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Company evaluation

Mission and Vision Evaluation

Remember to search for a mission and vision statement then evaluate them (running the mission statement through the mission-statement components.  If you cannot find either or both, so note in this report section, and write one for the company.

This part Includes a:

  • Vision Statement
  • Mission Statement
  • List Mission Statement Evaluation Components that are satisfied
  • Rationale for the components included as well as excluded.

==>Top 5 of The Best Accounting and Finance Textbooks

Milestones

Begin with a concise company profile followed by 5-10 company milestones.  Synthesize the company’s uniqueness and identity.  For example, a fun, employee-centered culture or low-cost, no-frills strategy uniquely identifies Southwest Airlines.

External Assessment

Insert your completed EFE Matrix.  Discuss the high score factors and interpret the overall score for your reader.

Your final paper will include:

·         An External Factor Evaluation (EFE) Matrix .

 

o    Why is this environmental factor key?

o    Why does the factor carry this much weight?

o    Why you rated the factor as you did?

·         How should management interpret the total weighted score?

How to do an External Assessment

After reading the case, first scan the environment. Use the following steps:

1.    List key external factors (opportunities and threats). These factors apply to all firms in the industry, not just this company. Any firm could potentially take advantage of an opportunity or be challenged by a threat because these factors are in the external environment. Include a total of 10-20 factors. Be as specific as possible.

2.    Assign a weight to each factor that ranges from 0.0 (not important) to 1.0 (very important). The weight indicates the relative importance of that factor to being successful in the industry. The sum the weights of all factors (for both opportunities and threats combined) must equal 1.0.

3.    This is the step at which the company (revlon) enters the picture. Assign a rating between 1 and 4 to each factor to indicate how effectively the firm’s current strategies respond to the factor, where 4=the response is superior, 3=the response is above average,2=the response is average, and 1=the response is poor. Ratings are based on effectiveness of the firm’s (revlon.) strategies. Ratings are company-based, whereas the weights in Step 2 are industry-based. Both threats and opportunities can receive a 1, 2, 3, or 4.

4.    Multiply each factor’s weight by its rating to determine a weighted score.

5.    Sum the weighted scores for each variable to determine the total weighted score for the organization(Revlon)

Internal Assessment

Insert your completed IFE Matrix.  Discuss the high score factors and interpret the overall score for your reader.  Use financial ratios for internal factors too, if applicable. (For example, if the company has a low inventory turnover ratio, this could be a weakness in the IFE Matrix.) See the link below under “Appendix” to help you preliminarily examine the financial ratios.

==> Read on the advantages of debt

SWOT Analysis

Summarize the key strengths, weaknesses, opportunities and threats.  Also, consider how well your company is managing both environments. This section serves as a conclusion to Case 1. Simply summarize the key strengths, weaknesses, opportunities, and threats that were prominent in your EFE and IFE matrices. This is not a SWOT Matrix, which is a matching technique. Matching techniques (e.g., the SWOT Matrix) are part of Case 2. 

 

 

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Outsourcing and Migrating from GAAP to IFRS

Outsourcing

Outsourcing is the practice of using other companies to reduce your costs and transfer portions or the whole job to another supplier rather than doing it yourself. When used properly, outsourcing can be a good cost-cutting strategy. It is sometimes cheaper and more affordable to purchase a product from a company than having to produce it yourself. This is because the company producing it has acquired the important economies of scale in production.

Outsourcing comes with both pros and cons. The major disadvantage of outsourcing especially when outsourcing payroll is data confidentiality. A small leak by an employee of the outsourcing company could lead to court battles, negative reputation to your business. Some key corporate secret, salary, will be shared with a third party. This if not well handled could result in a disaster.

Outsourcing payroll could be cheaper to handle it internally. Most corporates which offer these services could be expensive since they use very complicated software that is expensive to acquire. Another complication of outsourcing payroll is that you could be using the same company with your competitors. This would lead to a conflict of interest. You could have a competitor requiring the information of your staffs and get it because the company does not want to lose business to the competitor. Dealing with employee complaints on salary-related issues would also be a concern. A staff that has been under or over paid will have to go through their supervisor who then lodges a complaint with the personnel department, then to the outsourced company. This would take time, which is not good especially considering that we are dealing with salaries, which is a very emotional issue. Staff currently handling the payroll function might have to be let go. This portrays an image of a possibly a struggling company.

