The Sarbanes-Oxley Act, also called the Public Company
Accounting Reform and Investor Protection Act of 2002 was signed into law on
July 30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen,
Global Crossing, and WorldCom, SOX promises greater corporate accountability and
transparency. Named after Senator Paul Sarbanes and Representative Michael G.
Oxley, SOX focuses on the importance of ethical behavior in corporate
governance-across the United States and now…overseas.
All countries have
government-required laws like Sarbanes Oxley. In the UK, it’s the "Combined Code
on Corporate Governance," in The Netherlands it’s the "Code Tabaksblatt,"
Germany has a "Bilanz Reform" and a "Bilanz Kontroll Gesetz." But then, why do
we need SOX overseas since we already have the required laws? It’s because
companies with U.S. headquarters must ensure that all foreign outposts meet
federal standards. This is the major cause of concern in the management and
accounting circles. According to some experts, the Sarbanes Oxley Act might have
dictated convoluted rules and regulations on the U.S. businesses. While the
rules are concrete ideologies that prevent accounting scandals, the constant
flux in the policies confuses businesses around the globe.
SOX
compliance by vendors and business partners outside the U.S. is a frightening
task. The risks and complications involved in enforcing the regulations for
multiple firms around the world are enormous. The U.S. firms should keep
themselves abreast of the data operations and data management followed by
overseas vendors. This complicates the case further as the data should be
integrated in financials or entered in balance sheets. Cumbersome processing of
data would step up IT-related expenses.
The global impact of SOX is
tremendous. At the moment, the UK Big Four firms are feeling SOX repercussions
in their consulting sectors. http://www.big4.com -a website for global Big4
alumni - receives periodic updates on the latest news and trends at the Big Four
firms. The Big Four in UK reportedly lost GBP250 million in consulting fees
since 2002-a direct outcome of Sarbanes-Oxley Act. Among the Big Four firms,
PricewaterhouseCoopers faced a huge decline in their consulting fees. Causes for
this decline can be attributed to:
·The increased cost of compliance that
usurped consulting budgets.
·Independence restrictions in Sarbanes-Oxley
have restrained companies from utilizing their auditors for many consulting
services.
There is an apparent role reversal in consulting fees and
audit services. If consulting fees have declined, audit fees have considerably
increased. A whopping 30% increase in Big Four audit fees has been observed over
a period of two years. This spike does not compensate for the revenues lost for
consulting. Consulting was the major strength of the Big Four in the UK. But, in
the present conditions, the significant decline in consulting fees clearly
demarcates the performance of the Big Four in the UK.
According to a
survey by an European firm, many overseas firms with their shares listed in the
U.S. were not ready to meet the deadlines of Sarbanes-Oxley. Since European
firms already have specific regulations, SOX compliance is extremely difficult.
Some overseas firms have been attempting to get delisted from the U.S. stock
markets since SOX’s inception. Foreign firms about to get listed on overseas
exchanges are also resisting to get listed in the U.S. These problems would take
toll on the U.S. market performance and economy. But, the exit of foreign firms
from the U.S. exchanges is not that easy. As per SEC guidelines, foreign firms
holding 300 or more shareholders in the U.S. cannot delist from the U.S.
exchange where they trade.
In the light of these problems, the
Securities and Exchange Commission-in its bid to offer sustained
flexibility-started modifying rules for overseas firms listed in the U.S. The
SEC would facilitate foreign firms to delist their securities that are traded on
the U.S. exchanges. Modifying SEC rules to accommodate European firms would
create a state of unrest among the American managements.
The SOX
compliance should be an “all-encompassing” formula-that which enables
governments and managements worldwide to function efficiently and in rhythm. A
level headed approach to weed out this disconcert would improve the situation.
We believe that there are 3 factors that drive the success of
small businesses.
1) Acquiring start-up capital
2) Finding
customers
3) Accounting for, budgeting and controlling sales and expenses
The following resources will help your small business achieve
these success factors.
Acquiring Start-Up Capital
An
adequate supply of capital is essential as many profitable businesses fail
because they don’t have enough cash to pay their employees and suppliers. But
what is an adequate supply of capital? The only way to tell is by doing a
significant amount of research on your potential market and formally documenting
this in a business plan. I’m sure you know that a business plan is a very
important document that is crucial to convincing your banker to lend you money.
