Investview

No law is effective unless it can be enforced

2011-07-25T20:47:00.002+10:00

Introduction

By definition, the Corporations Law is a complex set of laws with respect to the incorporation of companies, their governance, corporate finance, transactions affecting control of corporations, corporate and corporate officers' liability, external administration of companies and the liability of auditors, liquidators and financial advisers. The ASIC Act provides for the appointment of ASIC as administrator of the Corporations Law, in addition to a range of other regulatory regimes (Helen Bird 2003). Subject to the ASIC Act, ASIC has the general administration of Corporations Act (Corporations Act, 2001).

“As at 30 June 1999, ASIC employed 1225 full-time equivalent staff, 209 of whom approximately 716 were employed in regulatory and enforcement operations. 210 Out of a total operating cost of $146 million, 211 approximately 65% ($95 million) was spent on enforcement.”(Helen Bird 2003) From the data, we can see enforcement is one of the important components.

What is ASIC?

From 15 Jul 2001, the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 are Commonwealth corporations legislation in Australia. These two Acts are major components of the national framework of corporate regulation and the other include Corporations (Fees) Act 2001, the Corporations (National Guarantee Fund Levies) Act 2001, the Corporations (Futures Organisations Levies) Act 2001 and the Corporations (Securities Exchange Levies) Act 2001. ASIC’s corporate members appointed by Governor-General on the nomination of the Commonwealth Attorney-General. A chair is appointed among those members (National Corporations Legislation, 2001).

The role of ASIC is acting as regulator of corporate, markets and financial service. ASIC is under and administer ASIC Act and imply works under the Corporations Act (National Corporations Legislation, 2001). ASIC regulates 1.3 million Australian companies, Australian Stock Exchange and other financial markets, financial services businesses, superannuation funds, registered managed investments schemes, credit providers(Collier 2003). ASIC is such a regulator should be made publicly accountable for their actions (Hyland 2010).

The role of lawyer in the context of ASIC’s investigative and enforcement power is different from the general law rules. ASIC Act modified or overrode the normal rules to achieve more effective corporate regulation. It is suggestion that lawyer should be familiar with the provisions of the ASIC Act and the Corporations Act before representing clients in the context of ASIC’s investigative and enforcement powers(Middleton 2010).

In Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 the High Court held that s 308 of the Companies Code 1981 (QLD) impliedly abrogated legal professional privilege and that an examinee (not being a lawyer) could not refuse to answer questions at an oral examination, or refuse to comply with a notice to produce books, on the ground of legal professional privilege (Middleton 2010).

The Enforcement Function of ASIC

Stated in ASIC Act, one of major function of ASIC is enforce and give effect to the law. In ASIC Act subs 1(2) (g) take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it (National Corporations Legislation, 2001). ASIC can take necessary action to enforce and give effect to the laws that confer functions and powers on us by Parliament (Collier 2003).

Enforcement in simple terms means problematic (Helen Bird 2003). The objector of enforcement action is to achieve ASIC’s regulatory objective. Meanwhile ASIC is trying to achieve enhancing consumer protection and market integrity. Without enforcement actions, regulation of the business world would be frustrated (Assaf 2002).

In Australia, police are responsible for the criminal law engagement. The police include Australian Federal Police and ACT Policing. And there are some another Commonwealth agencies dealing with enforcement of white-collar crime. Among of them, ASIC is the agency dealing with the legislations relate to the Corporations Act and ASIC Act (National Corporations Legislation, 2001).

ASIC has investigative power. The Australian Federal Police should assist ASIC in the actions of investigation. ASIC has wide powers to make orders affecting the person fails to comply with securities or futures contract regulations (National Corporations Legislation, 2001). ASIC can conduct informal and formal investigations that is stated in ASIC Act sections 13, 14 and 15 (Collier 2003).

Enforcement action decided by an examination of ASIC’s jurisdiction in the matter, the level of evidence, whether an achievable or appropriate remedy exists for ASIC to pursue, whether the meter involves serious corporate wrongdoing or serious risk or detriment to consumers and the market, and whether the matter satisfies ASIC’s regulatory and enforcement priorities (Collier 2003).

The investigation includes inspection of books, require disclosure of information in relation to financial products, a search warrant, and an examination. Books mean a register, financial reports or records, a document, banker’s book and any other record of information. Notice to produce books is used in 90% of investigating matters. Warrants are the ability to search premises for books and records. ASIC may require a person to appear for examination. The National Insolvency Co-ordination Unit was established to surveillance companies as being in clear financial difficulties and at risk of insolvent trading (Collier 2003). ASIC can seek an injunction preventing from disposing of or transferring assets. The infringement notice regime can be applied to continuous disclosure breaches(Cooper 2005).

It is possible to influence ASIC’s enforcement decision. For example, the enforcement action may be influenced by the submissions of prospective respondents. There are some factors which will influence the enforcement decision. Those involve regulatory impact, chances of success, cost, significance of the contravention and the individuals involved. The most influence to ASIC’s enforcement approach is timing. The civil proceedings would be too slow and expensive (Assaf 2002).

ASIC divides civil enforcement outcome into several categories: civil enforcement actions completed, summary prosecutions completed, orders made banning people from giving investment advice, compensation ordered or arranged, assets frozen and money saved from stopping illegal schemes or inadequate disclosure. Those outcomes reflect the ASIC’s regulatory objectives(Assaf 2002).

Civil and Criminal Penalty

The offence against the Corporations Act is treated as an offence against a law of the Commonwealth. That is deemed in Criminal Code c1 1.1. ASIC or any of its delegates may lay an information, charge or complaint for an offence against the Corporations Act. However, the Director of Public Prosecutions (DPP) retains all its rights including the powers to give directions on, take over or terminate the proceedings (National Corporations Legislation, 2001). ASIC’s criminal action is to prosecute serious offence primarily through the Commonwealth Director of Public Prosecutions(Collier 2003). Imprisonment is an option within the criminal context that is the major difference between civil and criminal regulatory penalties (Hyland 2010).

Ayres and Braithwaite’s model of regulation illustrates ASIC enforcement pattern from the lowest level which is education and intervention through up to the highest level which is license revocation depending on the regulatee’s behaviour (Helen Bird 2003).

ASIC may start civil proceeding for the recovery of damages for fraud, negligence, default, breach of duty or other misconduct, or the recovery of (National Corporations Legislation, 2001). ACIS’s civil action includes civil penalties, injunctive relief, correction action and compensatory action(Collier 2003). The types of civil remedies available for ASIC include preservative actions, recovery actions, intervention in proceedings, remedial and protective actions, civil penalty actions and enforceable undertakings (Assaf 2002). At the beginning, ASIC only commenced few civil penalty actions on director’s duties. So on 1998 a number of additional statutory provisions were added into the Corporations Law (George Gilligan 1999).

Administrative sanctions are considered as supplement to civil action or speedy alternative. ASIC can enforce compliance without engaging court proceedings to avoid the lengthy timing and expensive cost. ACIS can make a banning order to prevent the person breaching a financial services law or its statutory obligations under the corporations’ legislation. Corporations Act allows ASIC to make disqualification order to cease a person managing a corporation for up to five years. The alternative tool to disclosure requirements without bringing court proceedings is infringement notices(Hyland 2010).

Criminal matters are more than civil matters. There are 5 civil matters meanwhile there are 20 criminal matters and7 administrative matters during 1999-2000. Because in ASIC’s enforcement policy, no civil proceedings in substitution for criminal proceedings will be brought into matters involving serious corporate crime. But heavily civil penalty proceeds by ASIC in recent years(Collier 2003). During 2003 ASIC also prosecute about 800 less serious breaches without referring them to the CDPP (Cooper 2005). During 2009 to 2010, ASIC completed 23 criminal proceedings and 30 civil proceeding. 22 criminals convicted and 287 million recovered. 90 directors are banned for a total of 320 in 2009 to 2010(ASIC Annual Report, 2010).

In HIH case, ASIC can commence criminal proceedings notwithstanding that a civil outcome has already been achieved(Cooper 2005).

Also in ASIC v Craig McKim and Pegasus Leveraged Options Group Pty Ltd (2002) NSWSC 310 case, ASIC took civil action to ban McKim from being a company director and to shut down an unlawful scheme promoted by him and his company. And criminal charges were laid by the CDPP and Mr Mckim was convicted and jailed for 8 years (Cooper 2005).

Review ASIC’s Decision

With the enforcement power which given by Commonwealth government appearing to expand rapidly, a question has been risen. Is the ASIC should be carefully monitored to guard against the abuse of powers? Their decisions needed to be review via internal and external (Hyland 2010).

Merits review can be generated internally by the agency itself and/or by and external tribunal. Sometime, the appeal and review are interchangeable. This will encourage more lawful decision making and better administration. Merits is a way used to evaluate ASIC’s accountability and transparency.

Internal merits review is conducted by a different and more senior person. This person can make a new decision or affirm or vary the original decision. Regulators prefer internal review to external review because it is more time and cost effective. But the criticalness is its objectives less formal and expensive than external procedures.

External review is conducted by either the courts or tribunals. Review by tribunals is cheaper, faster and less formal than review by courts. External review could be the only way of review after imposing administrative sanctions (Hyland 2010).

In Visnic v Australian Securities and Investments Commission (2007) 231 CLR 381 at 386 held disqualification orders imposed by ASIC to be constitutionally valid, as their main purpose was to maintain professional standards, which served the public’s interest (Hyland 2010). This case is a typical external review progress via court. The court held support the ASIC’s decision.