 

To fully outsource a several payroll issues need to be addressed. If not well dealt with the whole process could be flawed with complaints and other issues. One of the issues to be dealt with is the choice of company. Competitive bidding needs to be done. The best company not only in pricing but also in controls and efficiency is to be chosen for the job.

Data confidentiality needs to be well addressed. The company given the contracts needs to demonstrate without reasonable doubt that its able to keep the company`s information securely. Performance agreements need to be signed in consultation with the legal team. Information should not be stored in transferable discs, e.g. Flash disk, CDs, etc. Consequences of a proven leak need to be agreed on at the beginning.

The process flows of how the transfer will need to be laid out. A direct injection plan or a piloting plan needs to be agreed on. This will ensure an easy transition from the previous system to the new system.

 Migrating from GAAP to IFRS

            IFRS is a principle based system while GAAP is a rule-based system. A principle-based system is favorable to businesses as it is flexible when compared with a rule-based system that is rigid. IFRS also offers more disclosures due to its flexibility. More disclosures are important to readers of financial analysis reports. Getting International Standards approval requires you to implement IFRS. ISO certification is crucial for businesses as it increases their credibility.



IFRS recognizes loss immediately unlike what happens with GAAP. Loss being reported immediately is advantageous to not the investors but also lenders and other stakeholders like suppliers. The sooner they can get this information the better.  This reveals the transparency that is in IFRS and not in GAAP. Contracting between companies and their management becomes easy, this also ensures effective corporate governance.

The convergence of IFRS has also made it easy to compare financial statements in many parts of the world. In the EU for example many companies adopted IFRS the same year it was introduced. With this kind of adoption businesses need to all now ensure they are on IFRS. The key reason for the preparation of key financial reports is for comparison purposes. It doesn’t make any sense to prepare statements that only you can compare with yourself.

Do you know that debt has some advantages?

==> Learn more HERE on advantages of debt

Users of IFRS need to understand the methodology used to generate reports. Under GAAP emphasis is on literature provided. Documentation is the key issue. IFRS is more flexible and even where documentation does not tally facts pattern are analyzed, and a decision is made. To implement IFRS is short and precise. It takes a minimum of one year to be fully setup. To use IFRS we would use direct key as the implementation plan.

 

References

Du, N., Alford, R. M., & Smith, P. L. (2016). Do GAAP And IFRS Differ In Collectiblity Judgments Related To Revenue Recognition?. Journal of Applied Business Research (JABR), 32(6), 1675-1686.

Giloz-Ran, E., Gavious, I., & Lev, B. (2014). The Positive Externalities of IFRS: Enhanced R&D Disclosure.

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TAX FILE MEMORANDUM

Please write an effective tax memorandum-to-file for the following closed-fact research scenario. You are expected to read the case, research relevant primary and secondary authorities, find appropriate citations from primary authorities, and write a one-page memo INDIVIDUALLY. You may not collaborate or share information with any other person, inside or outside of our class. Any sharing or discussion of information violates academic integrity and will result in your receiving a zero for the assignment as well as other penalties as stated in the Syllabus.

The memo should be prepared following the format noted in the handouts “How to Write an Effective Tax Memo” and “Sample Tax Memo.” It must be saved as a PDF file, attached to the HuskyCT assignment, and submitted before the due date. Late or emailed submissions will not be accepted. Only those submitted through HuskyCT on time will be reviewed and graded.

A grading rubric is attached to this assignment. It is strongly encouraged that you review the rubric periodically as you work this assignment. Projects are due by 5pm on Thu 4/26.

Any questions can be emailed directly to me. Please do not ask questions on the project outside of email so that I provide the same information/guidance to all class. If appropriate, I will post an announcement answering questions – if so, please consider any related announcements to be part of this project and its details. I encourage you to read the handouts noted above as well as “Intro Checkpoint,” “Tax Research Guidelines,” Chapter 2 in our textbook, and your notes (and the slides) from our class on tax research.

