write a half page clear and concise summary of the article and what you learned new and gleaned on the article.

The compliance revolution after the passage of the Sarbanes-Oxley Act of 2002 (SOX) was accomplished in large part with the help of the internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

COSO’s framework became part of a worldwide movement to enhance periodic accounting and reporting of financial results. Coupled with the global convergence to IFRS, this should provide for a new age of financial information reliability and comparability.

In the past few years, COSO has remained active, providing new guidance regarding monitoring, enterprise risk management (ERM), enhanced board oversight, and quantifying risk appetites for corporate America. In December, COSO released an exposure draft and several related discussion questions that convert the 20-year-old COSO model to an upgraded and enhanced 2.0 version. The ED is available at coso.org. The previous model has been effective since SOX was signed into law in July 2002, but clearly needed updating and modifying for relevance to today’s business environment.

Changes in the business and operating environment that drove this change noted by COSO are as follows:

Expectations for governance oversight.

Globalization of markets and operations.

Changes in business models.

Demands and complexities in laws, rules, regulations, and standards.

Expectations for competencies and accountabilities.

Use of, and reliance on, evolving technologies.

Expectations relating to preventing and detecting corruption.

Audit committee chairmen and their members need to invest time to consider the new ED, which is scheduled to be issued in final form in the first quarter of 2013. The complete package of materials will include the framework, a document with more information on internal control over external financial reporting, and a document on evaluation tools. Audit committees should consider the following during this interim exposure and finalization period:

Ensure that audit committee members read the COSO executive summary and related discussion questions. Encourage those with a greater appetite to read the 150-plus pages of the new framework.

Develop a plan with the CFO, internal audit department, and independent accounting firm over the remaining months in 2012 to discuss the impact the new ED will have on the registrant.

Provide to the full corporate board of directors summary reports of the key concepts in the ED and how they may affect the company in future years.

Consider other COSO guidance for monitoring compliance with internal accounting controls and ERM, as well as how the audit committee is integrating this new guidance to provide a comprehensive assessment of the regulation.

Ensure that the audit committee members understand the new codification set forth in the ED.

Since the audit committee is a key component to the control environment of any corporation, members should consider the five embedded principles applicable to the “control environment.” COSO describes those as follows:

Demonstrate commitment to integrity and ethical values.

Exercise oversight responsibility.

Establish structure, authority, and responsibility.

Demonstrate commitment to competence.

Establish accountability.

The updated COSO framework will provide refreshed objectives. It will increase focus on operations, compliance, and nonfinancial reporting objectives. Accordingly, the audit committee will need to educate itself about the enhanced framework. Audit committees should spend time with the CFO, accounting department, internal audit, and external audit management to translate the new 2.0 model into actionable and measurable enhancements in the company. This will strengthen resistance to fraud, material weaknesses, and significant errors in financial reporting.

Tips From the Audit Committee Chair

Olivia Kirtley is a nonexecutive director for U.S. Bancorp and Papa John’s International. She is also the chair of the audit committee of both companies. She was the AICPA’s first chairman from business and industry. She offers the following tips for efficient and effective operation of audit committees:

The audit committee should have both high expectations and robust processes for receiving information relating to the period under review on all critical areas, including significant issues, judgments, and transactions. It should receive written materials in advance of the meeting, setting forth all the important matters so that the meeting can focus on the most significant issues, whether these are revenue recognition, accounting for unusual transactions, or other matters. It is up to the CFO to be proactive in understanding the expectations of the audit committee and in developing the package of materials to be provided to committee members.

The audit committee and, particularly, its chair should develop a good working relationship with the CFO, seeking frank discussions about issues and challenges. This can be done by encouraging dialogue when important issues arise, and not just at general meetings. In addition, the chair should have a premeeting call to review materials and discuss matters that the committee should focus on during its meeting. The chair can ask any questions not evident from the advance meeting materials that may require additional review or work, allowing finance staff to prepare for questions that are likely to arise at the meeting. This helps build a collaborative, trusting relationship.

The audit committee discussions will be held with both the external auditors and the CFO in the room, so it is an opportunity to gain and test the views of both. In addition to its responsibilities with respect to the financial statements, the committee also has a role in mergers-and-acquisitions activity. It should focus on the results of due diligence on issues such as the internal control environment at the target company; planned timelines for the integration of systems and reporting; IT security and controls; and risk management processes. In short, it will need to consider anything that could impact the integrity of financial reporting and controls.