Conclusion

ASIC’s enforcement function is crucial for the implement of the Corporations Act. Though ASIC enforcements the regulator has tools to protect the customers and investors. With the dramatically changing business environment ASIC also needs to adopt those changes in globalized business world in order to protect Australian investors’ interests in multinational organizations (Middleton 2004).

Reference List

(2001). Corporations Act. C. Parliament.

(2010). ASIC annual report 2009-10, Australian Securities & Investmens Commission.

Assaf, F. (2002). "What will trigger ASIC's strategies?" Law Society Jouranl(May 2002): 4.

Collier, B. (2003). ASIC's Enforcement Powers and Activities. Law Institute of Victoria Annual Commercial Law Conference, Australian Securities & Inverstments Commission.

Cooper, J. (2005). Corporate wrongdoing: ASIC's enforcement role. International Class Actions Conference 2005. Park Hyatt Melbourne, Austrlian Securities & Investments Commission.

George Gilligan, H. B., Ian Ramsy (1999). "Civil Penalties and the Enforcement of Directors' Duties." UNSW Law Journal 22(2): 44.

Helen Bird, D. C., Jarrod Lenne, Ian Ramsay (2003). ASIC Enforcement Patterns. Melbourne, Centre for Corporate Law and Securities Regulation.

Hyland, M. (2010). "Is ASIC sufficiently accountable for its administrative decisions? A queation of review." Company and Securities Law Journal 28: 22.

Middleton, T. (2004). "ASIC's Investigation and Enforcement Powers - Current Issues and Suggested Reforms." Company and Securities Law Journal 22: 28.

Middleton, T. (2010). "The role of lawyers in the context of ASIC's investigative and enforcement powers." Company and Securities Law Journal 28: 22.

Abacus Group and Valad Group - Ratio Analysis

2011-05-30T11:08:00.000+10:00

Introduction of the Abacus Group and Valad Group

Abacus Property Group is a diversified company that incorporates the following strategic business units (SBU) in its portfolio

Property Investments
Funds Management
Property Finance
Projects and Investments

The company was formed in 1996 as a subsidiary of Godfrey Pembroke Ltd, whose main objective was to source and package property based investments for GPL financial partners. However in 1999 ABP became independent of GPL and in the following years, amalgamated some trusts to become Abacus Property Group. In 2002 ABP diversified its operations to include property investment, property finance, funds management and joint venture projects and in the same year was listed on the Australian Stock Exchange with total group assets in excess of $420 million. In the years to follow, ABP merged with the Abacus Diversified Income Fund and currently has $ 2.3 billion assets under its management.

The Property Investment business activity involves a diversified portfolio of commercial, industrial and retail properties. It has investments in QLD, NSW, VIC. ACT, and SA and also residential properties in New Zealand. The properties range from Ashfield Mall Properties, Ashfield NSW to Lennons Plaza, Brisbane and has a average occupancy rate of above 94 %. This contributes the highest revenue of about $932 million.

Fund Management’s main emphasis is on property funds investment, and its major investment options include:-

Property trusts
Mezzanine fund
Presales agreement just to name a few

This SBU is closely related to the Property Finance division.

ABP also has major projects and investments it manages under the Property & Investment business unit and has gross revenue in excess of $ 750 million. It is involved in residential subdivision in VIC, shopping centre development in Brighton, and development of retirement accommodation in NSW among major projects (Home page).

Valad Property Group is the very similar company as Abacus Property Group. In this case, they are the two object compared in this report.

Future profitability of the ABP

ABP is in the real estate industry section (Abacus Property Group (ABP)). Due to the credit crisis of America happened in June, 2007, the problem came bigger and bigger. In 2008, there are three of five the biggest investment bank in Wall Street disappeared (Ellis, 2008). And the biggest two real estate trust saved by U.S. government. This is the biggest financial crisis from the thirty’s (Stewart, 2008).

The beginning of this crisis was the subprime in the real estate area. The mortgage provider gave the credit to the unqualified customers to buy the house and then issued debt to the financial market. After the modern financial products issued among the financial market, the risk and amount enhanced to the trillions. The crisis hit the global economic (Greenburg, 2007).

Valuation:

The company’s property values in 2008 have decreased compared with 2007 from $120.4 million to $72.4 million in statutory profit after tax. Net devaluation in 2008 was $15.7 million while it was $33.3 in 2007. Despite this, the firm concludes with having a strong financial position still in these difficult market conditions, and will expect continued growth of earnings and distributions. This is because a total assets increase in 2008 of 29.7% from 2007’s $1.3 billion to 2008’s $1.7 billion. Another alibi is the total equity increase of 15.2% or $925 million as opposed to June 30’s $803 million (Business spectator, 2008).

Liquidity problem:

Abacus property group’s liquidity problem is due to net devaluation in property value. The firm’s acquisition of assets and opportunity creation in diversified business areas makes sure future growth in earnings (Annual financial report, 2008).

Consumer Confidence:

Consumer confidence is good because long term investors know they will get strong returns on their stocks as long as they remain keeping diversified portfolios (Owen Hodge Financial Plan-Market Review 3rd Quarter 2007, 2007). Funding for future distributions comes from cash earnings, and consumers know the firm is doing well since it’s growth of earnings and distributions are steady (Annual financial report, 2008).

The Australian share market cannot escape from this crisis either. The S&P AU51 index dropped from 6,700 at 25 October 2007 to 4,073 at 10 October 2008 (bloomberg.com, 2008). Especially the real estate companies’ shares dropped deeper than the S&P AU51. The ABP share was 2.00 and now is 0.70 (Abacus Property Group (ABP)). And the crisis is worse than expectation. The situation will not be changed in several months.

Financial ratio analysis of ABP and VPG

The use of financial ratio helps to analyse trends and interpret the financial position and performance .This analysis includes looking at the companies balance of debt in relation to the owners equity, it also involves the efficiency in which a company is able to utilise its resources in order to generate revenues and profits. The financial reports ending 30 June 2008

Profitability Ratios

Return on Equity (ROE)-this is calculated as operating profit after tax divided by owners equty and it indicates how much return the firm is genetaing on shareholders equity and this is particularly important to shareholders.

For ABP the ROE is

72426000/924999000 =7.83%

So every dollar that the shareholders have invested they are receiving 7 cents

Looking at the Return on Assets which measures how much the company is utilising its resources in order to generate profits and this is calculated as follows:-

Operating Profit After Tax/Total Assets

For ABP the ratio of the year ended 30 June 2008 is as follows:-

72426/1647193=4.4%

Profit Margin is calculated as Operating Profit After Tax divided by revenue and this determines the percentage of revenue that ends up as profit or the average profit on each dollar revenue.

ABP’s Profit Margin

72426/138423=52.3%

Earning per share show how much earning that are generated per dollar share and this is attributed to ordinary shares that have been issued.

Dividend Payout Ratio measures that portion of earnings paid to shareholders. It measures the percentage out of profit that was distributed to shareholders and this ratio determines investors confidence in the company and is guided by the company’s policy on dividends from year to year. It is calculated as ; -

Dividends Declared Per Share/Earnings per Share

Liquidity Ratio

The ratio applicable to ABP is the current ratio which indicates the company’s ability to cover its short term liabilities with the available current assets. ABP’s current ratio is:-

Current Assets/Current Liabilities= 245 811/133 779 = 1.84

The ratio above 1 indicates that the company has greater financial stability and low risk for both creditors and owners.

Financial Structure Ratio

Debt-to-equity ratio measures that portion of owners’ equity which is attributable to debt or borrowings and this reflects the company’s policy regarding finance its assets. For ABP

Total liabilities/Owners Equity=722 194/924 999= 0.78

This shows that most of the company’s assets are financed by owners’ equity and not much of debt.

Leverage ratio is also closely related to the debt to equity ratio and it considers how much of assets are financed by equity. It is calculated as follows:-

Total Liabilities & Equity/Equity=Total Assets/Equity=1 647 193 000/924 999 000=1.78

The profitability ratio for ABP save for the profit margin might appear to be small, however these ratios are relative to the different types industry. For example a retail company might have higher profitability ratios than a jewellery company, however the revenue generated in terms of real monetary figures would favour the jeweller. As for ABP the figures are very consistent with the industry they operate in. The liquidity ratio and financial structure ratios are also good meaning that the company cab cover its short term commitments and not much of its assets is financed by debt. This means the company would be able to borrow in future if it requires long term investment assets. These ratios would not make sense if there is no comparison between similar firms (Trotman & Gibbins, 2005).

The following is a side by side comparison with VALAD Property Group (bloomberg.com, 2008)

	ABP	VPG

Operating profit margin	50.13%	-34.44%
Net profit margin	52.32%	-34.33%

Rate of Return
Return on equity	7.83%	-11.95%
Return on assets	4.40%	-6.65%

Liquidity
Current ratio	1.84	2.27

Gearing
Gearing ratio	63.61%	66.35%

Financial Structure
Debt to equity	0.78	0.80
Debt to assets	0.44	0.44
Leverage ratio	1.78	1.80

Utilise the capital asset pricing model (CAPM) to value the stock of ABP and VPG

Use CAPM to calculate the present value of the ABP share.

The CAPM presents the expected return of an asset based on risk-free rate plus a premium for risk.

