Essay on “International and Domestic Oil Prices”

Essay on â€Å"International and Domestic Oil Prices† Introduction The involvement of the financial markets in the modern economies and the oil market is such that upwards of 60% of the crude prices are not determined by the supply and demand forces on the markets. Instead, leading hedge funds and banks, through the international oil exchanges in London and New York control the spot prices through oil futures (Rich, Streitfeld, Rampell, 2011). This has effectively crested more scope for speculation within the industry, which when coupled with the emergency of bond markets across the world, the scare of the exchanges markets losing an actual backing of the actual markets has arisen, with dire consequences on the predictability of oil prices. These have an ultimate effect in the economies of countries across the world. This paper seeks to assess the effects of the international oil prices on the US’ domestic economy as well as the economies of other nations across the world. The assessment includes an understanding of the role of speculation, oil exchanges, producing nations and other agents of the fuel prices, as well as the effects of their respective decisions on the consumer demand (Rich, Streitfeld, Rampell, 2011). International Oil Prices and the Domestic Economy The 1988 collapse of the OPEC administered system of pricing led to the emergence of the prices freely determined by the forces on the markets, which has survived to the present-day. The nationalizations of oil reserves and the collapse of the concessions system deprived multinational companies of the influence they enjoyed in determining the oil prices, leading to the emergence of exchanges and deals outside the horizontally and vertically integrated corporations. This was strengthened even further by the rising influence of non-OPEC producers, which in turn led into the development intricate markets across the world, including physical forwards, spot markets, options, futures and derivatives’ markets. The 24-hour trading and electronic markets, enabled by the rise of technology allowed greater access to the markets and with, multiple trading instruments. Under the new system, physical deliveries occur both through spot markets and futures, with the spot markets comprising a minority of the transactions because of the logistical difficulties associated with spot deliveries (Tang Wei, 2010). Crude Benchmarks and Pricing Long-term contracts stem from bilateral agreements for the delivery of crude oil shipments at pre-determined prices. The varied qualities of crude attract equally varied premiums (benchmarks), where the prices are determined by the price differential (D) and the benchmark crude price (PR). The price agreement for a spot or futures market involves agreements on the price differential (Fattouh B. , An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An An Anatomy of the Crude Oil Pricing System , 2011). The price differentials built in the Gross Products Worth of refining crude, rendering them hugely variable owing to the varied qualities of crude oil and perhaps most importantly, due to the changes in the relative supply and demand forces on the market for each variant of crude. In the recent three years for instance, the price differential between Arab Heavy and Arab Light crudes increased to reach upwards of $15 a barrel, with fuel oil being heavily supplied, despite the fact that diesel, which results from Arab Light’s saw shortages in the market (Fattouh, Kilian, Mahadeva, 2011). Benchmark differentials on the other hand are determined by the oil exporting nations, in consideration of the Gross Products Worth of the crude variant, announced up to a month prior to the loading of the products. The determination of the benchmarks builds in multiple lags, coupled with the use of dated figures, which in turn implies that the prices would least reflect the actual conditions on the market. Other nations, including Qatar and Abu Dhabi simply announce the Official Selling Prices, based on the Dubai-Oman Benchmark pricing system. Countries must not only ensure competitiveness of their crude, but also build into their pricing models the differences with between the reference and their own crudes (The Economist, 2009). In addition, oil producers delay announcing the differentials in order to reduce the lags, while also avoid being undercut by their respective competitors. Changes in the global oil prices have far-reaching effects on the domestic economies of all countries, and the fact that countries have little control over the changes in prices, makes the changes necessarily hurtful to the domestic economies. Since the beginning of 2010, commodity prices across the world have risen considerably, following a near 40% increase in the prices of oil. The international increases in the prices of oil occurred towards the close of 2010 to 2012 with the consequential cost-push inflation on the prices of basic commodities including food, metals, agricultural commodities and minerals across the world (Fattouh B. , The Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural Model, the Demand–Supply Framework and Informal Approaches, 2007). In addition, the demand for oil is dependent on not only the United States economy but also all other economies in the world. The demand of major emerging economies including China, Brazil and India, w hich effectively pits the interests of different countries against each other, with the consequent increases in prices, in the event the demand of the world goes up. The recent growth in demand from China has resulted in global increases in fuel prices and the