure, just like the name implies.

You can buy any of the books displayed below for more on capital budgeting:

ROLES OF AN ACCOUNTANT IN BUSINESS

Establishment of Epresence / ecommerce: today’s business environment requires that companies transact business on a global scale. Gone are the days when we see internet presence as luxury. Ecommerce as a matter of fact is now a necessity that every business executive and manager needs to seriously look into.

The training of accountants in recent times has incorporated a large chunk of e-business. Many schools now offer it as a full fledge course. ACCA for example have been ensuring that every accountant that they train is well equipped with the basic ecommerce skill. The new syllabus of ACCA that will be implemented from 2011 even placed more emphasis on ecommerce and internet business skill. It is hard to find business or investment opportunities in the face of economic meltdown. Having web presence helps a company scout for information from all over the world.

Safe guard of business assets: it is the duty and responsibility of the management to safeguard assets but, this burden has significantly shifted to the shoulders of the accountants. One way that an accountant does this is to ensure that accounting treatments are appropriate.

Institution of corporate governance and internal control: again, it is the duty of the accountants and other information measurement professionals to ensure that controls are in place and that corporate governances are upheld. This again is the legal responsibility of the management team. It is the role of the accountant to set up a formidable internal control system and ensure that they are being followed to the letters. This will also extend accountants role to fraud fighting. Fraud fighting is primarily the judiciary of the forensic accountants.

Investors’ relationship: accountants act as medium of communication between managers and business owners. This is usually called the financial statements. If you are conversant with the modern business environment you will agree with me that investors’ relations are even more important now than ever. The reaction of investors can either make or mare a company’s prospect. Investors can decide to withdraw their stake in a business if they feel that the right information if not being communicated to them in the right format.

If you have read this article and the other articles on the role of accountants, you will really appreciate the fact that accountants are professionals working tirelessly for the success of every business entity.

Financial analysis and business interpretation: as small and medium sized companies cannot afford the luxury of hiring both an accountant and a financial analyst, it then becomes obvious that the accountant will have to combine both the job of an accountant and that of a financial analyst. Businesses need to analyse business activities and carryout investment appraisal before investments are actually made.

Fraud prevention and fighting: fraud is one major cause of business failure and economic meltdown. It is the role of accountants to help small businesses put measures that will help fight fraud in place. For accountants to do this effectively, he or she needs to be well equipped with the right combination of accounting, legal and IT skills. A good professional body to join in this regard is the ACFE (the association of certified fraud examiners). You can join them today by visiting this website and register http://www.acfe.com the annual subscription fee is as at the time of this writing $35USD. Auditors also play their part in fraud fighting by giving management sound advice that will help prevent fraud from taking place.

Strategic decision making and fund raising: without strategy, businesses would definitely not strive. Strategic planning and management is no longer the sole responsibility of the top management team. It is now part of the duty of an accountant to fully participate in strategic planning, control and management of a business. Small businesses will immensely gain from the wealth of experience paraded by accountants and other finance professionals like auditors. The only problem here is that auditors are not allowed by law to render other non auditing services to their clients but, since small businesses do not really need to have their accounts audited, the advisory service of auditors can still be obtained, or better still engaging an auditing firm that is different from the company’s auditor.

Corporate governance and branding of company: brand is everything in business, remove brand and watch businesses cease to exist. Every forward looking company should jealously and carefully guard their brand. This brand is best guarded when corporate governance is given its right seat in a company’s affair. You company that lack ethic cannot successfully protect her brand. It is the duty and responsibility of the auditors and accountants to ensure that corporate governances in business are not sent to the background. Auditors can advice managers to take corrective actions that are needed to correct any weakness in controls that are already in a business or to put controls in place where there are none.

Cost savings and avoidance of legal violation: accountants are traditional known as cost savers. Cost saving is one of the primary reasons why a company keep record of transactions and carryout any form of financial analysis. Business owners may not know the best way of maximizing return from production plant but would be guided by an accountant to make the best allocation of resources. Accountants use various tools to make resource allocation decision.

