Archives for June 2009

The Accountant’s Story : Inside the Violent World of the Medellín Cartel

The Accountant's StoryCame across this audio book whilst in the National Library. Seems like a good read. Here’s what I read from the back of the CD cover:

Publisher’s Summary
“I have many scars. Some of them are physical, but many more are scars on my soul. A bomb sent to kill me while I was in a maximum security prison has made me blind, yet now I see the world more clearly than I have ever seen it before. I have lived an incredible adventure. I watched as my brother, Pablo Escobar, became the most successful criminal in history, but also a hero to many of the people of Colombia. My brother was loved and he was feared. Hundreds of thousands of people marched in his funeral procession, and certainly as many people celebrated his death.”
These are the words of Roberto Escobar-the top accountant for the notorious and deadly Medellín Cartel, and brother of Pablo Escobar, the most famous drug lord in history. At the height of his reign, Pablo’s multibillion-dollar operation smuggled tons of cocaine each week into countries all over the world. Roberto and his ten accountants kept track of all the money. Only Pablo and Roberto knew where it was stashed-and what it bought. 
And the amounts of money were simply staggering. According to Roberto, it cost $2,500 every month just to purchase the rubber bands needed to wrap the stacks of cash. The biggest problem was finding a place to store it: from secret compartments in walls and beneath swimming pools to banks and warehouses everywhere. There was so much money that Roberto would sometimes write off ten percent as “spoilage,” meaning either rats had chewed up the bills or dampness had ruined the cash. 
Roberto writes about the incredible violence of the cartel, but he also writes of the humanitarian side of his brother. Pablo built entire towns, gave away thousands of houses, paid people’s medical expenses, and built schools and hospitals. Yet he was responsible for the horrible deaths of thousands of people. 
In short, this is the story of a world of riches almost beyond mortal imagination, and in his own words, Roberto Escobar tells all: building a magnificent zoo at Pablo’s opulent home, the brothers’ many escapes into the jungles of Colombia, devising ingenious methods to smuggle tons of cocaine into the United States, bribing officials with literally millions of dollars-and building a personal army to protect the Escobar family against an array of enemies sworn to kill them. 
Few men in history have been more beloved-or despised-than Pablo Escobar. Now, for the first time, his story is told by the man who knew him best: his brother, Roberto. but also a hero to many of the people of Colombia. My brother was loved and he was feared. Hundreds of thousands of people marched in his funeral procession, and certainly as many people celebrated his death.”
These are the words of Roberto Escobar-the top accountant for the notorious and deadly Medellín Cartel, and brother of Pablo Escobar, the most famous drug lord in history. At the height of his reign, Pablo’s multibillion-dollar operation smuggled tons of cocaine each week into countries all over the world. Roberto and his ten accountants kept track of all the money. Only Pablo and Roberto knew where it was stashed-and what it bought. 
And the amounts of money were simply staggering. According to Roberto, it cost $2,500 every month just to purchase the rubber bands needed to wrap the stacks of cash. The biggest problem was finding a place to store it: from secret compartments in walls and beneath swimming pools to banks and warehouses everywhere. There was so much money that Roberto would sometimes write off ten percent as “spoilage,” meaning either rats had chewed up the bills or dampness had ruined the cash. 
Roberto writes about the incredible violence of the cartel, but he also writes of the humanitarian side of his brother. Pablo built entire towns, gave away thousands of houses, paid people’s medical expenses, and built schools and hospitals. Yet he was responsible for the horrible deaths of thousands of people. 
In short, this is the story of a world of riches almost beyond mortal imagination, and in his own words, Roberto Escobar tells all: building a magnificent zoo at Pablo’s opulent home, the brothers’ many escapes into the jungles of Colombia, devising ingenious methods to smuggle tons of cocaine into the United States, bribing officials with literally millions of dollars-and building a personal army to protect the Escobar family against an array of enemies sworn to kill them. 
Few men in history have been more beloved-or despised-than Pablo Escobar. Now, for the first time, his story is told by the man who knew him best: his brother, Roberto.

Explain the difference between gross profit and net proft

Profits going at the right direction

Gross Profit is calculated by deducting the cost of goods sold from the net sales figure. The calculation of the gross profit takes place in the trading account.

Net Profit – the excess of gross profit over expenditure. it is calculated in the profit and loss account by deducting all business expenditures from the gross profit.

What Is The Difference Between Accruals And Deferrals?

Accrual—accrual-basis recognition precedes (leads to) cash receipt/expenditure

Revenue—recognition of revenue earned, but not received

Expense—recognition of expense incurred, bill not paid

Deferral—cash receipt/expenditure precedes (leads to) accrual-basis recognition

Revenue—postponement of recognition of revenue; cash is received; but revenue is not earned

Expense—postponement of recognition of expense; cash is paid; but expense is not incurred

A deferral postpones recognition of revenue or expense by placing the amount in liability or asset accounts. Two methods are possible for deferring revenues and expenses depending on whether real or nominal accounts are originally used to record the cash transaction.

Revised ICPAS Code of Professional Conduct and Ethics

enron-code-of-ethics

The Irony of It All - Enron's* Code of Ethics

 

With effect from 1st August 2009, Singapore public accountants must adhere to an enhanced Code of Professional Conduct and Ethics. Following ICPAS Council’s approval on 19 May 2009 and in tandem with ACRA’s issuance of its enhanced code today for public accountants and effective from 1 August 2009, members of the Institute of Certified Public Accountants of Singapore (ICPAS) must adhere to a revised Code of Professional Conduct and Ethics (ICPAS Code). The ICPAS Code is modeled after the “Code of Ethics for Professional Accountants” published by the International Federation of Accountants (IFAC) in June 2005 (the IFAC Code) and is based on the ACRA Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities.

The updated code provides more guidance to accountants on how to apply the principles and independence rules. ACRA said it also “places an expectation on public accountants to pro-actively identify and eliminate potential threats to their independence”. 

The enhanced code requires accountants to document their decisions on independence issues to show they have complied with the professional independence requirement. Major differences of the current and revised code are noted in the ICPAS website. For example, under the current Code, it indicates that a covered party shall not accept gifts exceeding $200 annually from an audit client.

The revised Code uses a conceptual framework approach, discourages the acceptance of gifts or hospitality from the audit client. However, unlike the current Code, there is no mention of an acceptable amount for accepting gifts and hospitality.

The Singapore code went through a public consultation process in 2007-08. 

Sources:

Channel News Asia, Business Times and ICPAS.