There are two ways to obtain a business plan.
1) Do it
yourself by amending a business plan template, or
2) Hire a professional to
do it for you.
Obviously obtain 1) will be a great deal cheaper.
Our research led to a website that has over 60 high quality and free
business plan templates. We also found a directory that you can use to easily
find a business plan writer in your city – where ever you live in the world.
Finding Customers
Finding customers is a difficult and
expensive task for service business owners such as accountants, lawyers and
plumbers. We believe that a cost effective marketing strategy for service
business owners is to simply give all their personal contacts a few business
cards.
Our research led to a few websites that have pre-designed
business card templates. We felt that the diversity and quality of these designs
was outstanding. In addition, we found that you can obtain a significant saving
by finding a printing service on the Internet. We found that you could get 2,000
full color business cards for as little as US $150.
Accounting For,
Budgeting and Controlling Revenue and Expenses
Accurate accounting
is very important for small business owners. It’s essential that you have timely
access to information that could make or break your business. If stocks are
running low – you need to know about it. If a large proportion of your debtors
haven’t paid – you need to know about it. If you do not react to these
situations quickly you may have a situation where you don’t have enough money to
pay your employees – or worse still someone is stealing cash out the till.
Our research led to a website that compares and reviews top
accounting software for small businesses. The cheapest software cost US $89.99
and the most expensive software cost US $1,499. It was interesting to note that
the top 3 ranked websites were not the most expensive and cost between US $250 -
US $300.
Hopefully you now have an idea of some of the tools that
you can use to grow and maintain your small business.
Depreciation is defined as a portion of the cost that
reflects the use of a fixed asset during an accounting period. A fixed asset is
an item that has a useful life of over one year. An accounting period is usually
a month, quarter, six months or one year. Let’s say you bought a desk for your
office on January 1, for $1000 and it was determined that the desk had a useful
life of seven years. Using a one year accounting period and the “straight-line”
method of depreciation, the portion of the cost to be depreciated would be
one-seventh of $1000, or $142.86.
Most non-accountants roll their eyes
and shudder when the topic of “depreciation” comes up. This is where the line in
the sand is drawn. Depreciation is far too complicated to try and figure out, or
so it seems to many. But is it really? Surely the definition of depreciation
mentioned above is not that difficult to comprehend. If you look closely you
will see that there are five pieces of information you must have in order to
determine the amount of depreciation you can deduct in one year. They are:
-The nature of the item purchased (the desk).
-The date the item
was placed in service (Jan 1).
-The cost of the item ($1000).
-The useful life of the item (seven years).
-The method of
depreciation to be used (straight-line)
The first three are easy to
figure out, the second two are also easy but require a little research. How do
you figure out the useful life of an item? Let me regress for a moment. There is
“book depreciation” which is based on the real useful life of an item, and there
is the IRS version of what constitutes the useful life of an item. A business
that is concerned with accurately allocating its costs so that it can get a true
picture of net profit will use book depreciation on its financial statements.
However, for tax purposes the business is required to use the IRS
method. The IRS may have shorter or longer useful lives for fixed assets causing
a higher or lower depreciation write-off. The higher the write-off, the less tax
a business pays. The long and short of it is that you end up having to create a
book financial statement and a tax financial statement. So, most small
businesses that aren’t concerned with a precise measurement of their net profit
use the IRS method on their books. This means that all you have to do is look in
IRS Publication 946 to find the useful life of a particular item.
The
last piece of information you need is found by determining the method of
depreciation to use. Most often it will be one of two methods: the
“straight-line” method or an accelerated method called the “double-declining
balance” method. Let’s briefly discuss these two methods:
Straight-line
This is the simple method mentioned in the definition above. Just take
the cost of the item, divide it by the useful life and you’ve got the answer.
Yes, you will have to adjust the depreciation for the first year you placed the
item in service and for the last year when you removed the item from service.
For instance, if your depreciation for one year was $150 and you placed the item
in service on April 1 then divide $150 by 12 (months) and multiply $12.50 by 9
(months) to get $112.50. If you removed the item on February 28 then your
deduction will only be $25.00 (2 x $12.50).