There is this misconception that small businesses don’t need accountants for them to survive. This is a wrong kind of advice coming from the wrong set of advisors. I am sure that the knowledge you gained from this article has helped changed your thinking about the roles of accountants and auditors in small business. So, if you are a small business owner without accounting background or knowledge, I encourage you to go and hire one now.

To the success of your small business!

WHY DO WE NEED STATEMENT OF CASH FLOW?

We need statement of cash-flow for the following reasons:

Legal requirement: it is legally required that every big and medium businesses produce a statement of cash flow to enable users of accounting information make proper analysis of the financial statement. I am sure that you are aware of the fact that no business can operate successfully without observing the provisions of the law. Meeting reporting standards is part of the strategic plans that a business must make in order to succeed in today’s hot business environment.

Determining the capital structure of a business and why overdraft exists even while a company is making profit: it is useful to understand the components of a business’ finance structure. This will help determine the business risk and financial risk of a business. Through the analysis of statement of cash flow, a business can get insight into the reason why overdraft still exist in the company’s statement of financial position (balance sheet as it is formerly called).

Explanation of the reason behind behaviour of certain variables in the financial statement: this is similar to the point explained above. One does not need to be in darkness as to how a company raised cash, how the cash were invested and how the proceeds from business operations were distributed among competing variables.

How funds / cash injected into a business in a given year is used: statement of cash flow consists of three major parts; operating activities, investing activities, and financing activities. This will give clear information of the movement of cash in a business.

Statement of cashflow is used for making forecast: based on the study of cash movement, business managers and executives can make intelligent forecast on a company’s financial profile.

Determining how liquid and solvent a business is: you will agree with me that liquidity is a key factor to the long term success of businesses. A business that is not liquid enough to meet with its immediate cash needs

For valuation purpose: a method of valuation is based the cashflow of a business. The motive of the investor and other variables will have to play a big role in determining the method of business valuation to employ in appraising a business for investment.

To determine working capital requirement: working capital requirement helps determine the capital need of a business and the proportion at which they are needed.

Without the inclusion of statement of cash flow, the importance of accounting would not have been really felt.

Educational sector: education is what all and sundry need and will always be in constant demand. The only thing that will change is the method that people wants to be taught. Children and even the unborn generation all need to be educated. Average parents that cannot afford a three square meal can manage to send their children to school and buy some educational products for their children to learn. Investing in education and educational products is a wise investment that people can easily put their money and be assured their capital will be preserved especially in this current tight financial era.

Financial services sector: as the financial sectors are getting heat up by various regulations and rules to help preserve it, people (financial products consumers) are busy shopping for the best financial expertise and advice they can get. You will make good returns on your investment if you can simply invest in sound financial services provider(s). Companies need help on raising finance.

Consulting / human resource service: companies are actively shopping for the best hands in their businesses to help run their business effectively and efficiently. If you have money to set up a consulting firm, do it as this will yield good result. Again, companies now engage the services of recruiting firms to get the best candidates for their vacant positions. This they found necessary after recording massive frauds committed by privately recruited workers. You can even specialize in writing business plans and still make money as banks and financial institutions now place more emphasis on professional prepared business plans before giving out loans. As a consultant, you can even set up a fraud fighting outfit to meet the needs of people. The demand for fraud fighters is on the increase as it has been proved that fraud is the primary cause of economic meltdown.

Restaurant / eateries business: restaurant and eateries business as is one sure sub sector that has never and will not witness recession no matter what. This is based on the fact that people will always eat even while they cannot afford to have luxuries of life. Though, restaurant business might be somewhat difficult to run profitably, but the skills of running a restaurant can be learnt.

Investment in shares: shares can act as a shield to economic recessions and global financial crisis when invested in. the reason for this is: investors assume that companies will adjust their product prices to reflect the prevailing economic situation.

One thing I always tell people is to learn to exercise patient for their investments to age and mature. In other words, you will not start seeing results over night from your investments.

Immediate gratification and results from investments and other commitments of resources that people make is one primary cause of fraud and financial crimes. Also note that proper investment appraisals are needed in all these forms of investment opportunities.

Happy investing!