“The CAPM is a model based on expectations: the expected return of the asset, the expected return of the market, the expected beta and the expected risk-free rate.” (Ross, Thompson, Christensen, Westerfield, & Jordan, 2007)

The CAPM can be seen that:

E(R_i) = r_f + b_i[E(R_m) – r_f]

E(R_i) is the expected return of the asset. Now, it is the expected return of the share.

r_f is the risk free rate of return. At here, 10 years Australian government bonds rate is the risk free rate of return. Then we have:

r_f = 5.25% (bloomberg.com, 2008)

b_i is the coefficient of the share. It can tell us how much systematic risk a particular asset has relative to an average asset (Ross, Thompson, Christensen, Westerfield, & Jordan, 2007).

On the Bloomberg.com, we can have the b_i of the ABP:

b_ABP = 0.955 vs AS51 (bloomberg.com, 2008).

E(R_m) is the expected market return. We can use the ABP’s historical data to calculate the result. From the Bloomberg.com, here is the historical price of ABP (bloomberg.com, 2008).

Iterm	Date	Closing Price	Dividends of the year (cps)
1	29 Jun 2004	1.15	11.227
2	30 Jun 2005	1.35	11.400
3	30 Jun 2006	1.57	11.800
4	29 Jun 2007	1.98	12.500
5	30 Jun 2008	1.15	13.500

We can have the BY 2004 investment return rate as:

R₀₄ =((Closing Price 2005-Closing Price 2004)+Dividend2004)/Closing Price 2004

=((1.35-1.15)+0.11227)/1.15

= 27.15%

As the same, we can have the 2005, 2006 and 2007 investment return rates as below.

Iterm	Year	Closing Price	Dividends of the year (cps)	Capital yield	Dividend yield	Return rate of investment
1	BY2004	1.35	11.400	17.39%	9.91%	27.15%
2	BY2005	1.57	11.800	16.30%	8.74%	24.74%
3	BY2006	1.98	12.500	26.11%	7.96%	33.63%
4	BY2007	1.15	13.500	-41.92%	6.82%	-35.61%

Then we can have the standard deviation of ABP in 2004-2007.

Iterm	Year	Annual return rate of investment	Average annual return	Deviation	Squared deviation
1	BY2004	27.15%	12.48%	14.67%	0.021532984
2	BY2005	24.74%	12.48%	12.26%	0.015032576
3	BY2006	33.63%	12.48%	21.15%	0.044734675
4	BY2007	-35.61%	12.48%	-48.09%	0.231226922
	Total	49.92%			0.312527158

Variance (s²) = 0.312527158/(4-1)= 0.104175719

Standard deviation (s) = 0.104175719^0.5= 32.28%

E(R_m) = 12.48%

Then we can have:

E(R_i) = r_f + b_i[E(R_m) – r_f]

= 5.25% + 0.955 [12.48% – 5.25%]

= 12.15%

As expected company’s profit growth rate in BY2009 is 15%.

We use average growth rate of dividends from BY2004 to BY2008 as g, the growth rate in the future.

Iterm	Year	Closing Price	Dividends of the year (cps)	Dividends growth rate	Average Dividends growth rate
1	BY2004	1.15	11.227
2	BY2005	1.35	11.400	1.54%	4.75%
3	BY2006	1.57	11.800	3.51%	4.75%
4	BY2007	1.98	12.500	5.93%	4.75%
5	BY2008	1.15	13.500	8.00%	4.75%

PV2008 = D2009/(E(Rj)-g) = D2008*(1+Excepted Growth Rate)/(Excepted market earning rate- Excepted Growth Rate)

Present Value	Dividends in 2008	Dividends in 2009	Growth Rate	Excepted Growth Rate	Excepted discount on growth rate	Market Earning Rate	Excepted Market Earning Rate	Excepted discount on market earning rate
1.83	0.135	0.1414125	4.75%	4.75%	0.00%	12.48%	12.48%	0.00%
1.05	0.135	0.1414125	4.75%	-0.95%	120.00%	12.48%	12.48%	0.00%

Based on recent five years dividends and share price, the present value of ABP is 1.83 per share. The value is higher than the present price in the stock market.

Use CAPM to calculate the VPG share

For the competed company, we selected the Valad Property Group. There are the performance and value analysis of the VPG.

From the historical data we can have a price and dividends form below (bloomberg.com, 2008):

Iterm	Year	Closing Price	Dividends of the year (cps)
1	BY2003	1.00
2	BY2004	0.91	9.550
3	BY2005	1.34	9.800
4	BY2006	1.36	10.300
5	BY2007	1.99	11.070
6	BY2008	0.67	11.100

Then we can have the investment return rate in below.

Item	Year	Closing Price	Dividends of the year (cps)	Dividends yield	Capital yield	Investment return rate
1	BY2003	1.00
2	BY2004	0.91	9.550	9.55%	-9.00%	0.55%
3	BY2005	1.34	9.800	10.77%	47.25%	58.02%
4	BY2006	1.36	10.300	7.69%	1.49%	9.18%
5	BY2007	1.99	11.070	8.14%	46.32%	54.46%
6	BY2008	0.67	11.100	5.58%	-66.33%	-60.75%

We can have the stand deviation of the VPG stock and the average investment return rate is 12.29%.

Item	Year	Investment return rate	Average investment return rate	Deviation of investment return	Square of deviation	Variance	Stand deviation
1	BY2003
2	BY2004	0.55%	12.29%	-11.74%	0.01378771	0.23382233	48.36%
3	BY2005	58.02%	12.29%	45.73%	0.20912208	0.23382233	48.36%
4	BY2006	9.18%	12.29%	-3.11%	0.00096908	0.23382233	48.36%
5	BY2007	54.46%	12.29%	42.17%	0.17784038	0.23382233	48.36%
6	BY2008	-60.75%	12.29%	-73.05%	0.53357004	0.23382233	48.36%

We can also have the average dividends growth rate as 3.87%.

Iterm	Year	Closing Price	Dividends of the year (cps)	Dividends growth rate	Average dividends growth rate
1	BY2003	1.00
2	BY2004	0.91	9.550	N/A
3	BY2005	1.34	9.800	2.62%	3.87%
4	BY2006	1.36	10.300	5.10%	3.87%
5	BY2007	1.99	11.070	7.48%	3.87%
6	BY2008	0.67	11.100	0.27%	3.87%

We can have the excepted earning rate at 16.24% and present value is 0.93.

Item	Year	Dividends of the year (cps)	Average investment return rate	Average dividends growth rate	Risk free rate	beta	Excepted Earning Rate	PV use CAPM
1	BY2003
2	BY2004	9.550	12.29%
3	BY2005	9.800	12.29%	3.87%
4	BY2006	10.300	12.29%	3.87%
5	BY2007	11.070	12.29%	3.87%
6	BY2008	11.100	12.29%	3.87%	5.25%	1.56	16.24%	0.93

Comparison

After we used CAPM to calculate present value of the ABP and VPG share, we can find the present value of ABP share is 1.83 per share and the value of VPG is 0.93. ABP has the higher present value than the VPG.

Then we can find the present value base on CAPM is higher than their market price. The present value is almost 1.5 to 2.5 times higher as the market price.

The market price is given 60% discount on their present value. The discount is based on industry research and financial ratio research.

Conclusion

In short-term period, we suggest to sell the ABP share. As this share was influenced by the credit crisis very seriously, the price will not rise in several months.

But in long-term, based on the CAPM calculation, the price of ABP is under value. We suggest buying when the crisis is over.

References

Abacus Property Group (ABP). (n.d.). Retrieved 9 2, 2008, from Australian Securites Exchange: http://www.asx.com.au/asx/research/CompanyInfoSearchResults.jsp?searchBy=asxCode&allinfo=&asxCode=abp

Annual financial report. (2008, 6 30). Retrieved 9 10, 2008, from www.abacusproperty.com.au: http://www.abacusproperty.com.au/content/documents/2008%20reports/APG_2008_financial_accounts.pdf

bloomberg.com. (2008, 8 28). Retrieved 8 28, 2008, from goverment bonds: http://www.bloomberg.com/markets/rates/australia.html

Business spectator. (2008, 8 28). Retrieved 9 10, 2008, from Abacus Property normalized profit up 15% to 92m: http://www.businessspectator.com.au/bs.nsf/Article/Abacus-Property-normalised-profit-up-15-to-92m-HX79Q?OpenDocument&src=is

Ellis, D. (2008, 9 15). Lehman Brothers collapse stuns global markets. Retrieved 9 18, 2008, from CNN.com/world business: http://edition.cnn.com/2008/BUSINESS/09/15/lehman.merrill.stocks.turmoil/index.html

Greenburg, H. (2007, 12 10). The Subprime Crisis is just beginning. Retrieved 9 10, 2008, from The mortgage pot: http://www.themortgagepot.com/the-subprime-crisis-is-just-beginning

Home page. (n.d.). Retrieved 9 10, 2008, from www.abacusproperty.com.au: http://www.abacusproperty.com.au/home.asp

Owen Hodge Financial Plan-Market Review 3rd Quarter 2007. (2007, 10). Retrieved 9 15, 2008, from www.ohfp.com.au: http://www.ohfp.com.au/LinkClick.aspx?fileticket=X/JvNc2UJjc%3D&tabid=55&mid=808&language=en-AU

Ross, S., Thompson, S., Christensen, M., Westerfield, R., & Jordan, B. (2007). Fundamentals of corporate finance: fourth edition. North Ryde: McGraw Hill Australia Pty Ltd.