Double-declining balance
The idea behind this method is that when an item is purchased new, you
will use up more of it in the earlier years of its life, therefore, justifying a
higher depreciation deduction in the earlier years. With this method, simply
divide the cost of the item by the useful life years as in the straight-line
method. Then, multiply that result by 2 (double) in the first year. The second
year, take the cost of the item and subtract the accumulated depreciation. Next,
divide that result by the useful life and multiply that result by 2, and so on
for each remaining year.
But, wait! You don’t have to do this. The IRS
provides tables that have the percentages worked out for each year of the two
different methods. Not only that, they have set up special first year
“conventions” that assume you purchased your depreciable fixed assets on June
30. This is called the one-half year convention. The idea behind this is that
you may have bought some items earlier than June 30 and some after that date.
So, to make it easy to figure out, they assume the higher and lower depreciation
amounts will all average out.
Actually, the IRS doesn’t even call it
depreciation anymore. They call it “cost recovery”. Let’s face it. This is a
political tool. Congress giveth and taketh away. They have been playing with
this system for years. If they want to stimulate growth in business they will
shorten the useful life of assets so businesses can attain a higher write-off.
If they are not in the mood, they will extend the useful life of an item. A good
example is the 39 years set for the useful life of commercial property. This
means that if you lease a building for your business and make improvements,
those improvements have to be depreciated over 39 years. Now congress is working
on a bill to drop that down to 15 years for leasehold improvements.
Before December 31, 1986 we had ACRS or Accelerated Cost Recovery
System. Currently, we have MACRS or Modified Accelerated Cost Recovery System.
Every time congress tweaks the rules they give it a different name.
Keep
in mind there are different schedules for different properties. For instance,
residential real property is depreciated over twenty-seven and one-half years
and non-residential real property is depreciated over thirty-nine years. In
addition, if more than forty percent of your total fixed asset purchases
occurred in the last quarter of the year, then, you must use a mid-quarter
convention. This convention assumes that your purchases made in the last quarter
of the year were made on November 15. This prevents you from purchaseing a big
expensive piece of equipment on December 31 and treating it as though it were
purchased on June 30 and gaining a larger depreciation expense.
Understanding how basic depreciation works can be valuable to the small
business owner because it helps to know the tax implications when planning for
capital equipment purchases.
Natural Sleep Aids
Sleep restores us. And not getting enough of it can put us at greater risk of heart disease and cancer. Sleep even makes us smarter. Yet researchers are finding that more than 10 percent of the population is chronically sleep deprived. If you're having trouble slipping into -- and remaining in -- Dreamland, don't dart straight to prescription sleep drugs, which can be habit-forming, harmful if you live with certain conditions, and even downright bizarre! (Some people develop sleep-eating and sleep-driving habits when using prescription sleeping pills.) The good news is, science has found that many foods, drinks, herbs, and other natural sleep aids can help put you to sleep...naturally. In fact, just this summer, researchers made the connection between tart cherry juice and getting adequate shut-eye. Here are some natural food- and drink-based sleep aids.
Fish
Certain fish and sea creatures contain sleep-inducing tryptophan, including shrimp, cod, tuna, and halibut. But since not all seafood choices are healthy for us (some are high in contaminants) or for the planet (many are overfished, or methods for catching them kill other species), stick to catches like Pacific cod from Alaska or pole-caught Albacore tuna from the U.S. or British Columbia.
Carb/Protein Combo
If keeping track of the latest safe seafood guidelines is too complicated, you can get your tryptophan fix from other things. You've probably heard that warm milk can help you sleep, since milk contains tryptophan. But the key is to combine carbs with a protein containing tryptophan to help your body better utilize the sleep inducer. Try pairing a cup of whole grain cereal with organic milk before bedtime.
Lemon Balm
This lemon-scented member of the mint family has been a sleep-inducing superstar for ages. Other benefits include better digestion and decreased agitation. Try making lemon balm tea by steeping 1 to 2 teaspoons of the dried herb in 1 cup of hot water for 5 to 10 minutes. (If you take thyroid meds, talk to you doctor...drinking the tea could mean you'll have to adjust your dosage.)