The traditional role of accountants is principally the; collection, collation, preparation, analysis, interpretation and communication of accounting information to relevant user of accounting information in a suitable format. Now, notice that accountants in this case perform the accounting functions of a business.

The above roles of accountants can be statutory or voluntary. A business (especially the small businesses) can choose not to fully utilize the accounting function of the accounting system. A business can however decide to privately engage the service of an accounting as an independent business advisor/ consultant. When this is the case, the roles of the accountant might change depending on the letters of the consulting contract that establishes a legal relationship.

Accountants acting in the capacity of independent advisors can act in the following capacity:

Tax consultant: taxation is a fiscal policy tool that the governments use to control money in an economy. Higher taxes are charged in times of inflation and vice versa. However, it is the duty of companies and individuals to try as much as they could to reduce the amount of tax they pay to the government through a process known as tax planning. Tax planning entails legally taking advantage of loopholes in the tax laws in order to save money in the form of tax savings.

Systems consultant: accounting information system (AIS) is an aspect of accounting that is a subset of management information system (MIS) to take care of informational flows in the accounting system. AIS has become so important in businesses today that businesses quickly collapse without its presence and this makes it necessary for an accountants to be in the company to assist in the design, development, implementation and auditing of AIS.

Business continuity expert: it has been realized that business failures are rooted in lack of or improper business continuity plan in place. It is also discovered that other experts that operates in the field of business and investment continuity do not have the right mix of skills and qualification to help tackle the problems of business failures. This is why accountants are needed as independent business advisors in the area of business contingency plan.

E-commerce consultant: e-commerce has evolved to become the main sustainer of business community and posses its own threats and benefits. Accountants with forensic skills champion the fight against e-fraud and other internet identity theft that are everywhere now. Again, accountants help their clients’ carryout proper investment appraisal on potential IT investments.

Internal control/ fraud fighting experts: internal control has consistently proven to be the holy grail of fraud fighting. You will reasonably take control of other affairs if you can just have a functional and vibrant internal control system in place in your business. Accountants are among the few experts that are well informed on the ins and outs of internal control and are therefore invaluable in the process of designing, developing, testing and implementing internal controls in businesses.

Notice that the roles of accountants in each of these offices changed slightly but also be aware that that does not create a silos in the role of accountants. A silo is the term used to describe a situation where functions are not correlated. Like I always do, I encourage all accountants to live up to expectation and face the challenges that come with varying roles of accountants.

Above all, accountants helps us to protect our investments. The importance of accounting and accountants should not be taken for granted

This article is primarily written to discuss the role of independent business advisor. Independent business advisors are: business accountants, tax accountants, business analysts, information systems analysts, legal advisors (lawyers), financial analysts, fraud examiners, internal control experts like auditors, etc.

IMPORTANCE OF INDEPENDENT ADVISORS

The importance of independent advisors cannot be over emphasized. Your business will avoid a lot of avoidable loopholes by simply involving the services of business independent advisors. Psychologists for instance can help work on reducing workplace bully that can give room for heavy loss through assets misappropriation and theft. It is a well established fact that human beings are the weakest element in any system and must be worked upon by behavioral experts.

Accountants and auditors will help businesses plan, design and enthrone internal control in a business. You know that the aim of every business venture is to achieve the corporate goal of the business which hinges around the profit maximization via assets protection and multiplication.

Tax accountants in their capacity carry out quality and reliable tax planning on behalf of their clients. Tax planning is a calculated action taken by businesses to reap the benefits of loopholes that exists in tax laws. Tax accountants will ensure that our business does not go against the tax laws which are a criminal offence punishable under the law. The process of illegally refusing to pay tax or under paying is collectively known as tax aversion. Tax aversion can seriously put you and your business in danger of extinction.

Fraud examiners are involved in the interview process to ensure that criminals are not given sensitive positions in a company. Fraud examiners are even retained in most businesses to carryout other routine activities beyond employee’s interview. Fraud examiners are highly sought after independent advisors that serious minded businesses cannot do without. Accountants are assuming the role of fraud fighters in this our modern business society. The role of accountants in fighting fraud is so vital in the fraud fighting community.