Stewart, H. (2008, 9 16). IMF says US crisis is 'largest financial shock since Great Depression'. Retrieved 9 20, 2008, from www.guardian.co.uk: http://www.guardian.co.uk/business/2008/apr/09/useconomy.subprimecrisis

Trotman, K., & Gibbins, M. (2005). Financial Accounting third edition. South Melbourne: Thomson.

Cloud Computing - Data Management & Information Technology

2011-05-27T17:18:00.000+10:00

Executive Summary

Excursive Summary

This report descript cloud computing, its features and functionalities. Description of how organizations can use cloud computing to identify business opportunities and improve business performance. Description of how organizations will use cloud computing. Identify the issues and risks that managers should know about. Provide the provision of a list of additional references or sources of information for further learning.

The cloud computing is the future.

Introduction

Cloud computing as a technology is made up of three basic models called software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS). Software as a service eliminates customer’s disadvantage of installing software on their own computers because this IT is provided for a continuous expense through the internet. Software vendors are providing this service on web servers making server hardware unnecessary for individuals. Platform as a service on the other hand makes available the web applications and software from SaaS from the internet, while infrastructure as a service makes sure there is a computer infrastructure were platform virtualization created by the host software gives a simulated computer environment for the operating system, but for communication over a computer network there must be a LAN Adapter because the operating system requires it. In other words cloud computing has virtualized hardware made it unnecessary with hardware bound to individual computers because the virtual computer or hardware is presented as software (Langley, 2008).

Illustration: (Langley, 2008).

Description of the technology, its features and functionalities

Cloud computing is a technology which makes it possible for everyone to access software and to store personal data such as written documents on the internet from wireless devices including iPods, laptop computers and home/office computer. This is possible due to the connection these devises gets with super computers initially made for advanced calculations for scientists and the military. Hard drives are unnecessary because all data is stored online. Software installation on your computer is not necessary either due to it being available on the internet as well. Microsoft has developed a so called ‘mesh folder’ which makes it possible for individuals in the nearest future to store their work in this mesh folder which is on the internet. The folder can also be shared between several people, and accessed by several devices (Moses, 2008).

Big computers provided from IBM, Sun Microsystems, Dell, and HP stored together in huge halls can be operated for more than three days in case of power failure due to a big Caterpillar diesel generator providing two megawatts of electricity. Extra fuel and batteries also available is backing up for extended periods. An internet connection linking the computers to businesses using the data center to run their software and store their data is formed as a thick bundle of fiber-optic cables. Software that companies using this center had to purchase, install, and fix or renew can now be replaced with only having to access the computers in the center through the internet from their offices. As a result of this, new hardware or other equipment is not necessary either for these businesses. VeriCenter which operates these big computers take care of providing their users with what they need. The information age came after the industrial age where electric plants were a revolution. Now, the hall of big computers is the new power plant, but this time a computing plant. The modern dynamo which is connected to the internet is capable of supplying private households and businesses with digitized information and data-processing. Software is now run by the dynamo instead of as before when one would have to install it on one’s own computers. Because of the high efficiency of the dynamo, computing has become a cheap and universal commodity (Carr, 2008).

How organizations can potentially use the technology to identify business opportunities and improve business performance

Let us back to the great benefits or characters which the cloud computing can bring into the new era market.

1. Scalability: the ability of a computing system to grow relatively easily in response to increased demand.

2. Elasticity: the ability of a system to dynamically acquire or release compute resources on-demand.

3. Highly Available: systems designed such that the loss of any one component of a system will not result in system failure. No single points of failure (Langley, 2008).

From the characters of the cloud computing, almost every industry can use this technology to instead of the traditional IT service of now days.

So, the cloud computing is considered as the new generation infrastructure of the information system. It will exist in everywhere in the society. The platform of the cloud computing can give namely scalability, agility, automation, and resource sharing (Why Cloud Computing?, 2008).

There are some major applications in the future. People change their IT consume behaviors from purchasing information system to only purchasing service (Langley, 2008).

For the small firm, people can acquired the same service from the cloud as the same of the big firms. For example, salesforce.com provides the CRM service on the internet. The each small firm can have the same resource as the big firm at the rate of 9USD per user per month for their CRM solution. This makes the small company turn to more efficient from the business information system.

For the multiple national business firms, the cloud computing idea is very attractive too. They can use public cloud or private cloud to achieve their information management goal. Like IBM, they are setting up a private cloud solution for both their selves and their customers. They call their solution as “blue cloud” (Cloud Computing: The Evolution of Software-as-a-Service, 2008).

In the future, when the cloud computing technology is mutual more and more professional service will join into the cloud. They will bring a lot of service into the cloud. There are huge amount of opportunities both for the providers and users.

How organizations are and/or will use it:

There are a lot of companies are using the Cloud Computing technology including both the major players in IT area and new comers. Here are some cases which the cloud computing used in the reality society.

Linden Lab for an example has used cloud computing to be able to download their virtual world ‘Second Life’.

Microsoft Corp used cloud computing to increase the speed of software downloads. Windows cloud gives businesses the opportunity to access computing cycles through the cloud instead of having to buy new computers.

Google has enabled organizations and individuals to store their work or information on the internet where they can use Google’s web based software. Examples of such applications are the Google calendar that organizes events, Picasa that stores pictures, YouTube that holds videos, Gmail that stores e-mails, and Google Docs that keeps documents, spreadsheets, and presentations. It is also possible for anyone to store contents of one’s whole hard drives through a Google service online. But also Amazon, AOL, and Microsoft provide cloud computing space and software online. Storage prices starts from $0.15 per gigabyte per month to $9.95 for 50 gigabytes per month (Kate, 2007).

Issues and risks that managers should know about

Cloud computing is the future and the Gartner gives a very positive recommend on this new technological trend (Stevens & Pettey, 2008). But there are some issues about the risk in the cloud computing, these concerns are mentioned by both IT managers in firms and individual internet users.

There are some security issues and high availability concern of the cloud computing. Firstly, if the company changed from hosting service to cloud, a lot of regulations about the using data should be not compromised with the traditional technology. Secondly, the commingling data stores in the cloud. Cloud providers store data from multiple customers on the same hardware. Some customers will have concern to separate their information from their competitors’ physically (Thurman, 2008). Thirdly, is there any a single point of failure? For the new technology, there are still a lot of practices should be done to test the system reliability especially for the enterprise users (Langley, 2008).

For the individual user, there are more concerns about their private information safety. There are 90% users are very concerned about their files will be sold to others. That survey shows there are 68% users feel uncomfortable with advisements targeted them based on their online behaviors (Horrigan, 2008). As an IT manager, when the company tries to use cloud computing technology, the ethic problems should be consider carefully.

The other main issues should be concerned as an IT manager is the changed billing way of the cloud computing service. The traditional evaluation of the investment of the IT infrastructure is based on hardware, software and human resource cost. The way of the billing of the cloud computing has charge into based on how many service you acquired or how many store space or how many calculate process. The cost of IT function should be considered in compare to original IT project investment (Langley, 2008).

As the cloud computing is a new technology, when the enterprise comes into the cloud the support resource should be concerned. There are few technical support engineers in the market than the traditional IT service. It will come to high cost of support problem and poor service quality problem. All the service is from the cloud, if something happened to the cloud service provider, what will be the backup plan of the company (Langley, 2008)?

The using of the cloud computing will bring a lot of benefit to the company. Whatever the cloud is the public cloud or private cloud. When the company moves into the cloud, there will be more concerns than the traditional projects. This is why the cloud computing need more three to five year to get mutual (Stevens & Pettey, 2008).

Lists of additional references or sources of information for anyone who wants to learn more

Bragg, R. (2008, 7 26). Cloud Computing: When Computers Really Do Rule. Retrieved 10 22, 2008, from Linux Insider: http://www.linuxinsider.com/rsstory/63954.html

Brodkin, J. (2008, 7 28). Open source fuels growth of cloud computing, software-as-a-service. Retrieved 10 22, 2008, from Network World: http://www.networkworld.com/news/2008/072808-open-source-cloud-computing.html?page=2

Delic, K. A., & Walker, M. A. (2008, 8 5-11). Emergence of The Academic Computing Cloud. Retrieved 10 22, 2008, from www.acm.org: http://www.acm.org/ubiquity/volume_9/v9i31_delic.html

Distinguishing Cloud Computing from Utility Computing. (2008, 3 26). Retrieved 10 22, 2008, from ebizq: http://www.ebizq.net/blogs/saasweek/2008/03/distinguishing_cloud_computing/

Gruman, G., & Knorr, E. (2008, 4 28). What cloud computing really means. Retrieved 10 22, 2008, from InfoWorld: http://www.infoworld.com/article/08/04/07/15FE-cloud-computing-reality_1.html

Hewitt, C. (2008). ORGs for Scalable, Robust, Privacy-Friendly Client Cloud Computing. IEEE Internet Computing, vol. 12, no. 5, Sep/Oct , 96-99.