prices other commodities. The energy demand outside the OECD also contributed to the rapid depreciation of the United States dollar, with dire consequences on the ability of the country to import important resources into the country, while at once rendering its exports relatively cheaper (Ripple, 2008). The consequences of the (i) increasing oil prices and (ii) the fluctuating nature of the prices on the domestic economy are dire, with analysts estimating that a $10 increase in the price of oil is capable of reducing the GDP growth by more than 0.5%, within the OECD. In addition, a similar increase is estimated to lead to upwards 0.2% increase in the rate of inflation within the OECD, even with the multipliers used in these models ignoring multiple dynamic effects (The Economist Intellegence Unit, 2012). Other than the actual increases in demand for energy across the world are unsurpassed by the geopolitical issues that have a disruptive effect on the real supply, coupled with changes in the market dynamics. The spare production capacity of Saudi Arabia is insufficient to meet the fluctuations in the supply of other oil producing nations that may be disrupted by political and regional tensions (Tehran Times, 2012). Effectively, the demand and supply forces in the domestic economy are unrelated to the demand and supply forces within the domestic economy, effectively rendering them either too high or too low, for a domestic equilibrium to be reached. Formulae pricing is founded on the key physical benchmarks, including the West Texas Intermediate (WTI), Dated Brent, Dubai and the ASCI price (Fattouh B. , The Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural Model, the Demand–Supply Framework and Informal Approaches, 2007). The benchmark prices are known as the spot market prices, form an important part of the pricing system, not least because producers and traders use them rely on them in setting futures prices, which have an influence on the spot market prices both at present and in the future (Krugman, 2009). In addition, benchmark crude is used by companies and banks in settlement of derivative instruments such as swap contracts. Governments and futures exchanges used benchmark crude for taxation and settlement of financial contracts respectively. Oil-producing countries use different benchmarks depending on the destination of their exports with Iraq for instance using the Brent Crude to export t o Europe, while its Asian and US exports are based on the Dubai-Oman and the WTI respectively. Mexico on the other hand used a weighted averaged of varied benchmarks’ prices to determine their respective exports prices, including the WTI, the Louisiana Light Sweet, the High Sulfur Fuel Oil and Dated Brent. The benchmarks are priced through assessments by the Oil Reporting Agencies, based on the market information and assessments of the quality of oil, but the prices are strict estimates, with variation between different prices (O’Hara, 2001). Further, while the benchmarking principle remains the same, the benchmarks have changed immensely, both in terms of liquidity and the nature of crudes involved in the process of assessment of the value. The Brent Benchmark for instance, has since began including the North Sea Streams Forties, Ekofisk and Oseberg, while Platts Dubai builds in Upper Zakum and Oman. The streams in benchmarks are naturally not identical in quality. This makes the benchmark prices not to reflect the price of a physical stream, but most importantly, to reflect the prices of a constructed index of different physical streams (Rothwell Gomez, 2003). The benchmark crude oil streams have been declining, with far reaching effects on the market. In the United Kingdom for instance, the decline in production of Brent crude in the 1980s from 885,000 b/d to 366,000 b/d in 1986 to 1990, resulted in massive distortions, squeezes and manipulations, with the consequence of Brent crude prices being completely disconnecte d from other crude grades. The problem was alleviated by the comingling of Ninian and Brent crudes to create Brent Blend, coupled with the ceasing of Ninian as a crude stream. Brent Blend did not last too, and with physical production delays, came the fluctuations in the prices of crude oil based on the benchmarks. With the decline in the physical production of the crude components of benchmarks, other crudes have been co-opted into the benchmarks (Rich, Streitfeld, Rampell, 2011). In 2002 for instance, Platts expanded its definition of Dated Brent to include Oserberg and Forties (from the North Sea) in order to facilitate the assessment process as well as the quality of deliverables in multiple forward contracts based on the benchmark. WTI has also been reported to be declining rapidly, with effects on the futures based on the index. Effectively, the declining physical production of benchmark crudes has the consequence of taking with it, the standards that form the basis of oil p rice determination for both the futures markets and the spot markets, owing to the huge influence of futures on the spot markets (World Bank, 2007). Alternative Pricing While the above pricing model should under ideal conditions be functional, but the involvement of high finance and financial innovation has led to exaggerations of prices (Thorne, 2010). The Posted Pricing system that was previously used by the oil companies to set the prices of oil in consultations with the oil producing nations, and in view of the conditions on the market. In this way, the speculative forces in the market would be eliminated. In addition, the oil producing countries would be able to link the physical supplies to the actual demand