I can go on giving reasons why independent advisors are so important our life but, would stop here as this article is not meant to be long. The important thing to take home from this article is that we all need to involve the services of professionals in all that we do if we really want to make in life. Hire an independent advisor today and be rest assured that you never regret your action. Enjoy!

Investment is the action taken by an individuals or corporate bodies to add value to already controlled asset or resources. Notice the use of the word controlled. This implies that you must not be the owner of whatever resource you invest as your investment.

FORMS OF INVESTMENTS

Shares investment: shares are stocks of company held by the general public. It represents owners’ interest in a business entity. There are two broad types of shares; common shares and preferential shares. Those that owns shares I companies are called the shareholders. Investment in shares is one of the surest ways of hedging your resource against inflation and economic downturn. The reason is that investors would believe that management of companies’ factors in the general price level change into their business activities thereby retaining their purchasing power and this will in turn translate into corresponding increase in share prices.

Real estate investments: real estate is the phrase used to mean houses. People need building for varying purposes, but not all can build their own houses. This now creates an opportunity for investors to provide housing to those that cannot afford to build theirs. The process of providing housing to all those that cannot afford to build their own is known as real estate business. If done well, real estate business is one of the most profitable investments one can make.

Insurance investments: very many people don’t know that insurance is a form of investment. There is this thinking that insurance is only necessary for emergency sake and all that. If you are among those in this line of thinking, I will shock you today by telling that insurance is a form of investment that promises sure and reliable return while at the same time taking care of contingencies and unforeseen circumstances. Life insurance policy for instance yields interest that will all be given back to the policy holder if he or she outlived the insurance policy.

Business: business is the act of looking for what people need and taking steps to meet those needs is a profitable way and manner. Business is no doubt the best form of investment that anyone can make. The only problem is that people lack the needed skills to make their businesses work for. Business failures made people consider business as the riskiest form of investment. This is not true; business is a safe form of investment. All that you need to do is master the art of investing. There are lots of resources that one can use to hone his or her business skill.

Derivatives (options, swaps, etc): derivatives are not primarily a form of investment but, a necessary tool needed in any investment strategic plan. Derivatives acts as hedge to our investments and would therefore qualified to be called investments.

Bonds: bonds are form of investments in the form of security. Governments are the principal issuer of bonds. Corporate bodies also issue bond but is popularly known as debenture. People (corporations and high net worth individuals) invest in this kind of security for risk free returns. Risk free return is rewards that accrue to investor with reasonable certainty as regards returns.

CAVEATS OF INVESTMENTS

Beware of the activities of investment scammers: due to the fact that investment is important to our life and wellbeing, scammers have made it a point of duty to reap the general public off their hard earned money all in the name of investment. The golden rule is “if it is too good to be true, it probably is” fleeing as much as you can from any form of scheme that promises abnormal returns is the key to making secured investments. Investments should grow organically.

Carryout proper investment appraisal: investment appraisal is the act of x-raying business opportunity to establish its economic viable-ness before venturing into. You need to employ the service of professionals if you are not good in doing this.

Be sure of exist point before making investment: it is a good practice to see the exit point of an investment opportunity before committing your scarce resources to it. Any time you don’t see an exit root in any business opportunity, the most reasonable and wise thing to do is walk away from such opportunity.

Peoples mind needs to be cleared on what investments really are. One of the primary causes of the economic meltdown is the existence of toxic assets. Toxic assets are resources created to have value but did not have any value after all. A good example is the SPE (special purpose entity). Any resource controlled by you that does not have the prospect of adding value is not an asset.

Your living home for instance is not an investment, as obvious as this is, a lot of people still consider their living home as investments. This I know is one of the reasons why people struggle to make it financially. Your home does not bring in any cash flow except it is sold and until that happens; it still remains a liability and not an asset.

Now that you understand what investment is, all that you need to do is go out there and make exploit.

To the success of your investment!

A young lady out of fear of being called names failed to report discrepancy discovered in accounts payable for several months. Her superior officers always call her ‘dullest of all’ each time she asks a question about her work area that she does not understand.