Jeff Bezos' Risky Bet. (2006, 11 13). Retrieved 10 22, 2008, from Business Week: http://www.businessweek.com/magazine/content/06_46/b4009001.htm

Langley, N. (2008, 6 24). Google Apps makes its way into big business. Retrieved 10 22, 2008, from ComputerWeekly.com: http://www.computerweekly.com/Articles/2008/06/24/231178/google-apps-makes-its-way-into-big-business.htm

Lohr, S. (2007, 10 8). Google and I.B.M. Join in ‘Cloud Computing’ Research. Retrieved 10 22, 2008, from The New York Times: http://www.nytimes.com/2007/10/08/technology/08cloud.html?_r=1&ex=1349496000&en=92627f0f65ea0d75&ei=5090&partner=rssuserland&emc=rss&oref=slogin

Lohr, S. (2007, 11 15). I.B.M. to Push ‘Cloud Computing,’ Using Data From Afar. Retrieved 10 22, 2008, from The New York Times: http://www.nytimes.com/2007/11/15/technology/15blue.html?_r=1&oref=slogin

Miller, R. (2008, 3 25). What’s In A Name? Utility vs. Cloud vs Grid. Retrieved 10 22, 2008, from Knowledge Data Centre: http://www.datacenterknowledge.com/archives/2008/03/25/whats-in-a-name-utility-vs-cloud-vs-grid/

Munarriz, R. A. (2008, 6 28). With Their Heads in the Clouds. Retrieved 10 22, 2008, from The Motley Fool: http://www.fool.com/investing/high-growth/2008/07/29/with-their-heads-in-the-clouds.aspx

Schurr, A. (2008, 7 8). Keep an eye on cloud computing. Retrieved 10 22, 2008, from NetworkWorld: http://www.networkworld.com/newsletters/itlead/2008/070708itlead1.html

Weier, M. H. (2008, 3 10). SAP Is The Latest Convert To Software-Plus-Services Vision. Retrieved 10 22, 2008, from Information Week: http://www.informationweek.com/news/services/saas/showArticle.jhtml?articleID=207601148

Wieners, B., & Scanlon, J. H. (1999, 9 7). The Internet Cloud. Retrieved 10 22, 2008, from The industry standard: http://www.thestandard.com/article/0,1902,5466,00.html

Conclusion

Cloud Computing is the greatest opportunity in the IT area. In the two to three years, this technology will be mature in the market. Although there are some risks and weak points in the usage of the Cloud Computing but the solution providers are currently working on the plan to meet the market need. The solution will be more available and more flexible.

Cloud Computing is also a challenger for the existing company in the IT area. More competitors will become the service providers in every industry the Cloud. The leadership position will be taken by the Cloud Computing solution providers.

References

Carr, N. (2008). The Big Swith: rewiring the world, from Edison to Google. W.W. Norton & Company, Inc.

Cloud Computing: The Evolution of Software-as-a-Service. (2008, 6 4). Retrieved 10 22, 2008, from Knowledge W. P. Carey: http://knowledge.wpcarey.asu.edu/ar...

Horrigan, B. J. (2008, 9). Use of Cloud Computing Applications and Services September 2008. Retrieved 10 22, 2008, from PEW/INTERNET: http://www.pewinternet.com

Kate, G. (2007). Google’s Cloud Looms Large. Retrieved 10 22, 2008, from Technology Review: http://www.technologyreview.com

Langley, K. (2008, 3 9). Hadoop Meetup San Francisco by GigaOM. Retrieved 10 22, 2008, from www.productionscale.com: http://www.productinscale.com

Moses, A. (2008, 4 28). Cloud computing takes the 'P' out of PC. Retrieved 10 22, 2008, from smh.com.au: http://www.smh.com.au/news/technology/cloud-computing-takes-the-p-out-of-pc/2008/04/24/1208743109210.html

Stevens, H., & Pettey, C. (2008, 6 26). Gartner Says Cloud Computing Will Be As Influential As Ebusiness. Retrieved 10 22, 2008, from Gartner: http://www.gartner.com/it/page.jsp?i...

Thurman, M. (2008, 10 20). Security Manager's Journal: Looking for cloud computing's silver lining. Retrieved 10 22, 2008, from Coumputerworld: http://www.computerworld.com/actio...

Why Cloud Computing? (2008). Retrieved 10 22, 2008, from Appistry: http://www.appistry.com/cloud-info-c...

Price strategy - Hot Air price change

2011-04-30T21:30:00.000+10:00

Hot air changed their retail price in April 2011.

The previous retail price was 225 per person in 2010/2011. The normal flight included a Champaign buffet breakfast which was very tasty and sufficient. Due to cut down the cost and increase the profit, from 1st April 2011 the Hot Air cancelled the breakfast and increase express flight 10 AUD per person.

Despite the cost cut down as cancelling the breakfast, the 10 AUD per person additional fee is a little bit weir. People will usually choose the express light to catch up the cruise which can take them to the Great Barrier Reef. Normally the visitors came to Cairns and stay in Cairns three to four days and Chinese tourists stay even less. So the express flight will be sold out quicker than the normal flight. I think the 10AUD price difference is designed to encourage people to choose the second flight which is the normal flight.

But does this strategy work for the Chinese tourist market? I am doubt about it.

Hot Air put a lot of marketing emphasis on the Chinese market. With the booming of the Chinese tourism market in Cairns, Hot Air got a piece of pie. Hot Air ballooning become one of must-to-do option for the Chinese tourists.

But the most of Chinese tourists come to Australia as a group and travel to 3-4 cities of Australia and New Zealand in 10 to 15 days. So they don't have a lot of time in Cairns. For achieving must-to-do willing, they have to take hot air ballooning before going to the reef. This is the reason for the customer to choose the first flight.

Never than less, the other reason is those tour guides and tour leaders told their customers that the express flight has more chance to see the sunrise than the normal flight. It is partially true but people buy it.

So those were two major reasons for Chinese tourists to choose the express flight and the express flight will be more popular than the normal flight.

Although the 10 AUD different may convert some tourists from the other countries excluded China from express flight to normal flight, but to convert Chinese tourists to do so, we need some other strategies.

Cendant Case Study

2011-04-29T22:38:00.000+10:00

Question 1:

Professional standards outline the auditor's consideration of material misstatements due to errors and fraud.

a) What responsibility does an auditor have to detect material misstatements due to errors and fraud?

The purpose of assurance engagement is enhancing the reliability of the subject matters. So it is auditor's responsibility to provide a reasonable level to assure the financial report is true and fair.

Financial report is a data assembling which reflect the position of the business. Therefore these users, including investors, managements, shareholders and the other parties can make decision base on the information provided by the financial report. Then the information which impacts on the process of decision making for the uses of the financial report is defined as materiality (Kimmel, Carlon, Loftus, Mladenovic, Kieso, & Weygandt, 2006).

The fairness and trueness of the material is important to the users of financial reports. The major task of auditor is to identify the misstatement in the financial report. By definition, misstatement is a difference between the amounts, classification, presentation or disclosure of a reported financial report item and the amount, classification, presentation or disclosure that is required for the item to be in accordance with the applicable financial reporting framework. There are two kinds of misstatements and they rise from error or fraud respectively (Auditing, Assurance and Ethics Handbook, 2010).

But by the limitation of auditing, financial report audit only provides reasonable assurance instead of total responsibility to the fairness and trueness of the reports. The auditors can assure about whether the financial report is prepared in all material respects in accordance with a financial reporting framework. The reason of the limitation is determined by the nature of financial reporting, the nature of audit procedures and the need for the audit to be conducted within a reasonable period of time and at a reasonable cost (Moroney, Campell, & Hamilton, 2011).

b) What two main categories of fraud affect financial reporting?

By definition, fraud is an intentional act through the use of deception to obtain an unjust or illegal advantage. These two main categories of fraud are financial reporting fraud and misappropriation of assets fraud.

Generally say misappropriation of assets fraud involves some form of theft. Therefore misappropriation of assets fraud will decrease the assets and increase the expenses then it will reduce the owner’s equity of the company (Auditing, Assurance and Ethics Handbook, 2010).

Financial reporting fraud is intentionally misstating items or omitting important facts from the financial report (Moroney, Campell, & Hamilton, 2011). In Cendant case, the fraud is the accounting department manipulating the revenues to meet the expectation of Wall Street analyst. Than the company can have more opportunities to merge other companies. The affect of the financial reporting fraud will increase sales therefore increase the profit of the company. The financial reporting with fraud will indicate the future earning ability to the share market therefore rising the share price in the exchange market.

c) What types of factors should auditors consider when assessing the likelihood of material misstatements due to fraud?

First the auditors should consider the company economical environment to identify whether there are incentives and pressures to commit a fraud (Moroney, Campell, & Hamilton, 2011). CUC is in the travel service industry which is highly competitive. And CUC's revenue has dramatic doubled in the mid-1990s. To merge the other company, the company's profit has to keep increasing to meet the analysts’ expectation. So the managements of CUC have pressures to create more profit by fraud financial figures.

Second the auditors should look into the financial report whether there are opportunities to perpetrate a fraud. (Moroney, Campell, & Hamilton, 2011) In this case, CUC made various year-end adjustments to the general ledger. Those significant adjustments created great opportunities to make a fraud.

Finally, attitudes and rationalisation to justify a fraud need to be assessed by the auditors. (Moroney, Campell, & Hamilton, 2011)CUC has been required to amend its financial statements by the Securities and Exchange Commission several times for using aggressive accounting practices in later 1980's and early 1990's. And from CUC's high speed expand, the companies top management showed high enthusiasm to maximise the share price. So the top level managements have created a flexible environment for the financial fraud.

d) Which factors existed during the 1995 through 1997 audits of CUC that created an environment conducive for fraud?