in the market, effectively reducing the prospects of exploitative speculation. China has repeatedly implemented this system, with limited success, largely because of the heavily innovative financial markets and instruments in the modern world (The Economist, 2011). The Chinese model is founded on the assessment of the costs of purchase of crude oil from the oil exporting prices, including the costs of transportation and other transaction costs in order to These ensure that the role of the private sector in the determination of oil prices can never be under-estimated, regardless with the amount of regulation. In addition, the characteristic inefficiency caused by the slow reaction of governments, coupled with the time lags in forecasting models render the system heavy and impractical (Krugman, 2009). Financial Exchanges, Physical Markets and Speculation Upwards of 60% of oil prices are purely as a result of speculative forces by leading financial institutions, implying that while current oil prices comprise as much as $60 per barrel that derives from speculation, despite the relatively stable demand and supply forces in the previous five years (excluding the emerging economies effect). Hoarding of crude oil, and the arrival of speculative investments backed by the bond markets and securitization into the oil futures has resulted in increasing supplies, which are not passed on to the spot market but instead serve as financial instruments (Fattouh, Kilian, Mahadeva, 2011). The potential of speculators to herd markets into supply shortages in order to profiteer is enormous, especially with the emergence of paper crude of financial derivatives, which have gained acceptance across the financial and oil markets. Financial instruments including Contract for Differences, Brent Forwards, swaps, Brent options, Exchanges for Physicals and o thers are now tradable on exchanges. This has in turn offered easy access, with reduced risk to instruments such as index funds, options, exchange traded funds and futures (Rich, Streitfeld, Rampell, 2011). This has been driven by changing investor preferences in favor of market-based derivatives, which have low transaction costs and risks. Recent studies have shown a high correlation between equity and energy returns, with the most extreme effects being evidenced in periods of financial market booms. The sub-prime markets specter (reckless risk taking due to low risks and lack of physical market bases) is evident in the non-backed markets. While it is impossible to envisage a market without securities, given the central role of crude oil on the economy, it is crucial that financial exchanges are founded on the physical markets (O’Hara, 2001). At present, most hedge funds are reeling from the collapse in profitability of the housing market, moving investments into the oil markets. This in turn fuelled a bubble in the oil market, with increases in the prices of oil futures through the period. Major companies in the European Union and North America hoarded oil, leading to appearance of oil shortages, coupled with the limit credit availability that characterized the global economic crisis. These were exacerbated Lon don ICE Futures and Over the Counter (OTC), which are not regulated, leading to the imprecise figures regarding the dollar value of the expenditures on energy investments. This in turn created and has expanded the speculative space and incentive in the oil market, with the consequence of worsening the difference between the internationally set prices and the domestic prices. This even most significant, with the declining physical production of benchmark crude, which would lead to a disconnect between the actual prices and the oil supplies. Futures Physical Markets Both spot and futures prices are determined in response to the same economic conditions, and should by necessity reflect one another. The price set for futures closely reflects the expectations, whether real or otherwise, of the future supply and demand, which musty by construction be reflected in the spot prices (Smith Searle, 2007). This is the sole intention of benchmarking as well as the pricing models adopted by the oil-exporting countries, which are constantly adjusted in order to fit in with the demand and competitiveness needs of the market. The futures contracts are closed by exporters and traders who resale the oil to the consumers, and to this extent, the demand and supply forces are reflected. However, similar conditions would only prevail, if the demand by the oil traders is driven by the final market needs, and not speculative demand (The Economist, 2009). Speculative demand for oil, and the relative power of financial institutions and the instruments that have emerged in the modern markets have resulted in the creation of artificial markets, which may be manipulated to the benefit of the oil traders and speculators. This occurs through artificial increases in the prices, driven by futures markets that are founded on artificially created expectations of demand and supply. In addition, even if there was no manipulation, squeezes etc, the forecasting formulae that is used to project the futures contracts pricing is independent on whether prices increase or fall (Ripple, 2008). Further, the effect of politics and geopolitical tensions involving oil-producing nations and regions, have a greater effect on speculative and futures markets than the physical markets. While for instance the Iranian, Egyptian and Libyan crises resulted in fears of reduced oil supply to Europe, Asia and the Americas, with the consequent increases in oil prices, the actual reductions in supply have not been significant (Krugman, 