This workplace bullying that this lady had been suffering from her superior officers made her keep mute when she finally ran into fraud that would have been uncovered if she had raised alarm. The account clerk noticed that Anne (not real name) has developed fear of asking questions in areas that gets her a little bit confused. So, immediately Anne was made responsible for reconciling accounts, the fraudster injected fictitious invoices into the system.

Anne did her job well by noticing this discrepancy but out of fear of being bullied channeled her query to Paul (not real name) her colleague of the same level who coincidentally happens to be the perpetrator of the fraud. Trust fraudsters, Paul immediately instilled more fear in her by reminding her of how she would be bullied if she is to ask question.

Anne accepted the discrepancy in good faith and Paul continued his exploit for a period of 18 months before the external auditors noticed it and advised the management to contract the service of fraud examiners.

Anne clearly saw the red flag but was handicapped to say anything to the appropriate authorities. Workplace bully also affects the moral of worker.

The morale of this short story is that managers and executives should in collaboration with their accountants and other business advisors. A lot of frauds will be discovered and nib from the bud if workers would be allowed to ask question and relate with their superiors without fear or favour. In fact, creating a condussive work environment should be incorporated into companies policies.

Research has shown that most of the office bullies are not themselves the perpetrators of occupational frauds but, some senior members of companies intentionally use bullying to create atmosphere where junior staff members would be afraid to question their actions. Accountants as fraud fighters should always be on the lookout to ascertain the through motive behind office bullying.

INVESTMENT APPRAISAL FUNCTION: without investments, the economy will not develop and grow. Investment appraisal is the process of evaluating an investment opportunity in the face of both financial and other non-financial factors in order to determine the worthwhile-ness of the investment opportunity. Accountants are among the few professionals that can effectively perform this function with minimal resources being expended.

PREPARATION OF FINANCIAL STATEMENTS: investors and business owners no longer have to be present in their businesses for it to strive. This is made possible by the entity concept in accounting wish allows business be different from its owners. The only way that owners of business can monitor what is happening in their business is to have a representation of activities through the financial statements of the company. This financial statement is only prepared by the accountants (though the law says it is the duty of the managers to prepare the financial statements, but they make accountants of the company do it for them). This again gave rise to another role of the accountants; the accounts need to be audited in order for the piece of information has some credibility. Hence, auditing is another role of accountants in the economic development of the economy.

COST SAVINGS: there is an old adage that one does not get rich by earning and throwing away. Same goes to economic development. Costs must be minimized for the economy to grow and develop. It is the main role of accountants to lead the park of cost savers. Knowledge acquired from cost and management accounting is the most powerful tool that accountants need to give management the best advice on cost saving.

FRAUD FIGHTING: the world economy has lost so much from the activities of fraudsters. If the activities of fraudsters are not put under check, economic development will be stalled as no meaningful economic development will take place in an environment where misappropriations and embezzlement is all we hear in the news on a daily basis. Accountants are trained to be at the front seat in the fight against fraud in our time. This however will not be an easy task as the mix of accounting, law, and IT skills are required for accountants to be well positioned to effectively fight fraud. Accountants should be happy with the requirements of establishing and implementing functional internal controls in every organization they find themselves. Accountants also have to embrace IT as many fraudsters now perpetrate their evil deeds through the aid of computers and other information technology infrastructures.

RENDERING OF FINANCIAL SERVICES: it is a well known fact that economic development and growth will not be achieved if finances are not well managed. Accountants render financial services to business owners and the community at large. This role of accountants is more important now that the world is trying to recover from the shock of the financial meltdown that just rocked the global economy at large.

Since businesses are the main stimulant of every economy and accounting is the language of businesses, accountants have a major role to play in ensuring that the language of business is understood by all and sundry. Imagine the level of confusion that we all will be experiencing if we remove communication in our day to day activities.

Permit me at this point to say that accountants are the most important professionals as far as economic development are concerned. I don’t mean to upset you in any way if you are not an accountant but, that is the simple truth. You can always join the accounting profession.

Technological breakthroughs constantly place more challenges in the hands of accountants and other finance professionals that only those with lion heart can manage to handle the situation and all the problems that comes with it.