Seeking the incentives and pressures to commit a fraud, material stated in the early and mid-1990's CUC acquired several companies to expand market share. Those acquisitions included Entertainment Publications in 1992, Net Market in 1994, Welcome Wagon International, Home Shopping Travel Club, Privacy Guard in 1995, Sierra On-Line, Davidson & Associates in 1996. CUC also came into the new contracts with big companies such as Intel, Time Warner and American Airlines. CUC had doubled revenues from 738m in 1993 to 1.4b in 1996 and at same time CUC's net income rose from 25m to 163m (CUC International Inc. - Company Profile, Information, Business Description, History, Background Information on CUC International Inc.).

CUC was in highly increasingly competitive industry. To maintain high growth rate hut pressures on the managements.

However, for year-end reporting purposes, CUC made various year-end adjustments to incorporate the misstatements into the general ledger. Those adjustments are the opportunities to perpetrate a fraud.

Question 2:

Entity's 5 interrelated components of internal control

a) What responsibility does an auditor have related to each of these five components?

Internal control is the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of the entity's objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations.

Internal control framework is one of the independent reference for auditors to gather. The auditors need to test the five components of the internal control to identify the level of risk to error or fraud. The auditors need to test the effectiveness, consistent, inspection of documents for evidence of authorisation, inspection of documents for evidence that details included have been checked by appropriate client personnel, personnel performing,how they perform their tasks and re-performing control procedures.

1) The control environment

The control environment is the attitudes, awareness and action of management and those charged with governance concerning the entity's internal control and its importance in the entity. And the control environment sets the foundation for effective internal control, providing discipline and structure and includes several elements such as, communication and enforcement of integrity and ethical values, commitment to competence, participation by those charged with governance, management's philosophy and operating style, organisational structure, assignment of authority and responsibility, human resource policies and practices.

The auditor should consider each of these areas and their interrelationships. Especially, the auditor need to identify the significant deficiencies.

2) The entity's risk assessment process

The entity's process for identifying and responding to business risks, in the financial reporting area, is how management find risks in the preparation of a financial report that is true and fair.

There are three kinds of risks, inherent, control and detection risks. Inherent risk is the susceptibility of an assertion to a misstatement that could be material, either individually or when aggregated with other misstatements, assuming there are no related controls. Control risk is the risk that a client's system of internal controls will not prevent or detect a material misstatement. Detection risk is the risk that the auditor's testing procedures will not be effective in detecting a material misstatement. And auditors need to assess the combined inherent, control and detection risks to evaluate the risk of the material misstatements.

3) The information system, including the related business processes, relevant to financial reporting, and communication. The role of information systems is to capture and exchange the information needed to conduct, manage and control an entity's operations. Auditors will test the information system related to the financial reporting objectives as same as initiating and recording transactions, balance and events.

4) Control activities

Policies and procedures that help ensure that management directives are carried out. An audit need to categorise activities such as performance reviews, information processing, physical controls, segregation of incompatible duties. Those activities are easier to be test by the auditors compare those entity-level control activities.

5) Monitoring of controls

After establishing and maintaining internal controls, an important responsibility of management is to monitor the controls to assess whether they are operating as intended and modified for changes in conditions on a timely basis.

An audit needs to collect evidence about the design and effectiveness of internal controls. Those considerations include periodic evaluation, person in charge, communication channel, management implements, correcting significant deficiencies, implements reports and recommendations from regulators, function of internal audit and evaluations or observations made by the external auditors (Moroney, Campell, & Hamilton, 2011).

b) One component of internal control is the entity's control environment. What factors should an auditor consider when evaluating the control environment?

The entity's control environment includes several elements such as, communication and enforcement of integrity and ethical values, commitment to competence, participation by those charged with governance, management's philosophy and operating style, organisational structure, assignment of authority and responsibility, human resource policies and practices.

Communication and enforcement of integrity and ethical are essential elements of the control environment. Auditors should test what are the ethical and behavioural standards of the organisation and how they are communicated and they are monitored and enforced in business activities.

Commitment to competence can be judged by auditors' professional knowledge whether the employee and managements qualified with their assigned jobs and received suitable supervision.

Auditors consider the board's independence from the managements, the experience of its members, the extent of its involvement and scrutiny of management's day to day activities, and its interactions with the internal and/or external auditors. Therefore that is the way the participation by those charged with governance to be valued.

Management's philosophy and operating style need to be obtained by the auditors to identify the factors that influence management's attitudes towards internal control.

For the organisational structure, auditors need to understand the structure and its policies and procedures in matter of its size and complexity. And alternatively auditors can review the structure of the organisation through company's information systems.

The auditor also needs to gain evidence to show how authority and responsibility for operating activities are assigned, and how reporting relationships and authorisation hierarchies are established.

The competence and integrity of an entity's employees are essential so the auditors need to evaluate the human resource policies and practices. (Moroney, Campell, & Hamilton, 2011)

c) What red flags were present during the 1995 through 1997 audits of CUC that may have suggested weaknesses in CUC's control environment?

Water Forbes and Kirk Shelton did not create a control environment. Four of CUC's directors were tied with Walter Forbes through other joint investments in start-up companies.

These requirements by the Securities and Exchange Commission to change their financial statements are also reflect CUC's bad control environment.

Question 3:

Management override of controls

a) Provide an example where management override occurred in the Cendant fraud.

Management override is the management not complying with the exiting internal control regulation to fraud the financial figures in the financial report. This is normally happened when the management has incentive and pressure to achieve business target.

In CUC, the management recognised the deferred revenue as revenue immediately. That is an example for the management of CUC override the internal control.

b) What are the required auditor responses to further address the risk of management override of internal controls?

Although internal control over financial report is effective and well-designed, the management override still happened in many entities. Senior management might perpetrate financial statement.

It is difficult to identify the risk of management override fraud because management is in charge of the design, implementation and maintenance of internal controls. Actions need to be taken to address the risk of management override of controls. Maintaining scepticism is an attitude to know the fraud risk including management override existing in every entity. Auditors should strengthen understanding of the business to form the foundation of the business. Team of auditors can use brainstorming to identify the fraud risk. Auditors can use the code of conduct to assess financial reporting culture. And the governance should create a whistle-blower program and a broad information and feedback network.

These activities could not guarantee to prevent, deter or detect fraud through management override of internal controls. But as result these activities can help auditors to establish oversight of management. (Management Override of Internal Controls: The Achilles' Heel of Fraud Prevention, 2005)

Question 4:

Several misstatements were identified as a result of the fraud perpetrated by CUC management

a) For each misstatement identified, indicate one management assertion that was violated.

There are three misstatements identified in the CUC and they are irregular charges against merger reserves, false coding of services sold to customers and delayed recognition of membership cancellations and bank rejection of charges made to members' credit card accounts.

Irregular charges against merger reserves are artificially inflate earning by fictitiously recording revenues or reducing expenses and reducing the merger reserve in CUC. An audit can used the assertions used for transactions and events, including income statement items. The accuracy assertion is to test amounts and other data relating to recorded transactions and events have been recorded appropriately. In this case the expense and revenue for the merges should be recorded correctly.

False coding of services sold to customers is a classification fraud. Classification is that transactions and events have been recorded in the proper accounts. CUC put the revenue into a different account it can be recognised as income immediately instead of deferred income therefore the revenue is inflated.

Delayed recognition of membership cancellations and bank rejection of charges made to members' credit card accounts is a cut-off matter. Transactions and events have been recorded in the correct accounting period. This will increase the revenue in the accounting period.

b) For each misstatement identified, indicate one audit procedure the auditor could have used to detect the misstatement.

When testing for accuracy, an auditor needs to search for evidence that transactions and event have been recorded at appropriate amounts. In the CUC case, the auditors should collect the contract and transaction record relates to the merge to calculate what the correct amount is should be included in the financial report.

When testing for classification, an auditor needs to make sure that transactions and events have been recorded in the proper accounts. The auditors working on the CUC case should test the accounts to identify whether or not all the transactions in the particular account belong to the correct account.

When testing for cut-off, an auditor searches for evidence that transactions have been recorded in the correct accounting period. The auditors working on the CUC case need to test all the possible transactions which had happened have been recorded in the correct accounting period. (Moroney, Campell, & Hamilton, 2011)

Question 5:

Some of the members of CUC's financial management team were former auditors for Ernst&Young, LLP.

a) Why would a company want to hire a member of its external audit team?

A company may want to hire a member of an external audit team simply for expertise. For instance, if an audit manager has worked on a particular engagement for several years, that manager may know more about the operations of the audited entity than anyone else they could hire. In that instance, there may be no other motive. However, if a company consistently hires from the external audit team pool, one would have to wonder about the overall integrity of management and the audit team. (Moroney, Campell, & Hamilton, 2011)

b) If the client has hired former auditors, how might this affect the independence of the existing external auditors?

Hiring a member of an external audit team may not necessarily impair independence. However, if there was an unreported attempt to hire an audit team member or an unreported attempt to be hired during the audit, independence is impaired. Other independence issues may arise after the person is hired but must be considered on an individual basis.

Independence is the ability to act with integrity, objectivity and professional scepticism.

In CUC case, familiarity threat will be arise which refers to the threat that can occur when a close relationship exits or develops between the assurance firm and the client or between members of the assurance team and directors or employees of the client. The result can be that the assurance team become too sensitive to the needs of the client and lose their objectivity. (Moroney, Campell, & Hamilton, 2011)

References List

Auditing, Assurance and Ethics Handbook. (2010). Pearson Australia.