2009). However, the pricing models for futures that built in this possibility in turn resulted in prices that did not reflect the physical markets. This is noticeable in periods when supply was increased by both OPEC and non-OPEC nations, which were however, not reflected by reductions in the fuel prices. The United States, which accounts for a quarter of the global oil trade and consumption, has in the recent past offered a clear example of how oil futures distort the physical trade. Traders sale the dollar short, while selling oil long, leading to a fall in the current prices at which they acquire oil and hoard, to supply it during shortages (Eicher, Mutti, Turnovsky, 2009). The geopolitical tensions and the prominent role played by the speculators easily masks the role played by multiple other players in the industry that however, have an influence on the spot and futures prices. These players include the oil exploration and extraction companies, the refineries and the entire petrochemical industries among others. This adds to OPEC oligopoly, which does however comprise multiple oil rich nations that compete against each other to ensure the competitiveness of their oil. Iran and Saudi Arabia’s Arab Light for instance are of the quality, land go for about the same prices (Thorne, 2010). However, the two nations must compete for markets abroad. Effectively, it is in the interest of every country to make certain that their prices are as low as possible. However, the intermediaries that deliver the oil to the final consumers have an impact on the prices beyond the control of any one player. Effectively, the international pricing system is the only vi able pricing system, open to OPEC and other agents. Conclusion Benchmarks represent the most important pricing system, but ht emergency of financial derivatives based on oil, have led to the distortion of the oil prices, coupled with the lack of transparency in the industry, which has in turn resulted in the gap between the actual and the futures prices (Eicher, Mutti, Turnovsky, 2009). A lesson from the sub-prime mortgage crisis is apt for the oil market. While the recent global economic crisis was triggered by the crush of the sub-prime mortgage market in the United States, the actual problem that precipitated the creation of bubble and the subsequent crush was the emergence of bond markets. These in turn resulted in excessive credit on the markets, with the markets actually losing the physical market back up, which were replaced with tradable securities, fuelling a bubble that ultimately haunted the global economy. References List Eicher, T. S., Mutti, J., Turnovsky, M. ,2009, International Economics. London: Taylor Francis. Fattouh, B. ,2011, An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An An Anatomy of the Crude Oil Pricing System . Oxford: Oxford University Press. Fattouh, B. ,2007, The Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural Model, the Demand–Supply Framework and Informal Approaches. University of London . Fattouh, B., Kilian, L., Mahadeva, L. ,2011, The Role of SPeculation in the Oil Markets: What have we Learnt so Far? Oxford: Oxford Institute of Energy Studies. Krugman, p. ,2009, he Return of Depression Economics and the Crisis of 2008. New York: W.W. Norton Company Limited. O’Hara, P. A. ,2001, Insider trading in financial markets: legality, ethics, Efficiency. International Journal of Social Economics, Vol. 28 No. 10/11/12, . Rich, M., Streitfeld, D., Rampell, C. ,2011, Feb 24, Rising Oil Prices Pose New Threat to U.S. Economy. Retrieved October 12, 2011, from http://www.nytimes.com/2011/02/25/business/economy/25econ.html?pagewanted=all Ripple, R. ,2008, Futures Trading, What is Excessive. June 7: Oil and Gas Journal. Rothwell, G., Gomez, T. ,2003, Electricity Economics. Boston: Wiley. Smith, S. J., Searle, B. ,2007, The Blackwell Companion to the Economics of Housing: The Housing Wealth of Nations. London: John Wiley Sons. Tang, K., Wei, X. ,2010, Index Investing and the Financialization of Commodities. NBER Working Paper 16385: National Bureau of Economic Research, Inc. Tehran Times. ,2012, May 11, Japan considering government insurance for Iran crude. Retrieved May 12, 2012, from www.tehrantimes.com: http://tehrantimes.com/economy-and-business/97737-japan-considering-government-insurance-for-iran-crude The Economist. ,2011, Oct 25, How the economic slowdown has changed consumer spending in America. Retrieved Dec 6, 2011, from the economist: http://www.economist.com/blogs/dailychart/2011/10/us-consumer-spending The Economist Intellegence Unit. ,2012, The GCC in 2020: Outlook for the Gulf and the Global Economy. The Economist Intellegence Unit . The Economist. ,2009, Aug 7, On the Rebound?: Asia’s emerging economies are recovering much more quickly than economies in other parts of the world. Can they keep it up? . Retrieved April 29, 2012, from www.theeconomist.com: http://www.economist.com/node/14209825 The Economist. ,2011, March 3, The Price of Fear: A complex chain of cause and effect links the Arab world’s turmoil to the health of the world economy . Retrieved July 13, 2012, from www.economist.com: http://www.economist.com/node/18285768 The Tehran Times. ,2012, May 11, Iran oil production rises despite sanctions, OPEC says. Retrieved May 12, 2012, from www.tehrantimes.com: http://tehrantimes.com/economy-and-business/97739-iran-oil-production-rises-despite-sanctions-opec-says Thorne, S. ,2010, A User guide to Platts Assessment Processes Presentation at the Platts Crude Oil Methodology Forum 2010. London. World Bank. ,2007, August 18, FInance for All? The Pitfalls of Expanding Access. World Bank Policy Research Report .