Interim financial reports are just as important, as are annual statements for investors, analysts, debt holders, and others, so the audit committee should follow its basic processes to oversee this and related disclosures. Although the review procedures by the external auditors are limited for interim reports, they still provide a level of review that is quite valuable through inquiry and the review of significant issues and transactions, and the audit committee members should discuss their findings and observations.

Audit committees should perform their review before the company releases the interim financial reports, which would include not only discussions with external and internal auditors, but also reviewing significant issues and judgments for the period with management. The audit committee should be satisfied that any communications between the company and analysts, or others, is consistent with these discussions, and that the company issued reports regarding financial matters and disclosures.

Beyond the Financial Statements: The Evolving Role of Public Company Auditors

Changes in the role served by public company auditors could include expanded communication with audit committees and more involvement with earnings releases, according to a report by the Center for Audit Quality.

The CAQ, which is affiliated with the AICPA, held a workshop with investors, buy-side analysts, auditors, audit committee members, and preparers on March 12 in New York City. Participants discussed how the auditor’s role could evolve to meet investors’ needs, focusing on information management communicates outside of audited financial statements.

Investors said non-GAAP disclosures are increasingly important in their decision-making process. They would like more consistency in non-GAAP measures reported by management from period to period in management discussion and analysis (MD&A) and earnings releases. Investors also desire comparability in non-GAAP key performance indicators across companies in specific industries. There was agreement at the workshop that the consistency should be driven by industry groups at the outset “although adoption of a more formal framework by the SEC ultimately may be needed,” according to the CAQ report. Some participants said “regulated” disclosures could become less flexible and candid.

More auditor involvement with MD&A is unnecessary, investors said, but a majority would like some level of auditor involvement with earnings releases. Although participants said public reporting by the auditor would be unnecessary, a majority supported a requirement for the auditor to read the earnings release and thoroughly discuss the contents with the audit committee. Such reviews currently are recognized as a best practice, but they are not required.

The feedback was consistent with 2011 workshop results in which investors expressed a desire for streamlined and balanced reporting with content focused on effectively communicating companies’ financial results rather than complying with regulatory requirements. Participants also said education is needed to close the expectation and information gap by helping capital market participants understand the role of auditors and the checks and balances in the financial reporting system. In response, the CAQ intends to expand its education programs and collaborative efforts accordingly.

“We hope to advance further consideration of these issues by all interested parties through publication of this workshop summary and through continued dialogue with stakeholders and policymakers,” said CAQ Executive Director Cindy Fornelli. “It is vitally important that investors understand and continue to trust the work that auditors perform—and have confidence in our financial reporting system and the checks and balances that underlie the system.”

ACCY 207

EXCEL ASSIGNMENT #2

Spring 2018

CHECK FIGURES: What If #1: NOI $630,000

                                                           Increase in NOI $180,000

REQUIREMENTS:

Use the data in the posted problem for this Excel assignment. For the Year Ended December 31, 2017 prepare a Contribution Income Statement for CedarWorks using the following format for your data block page:

There are three What If problems in the data file. Input the changes in your excel file under the Proposed changes section of the file (see above). If it is a decrease to one of these items then show the decrease in parenthesis. If there is no new data (no change to that item) to type into the cell then just type in 0. Remember each change is independent of the others. You will use formulas in the Operating results area to adjust the original data for the changes under the Proposed changes area to calculate the new what if data. Make sure you are using formulas and cell references in your formulas between the two sections to calculate the new data.

See the next page for the Analysis format for your spreadsheet.

GENERAL INFORMATION:

There will be two spreadsheets in your workbook as follows: Data Block (above) and Contribution Income Statement format illustrated below:

All amounts must be either cell referenced from the data block page or supported by formulas! This includes the amounts in the Original Data columns.

Add additional columns next to What If #1 for What If #2, and What If #3 using the same format above as for What If #1. Separate each column in some manner so it is easy to read. You don’t have to use highlighting, but could use borders instead or some other way based on your preferences. Just be sure it is professional and easy to read.