Other Herbs
If lemon balm's not your thing, another herb, sage, also works as a natural sleep aid. Just steep 4 tablespoons in a cup of hot water, steep for four hours, strain, and reheat to drink. Chamomile tea and valerian teas, other sleep inducers, are also more widely available pre-bagged in natural food stores, if you don't want to fuss with the aforementioned straining herbs. For even more ways to naturally find your way to better sleeping patterns, check out Prevention magazine's 100 Ways to Sleep Better.
Cherries
In the small study, participants drank eight ounces of the tart cherry (also known as sour cherry) juice in the morning, and another eight ounces in the evening, for two weeks and reported better sleeping habits. Since all cherries are naturally high in melatonin, a compound that makes us sleepy, you can try eating a cup as a snack before it's time for shut-eye if you'd rather not drink the juice.
To you, it's just a few words. To him, it's a short sentence that he'll never, ever forget. Here, the seemingly innocent observations that can really rock a relationship.
"I really don't respect you." "My wife and I probably use the word 'respect' about as much as we use the word 'love.' Both words were in our wedding vows," says Dave, 36, about why the R-word is just as important to him as the L-word. "And when I hear that she doesn't respect me, it's almost like her saying she doesn't love me. Luckily, she's never said it-precisely because we had a whole conversation about how we'll never throw around that word like that."
Your tummy is so cute! "Please, call it what it is-a beer gut!" jokes Chad, 38. All kidding aside, the men we spoke with said that they have the same body image issues as women, which means that making fun of him when he's gained a few will make him feel insecure too.
"I love when you get all mad." Is he fuming because he's behind a car that's oh-so-annoyingly crawling along in the left lane? Sure, it's fine to make a joke, but Jeff, 40, suggests making it at the other driver's expense. "I know I can get worked up about minor stuff, but when I hear this, I feel like it's harder to be honest about my feelings when it comes to things that really matter to me, because I'm worried she's going to shoot me down." "He acts like such a baby when his team loses." "This is something I've overheard my wife say on the phone to her friends," says Charles, 38. "I know she's talking about me, but she uses the same voice she uses when she's talking about our 3-year-old having a temper tantrum." While no one likes to be talked about behind their back, guys are especially sensitive to lack of loyalty. Yes, the way he freaks out when his team blows a playoff game is funny-but if he's not laughing, it's best to keep it on the DL, at least while your husband is in earshot. There's another reason: "When I hear her talking about me to her friends when she thinks I'm not listening, I can't help but wonder what else she may talk about."
"Do whatever you want." Unless you're saying this with a smile because it's his birthday or he just bought a winning lottery ticket, when guys hear this, their stomachs sink. "I feel like I'm on a game show. Just tell me the right answer!" begs Bryan, 29. Men everywhere agree: If you have something in mind, spill it instead of making him play a guessing game. "Do you think I actually believe you?" This ties back to respect, says David, who asks, "If she doesn't believe me, then why are we even trying to have a conversation?" If you're questioning his honesty and integrity-and not whatever lie you think he may be covering up-that's what you two need to have a serious discussion about. "You're just like your dad." "I love my dad, but when my girlfriend is scowling at me and saying that, I don't want to be like him," says James. And even if he and his father get along great, it's not always ideal to compare them. Instead, speak directly to whatever he's doing that's bothering you.
"What do you think that was about?" When said in the bedroom, this phrase hits below-the-belt-literally. Performance issues happen, and the more you ask about them, the more likely they are to come (er) up again. "Sometimes things don't work the way they should, either because I've had too much beer, or am stressed out, or just because. And trust me, I'm obsessing over it...and I'd like to at least pretend you aren't too," says George, 40. If it only happens once in a while, just let it go. "Should I call the emergency room and let them prepare?" "I admit that my D.I.Y. projects may have landed me in the emergency room once or twice in the past, but reminding me only makes me feel like an idiot, and more likely to mess up," explains Avery, 28. If you're nervous about your guy cleaning the gutters, powering up the lawn mower, cutting down branches, or wielding a glue gun, the best way to get around it may be to discreetly hire a pro while his mind is on something else. "Are you sure we can afford that?" "The worst is when she says this in front of a salesman," says Chad. "I feel like I'm a failure." If you're heading out to buy a big-ticket item and don't want to blow the budget, research prices beforehand and use phrases like, "This seems over our target," so it sounds strategic, not like you and your guy are scraping the bottom of your savings account.