Althusser And Critique Of Marxism Essay - 1414 Words

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Audit Assurance and Compliance Financial Auditing Standards

Question: Discuss about theAudit Assurance and Compliance for Financial Auditing Standards. Answer: Introduction Auditing is the concept that takes place in every organization either during every financial year or during the sudden visits of the officials. Any big company is required managing financially which is an important aspect. This is carried out to make their data secured by providing safety with no data loss of the information that is related to the company. In this study it tells about the work executed by the auditors (Carmichael, 1974). They are proposed with some work to which calculation of the statements that regards to the data relating financial decisions should be made by the management. Only the examiners who is found responsible is given the authority of auditing the files and takes the step forward of representing the entire customized information to the stakeholders with all leadership validation and finding out the malfunctions that are carried out by manipulations with professionalism and making the appropriate estimations of the financial requirements for the company an d detailing them with that. The two elements such as morality and competence obligations are to be followed by the organization and should present the entire company related information in front of auditors (Debreceny et al, 2005). The management should take responsibility and prior step to implement the suggestions that are specified by auditor for the sake of company. The clarity in the data should be maintained regarding the data information of the company with perfection, with which the auditors can notice on all aspects with a clear view by maintaining good standards and accuracy. Any doubt related to the financial data are enquired by the officers and cleared then and there to perform correct audition. The significant variants of the financial statements are taken into consideration such as company revenue, assets profiting the company and the capital of all divisions related to that financial year and by viewing and checking them perfectly the task of auditing the files is sa id to be completed (Cegielski, 2008). Following Steps are to be Noted and Applied to BSF Ltd The examiners before getting into the acceptance of auditing the financial statements of any company should keep in mind that they are supposed to be compliant to all laws without being impotent by getting threatened by any organizations or a group and should follow the ethical rule conducts. These are taken from the lines of the book called ethical guidelines. The important point to be noted by any auditor is that any auditing task that is leading to threats should not be accepted by the auditors (Holstrum Hunton, 1998). Make sure of the guidelines that are mentioned in the book of ethical guidelines before performing the task of auditing in any company and the factors responsible for it. The auditor foremost thing to be done is to collect all the necessary and important information relating to the business such as clients information and the records of data for the work that is to be done and later they need to gist out the glimpses of work and the problems that are found if any s o that it does not end up with any mess as it is the client related work (Aall, 1999). The factors such as insecurity and threatening can be the reasons for cancelling the task given by the client. For the assessment of audit files there is no particular time frame designed it can be carried out as long as it requires until the task that is accepted is carefully looked after. This in turn benefits in knowing the information of clients in detail. The auditor has some objectives with which he wont get compromised and accomplish all the formalities that are related to auditing after the client gets an approval sign from examiner to audit their files (Chan Vasarhelyi, 2011). Any new firm can be the reason for the occurrence of threats to the auditors which is the function of job and this happens if any auditor of the team included in the share of the organization for which the task is undertaken. If the auditing team is expected to be under any threat then there is no compulsion of cancelling the audit they can even carry on with their work by taking proper security actio n which safeguards them from the clients. As these kinds of threats are faced repeatedly so appropriate safety measures are to be taken to get of the issue completely and destroy them with no chance of occurrence in future again. If any other issues are aroused from the clients in the next level of audits they are verified by identification and then accepted (Chan Vasarhelyi, 2011). The audit team should be safeguarded with the exact solutions with no issues of threat from the clients. The organization that is chosen defines the efficiency of the auditor. The auditing team differs if big organizations are in the catch. The special efficiency skills are expected from the auditor for the high profile industries such as BSF and his