CUC International Inc. - Company Profile, Information, Business Description, History, Background Information on CUC International Inc. (n.d.). Retrieved 4 2, 2011, from Reference for Business: http://www.referenceforbusiness.com/history2/69/CUC-International-Inc.html

Kimmel, P. D., Carlon, S., Loftus, J., Mladenovic, R., Kieso, D. E., & Weygandt, J. J. (2006). Accounting Buidling Business Skills 2nd edition. Milton: John Wiley & Sons Australia, Ltd.

Management Override of Internal Controls: The Achilles' Heel of Fraud Prevention. (2005). Retrieved 4 3, 2011, from Aerican Institute of Certified Public Accountants: http://www.aicpa.org/ForThePublic/AuditCommitteeEffectiveness/AuditCommitteeBrief/DownloadableDocuments/management%20override%20achilles_heel.pdf

Moroney, R., Campell, F., & Hamilton, J. (2011). Auditing A Practical Approach. Milton: John Wiley & Sons Australia, Ltd.

Para-sailing vs. Bus Charter business

2011-04-23T22:35:00.000+10:00

One of my friend went to a Para-sailing company on Green Island recently. She works as a sell man to promo Para-sailing product to the Chinese tourists. Then she is seeking some advice from me to enhance her sales performance and also the marketing strategy.

During the conversation, I try to get some idea about the basic information of Para-sailing business. Para-sailing has maxim daily capacity of 84 which made up by 12 per hour times 6. Let's assume they have half capacity sold on every day, operated 300 days a year and 100 AUD per head income. Their revenue will reach 1,260k. That is a very good result for that small company.

All their assets include a 10 person size boat, 2 or 3 para-sail and a permit. Comparing bus charter business, we need 5 buses fleet to generate such revenue. They are far more efficient.

Look into the para-sailing company's assets, the most valuable item is the permission. If you can have a permission, the para-sailing will be a good business for the family investor.

Measurement

2011-04-05T19:54:00.016+10:00

Executive Summary

This paper introduces the measurement under the accounting Framework. Since measurement is basic information gathered from the business activities and transactions, it should reliably to reflect the reality of the report objectors so which type of the measurement should be chosen in the financial report is important to the report users. Also, which type of the measurement should be chosen should depend on respective criteria. In this paper, there are three issues indicated to illustrate the different type of measurement consideration in terms of the different business activity and purpose. The three issues are foreign currency exchange, agriculture accounting and public sector accounting. During the comparison, readers may conclude some ideas to apply four types of accounting measurement systems in the different business environments.

Introduction

Measurement is the fundamental framework in accounting. This paper reviews the definition of accounting measurement and the different types of measurement. Meanwhile, this paper uses three issues in accounting area to illustrate the implication of the different measurement systems. The three accounting issues are public sector, foreign currency and agriculture accounting. By choosing the correct measurement system, financial report can reflect true and fair business information.

Accounting Measurement

As generally considered, accounting is a measurement and communication discipline. There are two principles relating to accounting measurement. One is to identify appropriate objects of a measurement. The other is the way that the objects are measured so as to identify properties of alternative measurement approaches or to estimate a given measurement object (Belkaoui and Jones 1996; Clinch 2000). Yet, Staubus (2004) suggests that there are two views included in accounting theory literatures. The first one is the Chambers/Sydney view asserting only one measurement method through current net realizable price. The other view is the Staubus/mainstream view accepting several measurement methods in one same financial report.

The Accounting Handbook (2011) indicates that there are several objectives for financial report. The financial reports provide necessary information for common needs of users to understand financial situations in regard of financial effects of past events of their entities such as financial positions, financial performance and cash flow. Such understanding enables the users to make economic decision. Also, the financial reports provide information regarding results of stewardship or accountability of management that relates to resources entrusted to, which, again enable users to make economic decisions such as whether or not to sell investment in their entities. Nevertheless, the Handbook (2011) further indicates that financial reports do not necessarily convey non-financial information which is also needed for economic decision-making.

To achieve the objectives of the financial report, measurement that is adopted for the report needs to be considered. Normally, the study of accounting practices starts from considering the range of technical issues in relation to record and report financial or economic activities. In the fifteenth century, Pacioli (cited inGodfry, Hodgson et al. 2010) described a double-entry accounting system stemmed from the basic technical processes. In 1929, the traditional historical cost system emerged after collapse of the Wall Street. In the 1960s, a few alternative systems were developed such as updated cost system for measurement of current costs of resources usage and for evaluation of capital at current buying prices as well as systems applied current selling prices. Two major current buying price systems were proposed. One was the fair value accounting system that was proposed by Edwards and Bell on the basis of the concept of financial capital maintenance using physical capital maintenance and significantly affects the derived measure of profit. In another system, income and capital are measured by selling prices or exit value (Godfry, Hodgson et al. 2010). Noteworthy, though entities usually combine different measurement bases, they commonly adopt the historical measurement basis to prepare their financial reports. Another fact is that, some entities adopts the current cost basis for effects regarding changing prices of non-monetary assets, which falls into the inability of the historical cost accounting model (Shying and Ngiam 2011).

Nonetheless, according to The Accounting Handbook (2011), measurement refers to a process for monetary amounts determining. During this process, elements of the financial statements are recognized to produce balance sheet and income statement. This process involves selecting particular basis of measurement. Thus, there are several measurement bases that are considered for different degrees and are combined variously in financial reports.

There are four measurement bases are identified in The Accounting Handbook (2011). The first one is historical cost assets. They are recorded at the amount of cash or cash equivalents paid for fair values of the considerations when acquired at the time of their acquisition. Liabilities are recorded, at the same time, at the amount of proceeds received in exchange for obligation. The liabilities can also be recorded at the amounts of cash or cash equivalents under certain circumstances when such cash or cash equivalents are expected to be payments in regard of satisfaction of the liabilities in the normal course of business. The second one is current cost assets. They are recorded as the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently (Shying and Ngiam 2011). The liabilities are recorded at the amount of the cash or cash equivalents that are not discounted but that would be required for current obligation settlement. The third one is realised value assets or settlement value assets. They are recorded at the amount of cash or cash equivalents that can be current obtainable when the asset is sold in an orderly disposal. Liabilities are recorded at the settlement values. In other words, the undiscounted amounts of cash or cash equivalents are paid under expectation to satisfy the liabilities in the normal course of business. The fourth one is present value assets. They are recorded at the present discounted value of future net cash flows. Meanwhile, the item is expected to generate in the normal course of business. Liabilities are recorded at the present discounted value of the future net cash outflows to settle the liabilities in the normal course of business (Godfry, Hodgson et al. 2010).

Various types of measures in accounting are possible for respective purposes. For example, there are direct or indirect accounting measures. The former are primary and actual measures of an object or its attributes. The latter are secondary measures derived indirectly though algebraic transformation of certain set of numbers representing direct measure of an object or its attributes. Another type of measure is classified as a past, present or future measure to refer respectively to a measure of a future event under consideration of decision time dimension. Also, there is measure type that can be classified as a retrospective, contemporary or prospective measure when referring to whether an object or its attribute measures belong to a past, present or future event under consideration of the time when measurement is made (Belkaoui and Jones 1996). To illustrate, there are three issues are indicated below which are foreign currency exchange, agriculture accounting and public sector accounting.

Measurement in Public Sector Accounting

Public sector is important to a country because it acts on behalf of its people and communities for their interests and provide collective goods and services that cannot be accomplished by private sector (Deegan 2010). There are three broad groups of public sector which are government trading enterprises, government departments, and whole of government (Henderson, Peirson et al. 2011). The development of accounting regulation of public sector reporting has been one of the most important projects of the AASB/PSASB because it directly influences with a significant degree on the Australian people’s well-being and public resources. With improved financial reporting practices, the government and taxpayers are provided with information to make informed decision on the way that the resources are to be allocated (Deegan 2010).

There are several differences between the public sector and the private sector. Their bases are different. Public sector is based on budget when the other is on a self-sustaining basis. When considering transfers, the public sector holds objective of inequality of exchange and redistributive transfer while the private sector has each transaction in the form of an exchange of resources between the enterprise and its environment. In the aspect of performance, the public sector has little connection between taxed and the benefits at the level of individuals. Yet for the private sector, its performance is considered as its marketability of its output compared to its input. Thus, compared to private sector, public sector faces problems of absence of profitability as a regulatory mechanism as well as a measurement framework. Further, the accountability of public sector has to respond to questions from individuals and organizations for their conduct, responsibilities and activities; has to provide information for evaluation of the performance of the parties concerned; and has to provide financial reports to set an important example of the accounts for process of evaluation (Moxham 2009; Deegan 2010; Henderson, Peirson et al. 2011).

Three issues are inherent in the public sector accounting which are infrastructure and heritage assets, land under roads and form as well as content of financial statements. Of the three issues, the first two need to be considered with the measurement issues. The priority is to make clear definition of the issues with essential features.

The infrastructure assets are public facilities, immovable and require sustainability of living standards and relevant essential services. Whereas for heritage assets, they are considered as assets that are unreplaceable or indefinitely preserved such as museum collections, national parks, and nature reserves. However, infrastructure assets and heritage assets are difficult to be measured because their characteristics are different from that of other assets. Firstly, costs of such assets are ‘sunk’. Secondly, they are not vendible or evaluated by marked value. Thirdly, information that they convey is rather socially than commercial benefits. Also, such assets do not have physical life that can be determined. Besides, they actually are liabilities rather than assets (Deegan 2010). As a result, it is argued that these assets need to be measured with special treatment. For example, the amounts of infrastructure ad heritage assets need to be disclosed as two separate categories of non-current assets in the statement of financial position of government departments (Sutcliffe, Micallef et al. 1991; Deegan 2010; Henderson, Peirson et al. 2011).