You will need to use formulas to calculate Contribution Margin Ratio, Breakeven Points, Margin of Safety, and Operating Leverage. You must use a Data Block area and cell reference the appropriate data from the Data Block page to the income statement and/or use formulas. You should cell reference last year’s per unit data also and use this information to calculate the original total column. It should not just be typed into the Contribution Income Statement directly. Don’t forget to show dollar signs and percentages as per the format above. Add a heading to the Contribution Income Statement. Your heading should have the company name, the name of the statement, and the time period it covers (For the Year Ended December 31, 2017). You should use cell references from your data block page for all proposed changes in the “What If Analysis” section.   Do not type in changes directly to the Contribution Income Statement.

Save your work frequently! Do not be the next person telling horror stories about lost work! Back up your work.

SAVING YOUR FILE:

Save your file according to the following name format:

Original data file: (Your Last Name, First Name Initial) Excel#2.

For Example: SmithJExcel2.xls or SmithJExcel2.xlsx (depending on which version of Microsoft you are using).

SUBMISSION OF YOUR EXCEL ASSIGNMENT:

Put a footer on each page in the bottom right-hand corner which includes your name and ZID#.

Before submitting your Excel assignment, check the Print Preview to make sure your Income Statement is centered (horizontally) in the page and you have included the footer.

You will submit your file to Bb. Your file should contain the following items:

            1.         Data Block

2.         Contribution Margin Income Statement

Please be sure what you turn in is a unique product. You may work together, but you must each do your own spreadsheet. Do NOT turn in duplicate spreadsheets. We will assume you cheated and you both (or all) will get a zero for the assignment.

DO NOT WAIT TO THE LAST MINUTE TO START THIS PROJECT!

Excel #2

Problem and Data

CedarWorks manufactures playground equipment from Northern White Cedar wood which is free of all chemical additives and never splinters. The current manufacturing process is heavily labor intensive, so the company is studying ways to improve profits given that it currently has a significant amount of unused capacity. CedarWorks contribution margin income statement for the month of December 31, 2017 is given below:

                                                                                       Total             Per Unit          

Sales                                                                $4,500,000      $3,000

            Variable expenses                                           3,150,000

            Contribution margin                                        1,350,000

            Fixed expenses                                                     900,000

            Net operating income                                      $ 450,000

What If #1:

1. The company is studying the effect on its financial statements of purchasing some new equipment which would allow it to automate a large portion of its operations. Since direct labor costs will decline, variable costs would decrease by $900.00 per unit. However, total fixed costs would increase by $2,250,000. The volume of sales is expected to increase by 600 units if the new equipment is purchased. If the company operates in an industry that is sensitive to changes in the economy, do you think CedarWorks should purchase the new equipment. Explain.       

What If #2:

2. As an alternative, rather than purchasing the new equipment, the president is thinking about changing the company’s marketing method. Under the new method, the president is proposing that CedarWorks pay its sales people a 5% commission on sales and decrease the monthly fixed salary by $420,000. Paying the sales force commissions is also expected to increase sales volume by 20% (or 300 units) each month. Do you agree with the president’s proposal? Explain.

What If #3:

3. Management is currently in contract negotiations with the labor union. If the negotiations fail and the company does not buy the equipment (part 1) or change the company’s marking method (part 2), direct labor costs will increase by 10% (or $90 per unit) and fixed costs will increase by $25,000 per month. If these costs increase, how many units will the company have to sell to earn a profit of $1,000,000.

1.

-Discuss what health communication can and cannot do.

-Describe the characteristics of effective health communication.  

-Describe the six steps of planning process of developing a health communication program plan including what you intend to accomplish as a planner at each step.

-Select a theory & use a practical example on a health issue of your choice to show how changes in health behavior may occur according to the steps highlighted in the theory you selected.  

-Describe cultural competence and discuss its implications for health communication.

Which of the following business forms give individual business people (Basically sole proprietors) a form of limited liability:

a. all forms of partnership

b. only general partnerships

c. S corps

d. regular partnerships

e. Independent agent partnerships

Which of the following could be an explanation for a falling fixed asset turnover (assuming nothing else changes):

a. falling intangibles

b. increasing sales

c. Purchase of New P.P. and E.

d. continued depreciation

e. a drop in the current ratio

HR Industries (HRI) has a beta of 1.4, while LR Industries's (LRI) beta is 0.8. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation built into rRF falls by 1.5 percentage points; the real risk-free rate remains constant; the required return on the market falls to 10.5%; and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI? Round your answer to two decimal places.