ability to understand with the terms of rules and policies of that industry for this criterion. If auditor is ready to accept the task then he is expected with a higher evaluation results and if such extent is not shown then it is the way of risking themsel ves with the threat if they cant find their ability for the task to execute and acceptance is given if not able to figure out the details of the business to the required level (Holt Henson, 2000). The satisfaction of clients is expressed if their expectations are met like auditing the files before the deadline is met for which the auditor should pay attention and all requirements are to be fulfilled before signing off the task. Auditing at BSF Ltd is Done Under these Conditions If accurate solution is not given that is relevant to the situation mentioned then its the opportunity of inviting the threats that is related to the audit firms while benefitting the financial statements by providing the conditions that are suitable for them. The types of risks that are involved in the auditing are as follows: Control risk of audit Inherent risk of audit Detection risk of audit Inherent risks are said to be that by any possibility the information loss occurs and involved in the shares of company or evaluating the data in an inappropriate manner in the financial statements. The consequences of the controls are different from this and it is very important to note that it should be verified. The inherent risk is to be faced by the company certainly if the level of risk if found at higher level (Teck-Heang Ali, 2008). The similar one is noticed in BSF limited. The BSF limited standards are different in comparison to other industries which rely on the judgments of their own as it is personal and gives the opinions with no limitations. These are the set rules for moving forward. This shows that the inherent risk is at higher level. The control risk is very less and insignificant that is recognized with BSF limited. The involvement of such risk is less than 5 percent. If the process controlling mechanism is not correctly handled then it gives a way to the risk of control whose definition can be given exactly from this. Then definitely threats are invited if unable to identify the financial statements that are opportunistic (Teck-Heang Ali, 2008). Internally, measures to control that are suitable are to be identified for solving the delusion relating to BSF.BSF control measures are to be seen by the auditor and comment accordingly as is being used in industry. The efficiency of them is found to be good at BSF with the implementation of such control measures (Flesher, Previts Samson, 2005). BSF being the industry of top position can expect with such a rate of risk factors and the information about the business firms is not properly submitted to the auditing team. So the control measures are given the chance of figuring and locating the situation for controlling it (Flesher, Previts Samson, 2005). The detection risk is seen in the picture when the statements of financial bills are missing from the company and they are unable to locate it. It seems to be that auditor is in favor of the company and his inability is highlighted. The financial statements are to be audited with the set of customized flow chart and in a systematic way so that it is easy to locate the data that is missing and to spot the manipulations done in the financial statements and the necessary modifications are to be suggested since the finally recorded data is expected to be correct with the perfect data analysis by the auditor (Elliott Pallais, 1997). At later stages it might create wrong impression in the users mind if found any in corrected data in the files. For reducing the chances of risk factors multiple opportunities are given to the auditors to carry out the analysis. The audit team finally represents the combination of three audit risks only after completing the entire process of auditing the files. The risks that are involved in the three kinds such as inherent risk, control risk and the detection risk, any increase should be figured out for estimating the risk that complicates the audit (Soh Martinov-Bennie, 2011). The Audit risk = Inherent risk x control risk x detection risk The process had been identified by the audit team to know the threats that are involved in the task of auditing the files and possible ways are to be reported for the reduction of threats they are supposed to be acknowledged with work assigned to team for making the final decision on the reduction of entire threats (nerud, 2007). The task can be rejected if the level of risk is at unmanageable position. Numerous processes of safeguarding tracks has been proposed if the detection risk is at high level but here it is at minor level. Management approval is required for accepting the task because huge labor and long time frame is necessary for this risk to handle. The detection risk level is inversely proportional to the inherent risks and the control risk levels. Audit team proposed that the detection risk would be at the lower stage if inherent risk is noticed in the task which in turn making the possibilities