As for the issue of land under roads, the major features include three aspects. First, it is the uncertainty about the land under roads that is to be controlled by which entities. Secondly, there is not much reliability in measuring the land under roads. Also, to recognize land under roads costs a lot which exceeds its relevant benefits. Yet the framework notes that assets are to be recognized when they meet the definition and recognition criteria of assets. The recognition criteria include asset with a reliably measured cost or other value. Current value also needs to be estimated and determined for land under the roads in the absence of a market transactions through analysis of market transactions for adjacent land (Deegan 2010; Henderson, Peirson et al. 2011).

Measurement in Agricultural Activity

Agriculture Sector involves biological assets which are non-human living assets such as animals and plants controlled by entities. There are two broad categories of the biological assets. One is bearer biological assets that generate revenue by producing output more than once. The other is consumable biological asset generating revenue only once when the assets are slaughtered, harvested or sold.

The consideration of biological asset measurement roots in their essential features that such assets are living and capable of biological transformation. Such features make the biological assets different from other assets and lead to certain accounting problems for classification, measurement and recognition of changes in asset value. Nevertheless, the biological assets are basically classified into to two categories: animal and plants. Such classification enables an easier consideration for measurement (Henderson, Peirson et al. 2011).

Animals

After series of arbitrary assumptions and allocations, costs of animals can be estimated and determined. It is commonly agreed that cost is not a satisfactory basis for measuring animal due to unreliable measuring to recognize such assets. Also, it provides irrelevant data which brings more practical difficulties for measuring such assets (Roberts, Staunton et al. 1995). However, there are several alternative ways to measure market value of animals.

There are three variations of market value. Firstly, the net price is the net realisable value obtained after the animal is sold with deducted transaction costs at the end of each reporting period in an orderly market. Secondly, discounted market value is net realisable value achieved after market value is reduced by a certain amount to a possible future market price. Thirdly, agreed values for animal are involved in standard value which is based on conservatively estimated market prices in foreseeable future. As the market changes all the time, the animals are recognized in the accounts at the standard values. Thus, generally, net realisable value becomes the best alternative to measure the value of the animals by providing more relevant and reliable information than merely cost.

Plants

Noteworthy, compared to measuring the animal, measuring bearer plant biological assets through the net realisable value is particularly difficult. For example, results of measuring a vineyard or an orchard by the net realisable value are usually a sum of the net realisable values consisting land, improvements and the plant biological assets. The fact is that bearer plant biological assets are seldom measured separately from the land on which they grow. Also, the fact is that the net realisable value is usually considered and determined by the price at which the land, improvements and bearer plant biological assets are sold as a unit. Besides, some other issues need to be considered when measuring forestry assets. There are three possible const-based methods for the forestry assets measurement which are historical cost, compounded historical cost, and replacement cost. To incorporate current value-based methods of accounting for such assets, the suggested ways are net-present-value method and net-realisable-value method(Henderson, Peirson et al. 2011).

Measurement in Foreign Currency

AASB121 contains accounting principles for companies regarding foreign currency translation and presentation in the balance sheet and profit and loss account. Effects of changes in foreign exchange rates were introduced for annual reporting periods beginning on or after 1 January 2005. The Financial Reporting Standard 121 states the principal issues determining which exchange rates to be uses and how to report the effects of changes in exchange rates in the financial statements. The magnitude of the exchange rate valuation effect has been increasing during recent years. There are two main reasons. One is that it is considered as a part of reflect of large fluctuations. The other reason is that it reflects increasing degree of international financial integration. As higher cross-holdings of financial assets across countries increase, the exchange rate valuation effect is concentrated on gross assets (Shying and Ngiam 2011).

AASB121 specifically defines 3 different exchange rates for foreign currency translation which are closing rate, exchange rate and spot exchange rate. All the entities’ transactions are recognised in the functional currency when all currencies other than the functional currency are foreign currencies. Meanwhile, foreign accounts should be translated at the exchange rate in effect at the date of transaction which is spot exchange rate or at the first date of the month when transactions occur. Also at the end of month, foreign accounts should be translated at the exchange rate in effect at the closing date of the month(Shying and Ngiam 2011).

Notably, any foreign accounts denominated monetary items are measured using the closing rate. On the other hand fair value is used to measure any non-monetary items arising from transactions denominated in foreign accounts. A part of non-monetary items that are measured in foreign currency at historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Nonetheless, depending on the accounting regulations that affect the parent company, the translations can be done at the exchange rate at the end of the period or at the average exchange of the period. As a result, income statement are usually translated at the average exchange rate over the period when balance sheet that exposures foreign subsidiaries are usually translated at the prevailing current exchange rate at the time of consolidation. The differences caused by translations are exchange differences which recorded in financial report in accounts of assets, capitalisation or expenses in the period in which they arise (Dumas 1984; Board 2010).

IAS 36 Impairment of assets states that all assets are subject to impairment tests such as recoverable amount test as well as in IAS 2 Inventories states that net realisable value tests. These two requirements interact through the comparing process of non-monetary assets measured in a foreign current that are assessed for impairment. There are two aspects involved in the comparing process. One is the carrying amount that is translated at the rate when the amount was determined. The other is the net realisable value or recoverable amount translated at the rate then the value was determined. Based on the comparison, assets are impaired in the functional currency instead of in the foreign currency. Such situation roots in the factor that some amounts used in impairment testing are translated to the functional currency at the current rates while the carrying amounts are translated with historic rates(Board 2010).

Conclusion

In general, there are many different types of business activities and transactions. Through illustration of three issues, the understanding is that appreciate types of measurement need to be considered to record the real information about the reporting entities. Therefore, nature of respective business procedure and purposes of the report need be justified before choosing the measurement system. To achieve, keeping knowledge update is necessary as well as being aware of debates in applying the measurement. Also, it is important to produce financial reporting that reliably reflects the reality of the report objectors to the report users. Thus, different types of accounting measurement need to be considered and chosen in accordance with different business environment.

Reference

Accounting Handbook 2010, Pentice Hall, 2010.

Belkaoui, A. R. and S. Jones (1996). Accounting Theory. Marrickville, Harcourt Brace.

Board, I. A. S. (2010). IAS 21. Changes in Foreign Exchange Rates, IASB.

Clinch, G. (2000). "Accounting Measurement and Capital Market Research." Australian Accounting Review 11(2): 58-62.

Deegan, C. (2010). Australian Financial Accounting. Waterloo, NSW, McGraw-Hill.

Dumas, B. (1984). "Exposure to Currency Risk: Definition and Measurement." Financial Management 0046-3892(13/2): 41.

Godfry, J., A. Hodgson, et al. (2010). Accounting Theory. Milton, QLD, John Wiley & Sons Australia.

Henderson, S., G. Peirson, et al. (2011). Issues in Financial Accounting. French Forest, NSW, Pearson Australia.

Moxham, C. (2009). "Performance Measurement: Examining the applicability of the existing body of knowledge to nonprofit organizations." International Journal of Operations & Production Management 29(7): 740-763.

Roberts, D. L., J. J. Staunton, et al. (1995). Accounting for Self-Generating and Regenerating Assets. Melbourne, Australian Accounting Research Foundation.

Shying, M. and J. Ngiam (2011). (ed.) Accounting Handbook. C. Australia. Australia, Pearson Australia Group Pty Ltd.

Staubus, G. J. (2004). "Two Views of Accounting Measurement." ABACUS 40(3): 265-279.

Sutcliffe, P., F. Micallef, et al. (1991). Financial Reporting by Government Departments. Melbourne, Australian Accounting Research Foundation.

Taxation

2011-03-31T18:07:00.000+10:00

Seeking professional advice is necessary.

In my Taxation Law subject. Mr. Justin illustrated a tax deduction on investment property. If you can follow the definitions of the deduction, you can have 4% per year over 25 years or 2.5% per year over 40 years deduction based of the building cost of the unit. Normally the cost of building is the half price of the sales price. That is 2% return increase per year.

This is only an example of reducing income tax and there for increasing net profit by taxation lawyer. In a project planning period, seeking professional advice is necessary. That cost should be recovered by the professional knowledges.

English or Chinese

2011-03-31T11:08:00.000+10:00

I am a Chinese. First of all, I must say that I am not good at writing in English even in Chinese. Writing was my worst subject in my study experience. I am always good at calculation. But during my work experience. I found writing is extremely important. It is a useful tool to review what you thought. If you have an idea, write it down, you will have more considerations about your idea. It helps you think it throughly.

Why English not Chinese?

Of cause, Chinese will be more easy for me and for my friends. But as an investor, you need look opportunities over the world. English is almost standard language used in investment area. It is a barre but you have to over it. So I need practice and more practice.

I am sorry there will be some grammar and punctuation mistakes in blog. Please give me a comment and I will fix it.

Blog start up

2011-03-31T10:20:00.000+10:00

After having two master degrees study in James Cook University since 2008, I am going to finish the study in this semester. During last 3 years, I was trying to change my career form a sales manager into professional businessman. So in the JCU, I got a lot of ideas and knowledge about the business world. These ideas will influent my career in the future.

I feel I am a freshman just into the society again. It is an opportunity to start a blog to record my ideas about investment activities. So those activities can be reviewed in the future, whatever they are wrong or right. It will be very interesting.

The blog name is "Investview" and it is start at 31/3/2011.