PROBLEMS FACED BY ACCOUNTANTS

The problems accountants face will be discussed under two different headings: VIZ,

As auditors: as auditors, accountants continue to face the challenge of compliance and lose of confidence from the general public. Apart from the compliance problems, auditors face the problem of handling the issue of auditor’s independence. The nature of today’s economy has added to the already difficult situation of establishing auditor’s independence. As if that isn’t enough, the pressure from the general public questioning the relevance of auditing in the face of various scandals that constantly rock the accounting and auditing world.

As business accountants: accountants that are working in the business as consultants to management on managerial issues will have to wrestle with the uncertainties that characterize business as a whole. The challenge placed by globalization is enough to extinct any business that does not take a global perspective in all of its activities. Accountants are now at the forefront of marketing and strategic planning functions in various sectors of the world. Corporate governance and reconciliation of the interest of shareholders and other stakeholders of a business is enough to give an average accountant many headaches.

As tax consultants: problems that are facing accountants are even made worse by the increase in tax fraud cases reported in recent time, business owners now employ all sorts of trick to averse tax. Accountants that act in the capacity of tax consultants are faced with the challenges of keeping abreast with the constant change in finance Acts (in the UK). As tax consultants, more and more is being expected from them as far as tax fraud is concerned.

As fraud fighters: fraud in business is now proving to be a problem that has defiled every solution. Accountants are always called upon to help prevent fraud. The worst of the matter is that fraud and other financial crimes are now being perpetrated through the computer and the internet. This development has led to the development of new credentials in the accounting profession that will reasonably equip accountants to fight the online and internet fraud that is trying to erode the confidence reposed on e-commerce.

You will agree with me that the challenges that faces accountants are on the increase but that shouldn’t deter you from being the great accountant that you are. You should be encouraged and carryon with the challenges. Remember again that one way of combating these challenges is to be fully prepared both in the areas of finance and technological advancements.

Great accountant!

Accountants have been called upon by some professional accounting bodies to curb the surge in information risk. Information risk is the probability that companies and businesses are circulating false information. Companies parading themselves as being profitable while they are in fact empty shells. This was exactly what led to the demise of Enron and some other financial scandals.

 Financial statements fraud and online scam are just two examples of information risk in this our time. In this article are some assurance services that accountants as information specialists can offer.

ASSURANCE SERVICES PERFORMED BY ACCOUNTANTS

• Risk assessment: it is directly within the purview of accountants acting as auditors to provide risk assessment service. This they do through the institution of internal audit and internal control. Auditors should evaluate the systems of internal control to ensure that control objectives of organizations are met in a cost effective manner.
• Business performance measurement: accountants have long shifted their focus from being pure business accountant and auditors to being information processing and measuring experts. Information has become the most valued asset in today’s business world. Accountants provide assurance service that what the business says it has done in terms of performance is actually what it has done. There is need for an assurance that the content of a company’s mission statements are adhered to religiously.
• Information systems reliability (SysTrust): accountants and auditors assure managers and executives who are faced with too many information to make decisions from; that the system that produces the information can actually be relied upon to a reasonable extent.
• Electronic commerce (WebTrust): this is similar to the systrust assurance service. The only difference is that webtrust as the name implies is an assurance service that is web based. This is very important as e-commerce is gradually eating deep into the global economy.
• Health care performance measurement: since the health care sector is not profit oriented, steps needs to be taken to ensure that funds committed to the wellbeing of people are actually put to judicious use. VFM (value for money) audit is carried out on health care statement of affairs to lend credibility to it.
• ElderCare services (PrimePlus services): this is similar to the above point explained.
• Technology service: as technologies are constantly being employed to negative use, accountants need to evaluate the use of any technology before it can be fully embraced by businesses as a means of getting problems solved.
• Privacy compliance test: the services of accountants are needed to ensure that businesses are in compliance with the provisions of the law.

The above services are performed by accountants because they are the set of professionals that are more equipped to tackle the new internet and jet age that we now live in. People now employ technology and internet to commit financial crime and economic crime.