for the inherent risk to the high level peaks. The threatening levels for inherent and detection risks are found to be high by the auditing process team at BSF as the end result (Karapetrovic Willborn, 2000). The audit risk calculations are done in the following manner: The Audit risk = Inherent risk x control risk x detection risk = 0.9 x 0.05 x 0.8 = 0.36 or 36 percent The audit team has a fine line of detecting the threat levels so the level below 10 percent is said be moderate in general. Eventually for the BSF the threat level is noticed to be below 10% so the audit threat is at safer side. So no further issues are found in accepting the task of auditing the financial statements at BSF limited. Program of Audit at BSF Ltd A rule in the auditing process is important that many proofs are to be collected that are related to the audit by the auditing team for the purpose of sticking to the procedure that is systematic and appropriate for auditing the financial statements. After the evaluation processing the accounting system of the client is verified by team then the auditing process is executed for instance in this case it is BSF limited. For the clients task the procedure that is followed is the detailed study of the accounting system by the audit team (Vasarhelyi Halper, 2002). Later on many tests including control test is conducted that is related to the process to ensure that all the evidence is accumulated in the mentioned time period. The evidence of the financial statements of clients is to be provided by the audit team at the end. The certainly recommended audit programs are as shown: Monthly based financial reports Number of accounts to be seen Suggestions from the previous audits to be followed Capital finance at the year-end should be proposed Client reports to be sent and funds lists to be received Account should be checked on prelims for funds Files and ledgers related to the financial assists are to be observed thoroughly At the end the financial income should be matched with the data Office and bank accounts should be linked Transactions should be checked and the amount taken and utilized for the same should be reported CSIRO Grant Treatment The external auditors have to follow entities in the financial statements that pertain to irregularities mentioned in the journal since the auditing process is followed according to it. The funding is distributed by enquiring the entities (Adams Simnett, 2011). Development and the research are the two success factors designed by BSF limited. External factors are responsible for uncertainty in research. If success is gained from such research programs it can used for the beneficial purpose of customers. Proper research and development activities should be done for attaining success and correct targets should be known. Based on the budget and time the in between targets should be cleared. The journal guidelines are followed by BSF for effectiveness. The budget for research is allocated on daily basis as the BSF research process is complicated. More amounts is allocated for materials and equipments. The funds should be yet fixed by audit team based on industry works (Soh Martinov-Bennie, 2011). Triple Bottom Line Addendum The social, environmental and the economic production are the three entities on the triple bottom line. This system is designed by Spreckly during 80s as a part of signature audit process. These standards are followed by BSF limited. The financial statements work credits are appreciable. The good communication and friendly environment is accepted though the auditing process is lengthy. It is being opposed by other firms because of the favor to fish production than to food material suppliers. But it benefitted the next generation (Soh Martinov-Bennie, 2011). The poor and high bias is created. It was accepted as perfect solution as the time went on .this triple bottom line is the measure of success but not appreciated by the auditing team for the signing off as they were unwilling to do so. Are you Willing to Sign-off on that Statement as Being True and Fair? The auditor is forced to sign off the document because of the evidences that are available and the availability of the information is huge proposing that the process of auditing is right. On the conditional basis in the market the information is given only after the extensive research and the conclusions from the situations are drawn. The patent value that is produced by the management is found to produce the output that is efficient in future. Since the technology advancement is low there is less completion in market bur progresses with time (Vasarhelyi Halper, 2002). The research in market might not be same all time it may change. In near future in some time the market might gain a good understanding and huge interest is bought on patent value. The product popularity is taken into account before fixing the price for it and conditions of sales are also given importance. There is no worry expressed from management because it can get its value after popularity is gained in market. References Aall, C., 1999. The manifold history of eco-auditing and the case of municipal eco-auditing