 

Fact Pattern

Five years ago, in 20X1, Tyrion and Missandei Hill purchased an antique stone house in the westerlands region of Indiana, outside of Chicago. They purchased the house and accompanying 9 acres for $650,000. Although the house was in desperate need of upgrades and repairs, they moved in right after their closing and continued to live in the house as their primary residence throughout the multiple restoration projects. Their primary mortgage is a 30-year fixed, 3.5% zero point non- recourse loan for $585,000 with The Iron Bank of Braavos, Illinois. The next year, 20X2, they took out a second mortgage with Winterfell Savings and Loan to help cover renovation costs as well as consolidate Missandei’s student loans. The Winterfell loan is a 30-year fixed, 4.2% zero point non-recourse loan with a principal of $325,000.

Two years later (20X4), Tyrion was promoted to COO at Targaryen-Stark, an offer that also included a promotion for Missandei to SVP of Finance but required them to relocate to corporate headquarters in Kingston, New York. Unfortunately, in order to sell their house in the current market, they had to lower their asking price twice before finding a buyer willing to take on the old manse at $798,000. The net proceeds, after commissions and selling fees, of $742,000 were well below the Hills’ $891,700 in outstanding mortgages.

Tyrion’s skilled negotiation strategies convinced both banks to agree to the short sale. The Iron Bank was firm in demanding their full outstanding loan principal of $583,000. Winterfell agreed to accept $168,000 toward the current mortgage balance of $308,700 and forgive the remainder. The Hills filed their 20X4 Form 1040 on time.

In February 20X6 (this year), the IRS sent a notification of deficiency for their 20X4 Form 1040 to the Hills, stating that they had underreported their gross income by $140,700, the amount of debt forgiven by Winterfell S&L, and demanding immediate payment of the tax on the understated income, plus penalties and interest. The Hills’ attorney has hired your accounting firm to determine if the IRS or the Hills are correct and provide supporting tax law.

 

Requirements

  1. Review the Client Facts and understand the key issue
  2. Narrow the key issue to 2-3 sentences (see handouts)
  3. Locate the relevant tax questions using RIA Checkpoint
  4. Keyword searches as well as Code section searches are often effective
  5. Review relevant tax authorities to determine the governing Code section(s) and case law

  6. Write a memorandum to file, in good research memo format (see handouts), documenting the relevant facts, issue, research, and conclusions

  7. Submit your completed one-page memo in PDF format through HuskyCT‘s Assignment tool by midnight Mon, April 30th

 

Reminders & Hints

  • Projects will be graded based on writing style/clarity/brevity, research quality, and citations. Points will be deducted for exceeding one page, including excessive/unnecessary facts and/or issues, typos, misspellings, grammatical errors, and inaccurate/ineffective citations. 

  • As with most clients, the Hills have provided you with much more detail than you need for this assignment. Part of tax research is sifting through the narrative to find the key issue. Include only the facts that identify the key issue in your memo (see Sample Memo). 

  • Please ensure that you follow the citation formatting from either the textbook or the handouts. Don’t just cut and paste from RIA Checkpoint. 

  • There are many relevant cases on point for this case. Please use primarily appellate court decisions (and Supreme Court, if relevant) as they have more authoritative weight. You do not need to take the client’s location in to consideration. For this assignment, all Circuit Courts of Appeal have the same authoritative weight. If you find a court ruling from a trial court that you believe is more effective, you may use it. 


o Regardless of authoritative weight, all citations must be on point, support your conclusion, and be accurately interpreted.

  • For cases, that means that issues of law (rather than issues of fact) match the issue in this fact pattern.
  • For Code sections, that means that the section is relevant and applicable, and is the governing tax law for the issue in this fact pattern.

o I encourage you to also read “Why My IRC Beats Your Rev Proc” in Handouts.

  • All assignments must be completed in the format set forth in “Writing Effective Memos” and “Sample Memo.”
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