It will be a shameful thing for accountants to claim to be financial experts if they cannot reasonably provide the business community with the right kind of assurance services that will reasonably guarantee a satisfactory secure business environment.

The theme of the seminar is “Computer: the solid rock of AIS”. All what they were saying there was that AIS MUST be a computerized system. This is not true; AIS can either be computerized or manual.

WHAT IS ACCOUNTING INFORMATION SYSTEM?

AIS is a specialized subsystem of the IS (information system) as a whole whose primary aim is to convert data from internal and external sources into information related to the financial aspects of business events, in an integrated IS, and to communicate that information, in a suitable format, to managers at all levels in all functions and capacities to enable them make timely and effective decision for planning, directing and controlling the activities that they are made accountable for.

Notice that the medium (computerized or manual) of collecting, processing and storing the information is not emphasized. Rather, emphases were laid on the use of information.

CHARACTERISTICS OF ACCOUNTING INFORMATION SYSTEM

Because an accounting information system is a subsystem in the information system, its characteristics will be the same with that of information system which are:

effectiveness, efficiency, confidentiality, integrity, availability, compliance, completeness, relevancy, reliability of information, neutrality/freedom from bias, comparability, timeliness, predictive value, sufficiency of content, detailed, confidence in source, understandability and simplicity.

Note however that good AIS should have the ability to resolve conflicts that sometimes exist among information qualities.

WORKING TOOLS OF AIS

For an accounting information system to achieve its objectives which is to provide management with well filtered information to assist in decision making, AIS must incorporate the following components as its working tools:

Technology, database, reporting criteria, control, business operation, management decision making, events processing, security, systems development and & operation, communications, accounting & auditing principles, and tax laws.

The above elements reveal that for you to be successful in the design, use and audit of AIS as an accountant, your skills must transcend the processing of financial data.

Again, I want to repeat that AIS is not a computer processing system like the organizers of that seminar told us.

Financial services

People are becoming increasingly in need of financial service and accountants are the most qualified professionals to give this advice. The recent global economic crises has made people to realise the importance of good financial management and this opens a wide new doors of opportunities for accountants and people with financial skills.

Systems consulting

As the line between accounting and information technology and information processing continues to diminish, systems consulting become a viable option for accountants. Many accounting professional bodies have developed a new credential help equip accountants in this regard. The introduction of AIS in accounting curricular puts accountants ahead of other information processing professionals.

Tax consulting

Tax planning in a good way of saving money that businesses and individuals can harness to their advantage. Tax planning is the process of taking advantage of loopholes in the tax law. Note that it is a criminal offence to engage in tax aversion. Tax aversion is the intentional act of businesses and individuals to defraud government of their entitlement.

Internal control consulting and fraud prevention services

Good internal control is the best way to fight fraud and financial crimes in businesses and other entities. Companies are actively looking for people with knowledge of internal control to help them establish and maintain a functional internal control. Accountants that are working from within the company may not necessarily be in a good position to make this happen as familiarity with colleagues may make them not to diligently carryout their operations. Hence, accountants as consultants are the best people for this.

Human capital development service

Humans are the best asset that companies and businesses have and recruiting and retaining the best of them all is usually a challenging task for businesses in this our modern day economy. The investigative and forensic knowledge of accountants makes them most qualified to act as human resource consultant of businesses and companies.

Business advisory services

As business and business environment gets more complex, business executives and mangers continually seek sound business advice to help them stir the affairs of entities under their care to greater height. The fast knowledge of accountants in business processes and management rightly equips them to judiciously discharge this function. Business owners are willing to pay heavily for this right kind of advisory service and management strategy.

I always chuckle when I see qualified accountants seeking paid jobs just to make ends meet while opportunities in the consulting field wait for them. I have not taken any paid job after my graduation till date and I still enjoy most good things of life. I encourage you today to quit snoozing and explore the vast opportunities that exist in the consulting field and fast track your race to financial freedom. Note that your chance of becoming financially free is slim while you work for someone else.

When packaged well, you can even float a company in consulting. Start today by writing an operational and bankable business plan. Your accounting skill is a valuable asset that you must put to work to make you financially free. To your success as a consultant!!