in Norway.Corporate Social-Responsibility and Environmental Management,6(4), p.151. Adams, S. and Simnett, R., 2011. Integrated Reporting: An Opportunity for Australia's Not for Profit Sector.Australian Accounting Review,21(3), pp.292-301. nerud, K., 2007. Harmonization of Financial Auditing Standards in the Public and Private Sectors-What Are the Differences?.International Journal of Government Auditing,34(4), p.17. Carmichael, D.R., 1974. The assurance function--auditing at the crossroads. Journal of Accountancy (pre-1986),138(000003), p.64. Cegielski, C.G., 2008. Toward the development of an interdisciplinary information assurance curriculum: Knowledge domains and skill sets required of information assurance professionals.Decision Sciences Journal of Innovative Education,6(1), pp.29-49. Chan, D.Y. and Vasarhelyi, M.A., 2011. Innovation and practice of continuous auditing.International Journal of Accounting Information Systems,12(2), pp.152-160. Che, P., Bu, Z., Hou, R. and Shi, X., 2008. Auditing Revenue Assurance Information Systems for Telecom Operators. InResearch and Practical Issues of Enterprise Information Systems II(pp. 1597-1602). Springer US. Debreceny, R., Lee, S.L., Neo, W. and Shuling Toh, J., 2005. Employing generalized audit software in the financial services sector: Challenges and opportunities.Managerial Auditing Journal,20(6), pp.605-618. Elliott, R.K. and Pallais, D.M., 1997. Are you ready for new assurance services?Journal of Accountancy,183(6), p.47. Flesher, D.L., Previts, G.J. and Samson, W.D., 2005. Auditing in the United States: a historical perspective.Abacus,41(1), pp.21-39. Holt, G. and Henson, S., 2000. Quality assurance management in small meat manufacturers.Food Control,11(4), pp.319-326. Holstrum, G.L. and Hunton, J.E., 1998. New forms of assurance services for new forms of information: the global challenge for accounting educators.The International Journal of Accounting,33(3), pp.347-358. International Auditing and Assurance Standards Board (IAASB), 2010. Handbook of International Quality Control, Auditing, Other Assurance, and Related Services Pronouncements, Part I. Karapetrovic, S. and Willborn, W., 2000. Quality assurance and effectiveness of audit systems.International Journal of Quality Reliability Management,17(6), pp.679-703. Richardson, A.J., 2008. Due process and standard-setting: An analysis of due process in three Canadian accounting and auditing standard-setting bodies.Journal of Business Ethics,81(3), pp.679-696. Sierra, L., Zorio, A. and Garca Benau, M.A., 2013. Sustainable Development and Assurance of Corporate Social Responsibility Reports Published by Ibex 35 Companies.Corporate Social Responsibility and Environmental Management,20(6), pp.359-370. Soh, D.S. and Martinov-Bennie, N., 2011. The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation.Managerial Auditing Journal,26(7), pp.605-622. Soltani, B., 2007.Auditing: An international approach. Pearson Education. Teck-Heang, L.E.E. and Ali, A.M., 2008. The evolution of auditing: An analysis of the historical development.Journal of Modern Accounting and Auditing,4(12), p.1. Vasarhelyi, M.A. and Halper, F.B., 2002. Concepts in continuous assurance. Researching accounting as an information systems discipline, pp.257-271.

Lucky free essay sample

Who is the luckiest person you know? Many people consider luck as a gift, you either have it or you don’t. For me luck is a part of who I am. In some ways it has defined me. It has taught me valuable life lessons that have shaped my beliefs. Through experience I have learned that you cannot always rely on fate and that it is simply a blessing. When I ask people who is the luckiest person they know they always respond, â€Å"You†. I never considered myself lucky until one night when I bought my first scratch ticket and won a thousand dollars. We will write a custom essay sample on Lucky or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This was probably the most memorable moment of my life. I became incredibly overwhelmed with excitement and felt invincible. All those feelings ended on my way home when I was hit by a drunk driver. I never thought that misfortune would strike me in that way, especially after winning a thousand dollars. Luck has proven to me that I should appreciate everything that is given to me and I shouldn’t take anything for granted. Luck comes in all forms. I may have been hit by a drunk driver but luckily I was unharmed. This frightening incident has shown me the power of luck and how if you are not thankful what you are given can be taken away in a flash. It has also taught me that being considered lucky does not always involve money. I now appreciate life’s virtue. I am thankful to have a family and to be given opportunities. My outlook on people has changed significantly. I am aware of the misfortune in the world and I want to help and offer everything I can. I understand that my luck will one day run out and it is not something I should live by, but as of now I am grateful for what I have been given. It may have only taken me a car accident to figure this out, but I truly consider myself lucky to have learned from this.