This is something we all desire. We all study hard in school to get into a good college. Once we get to college we work hard to do well and get a good job. Why do we want a Job? Well its quite obvious - that five letter word that makes most of the world tick - M.O.N.E.Y. Don’t get me wrong, there are enough people who don’t care about money and I salute them but for a large portion of the populace, money is priority.
Because of this unique position that money occupies in our world, a large number of scamsters make a living off convincing people that they in fact can make money quickly, Easily and without risk. Is it really that easy? I don’t think so.
Why Money?
People often say that money is the root cause of all problems. Crimes are committed for money. Some statistics, in fact, suggest that the majority of crime in the world is directly or indirectly linked to money. However, this is one view. I believe that money is very important but to the extent that it doesn’t start ruling your life. Don’t feel bad if you like money, because I’m sure there are many like you. I, however, love it. There, I’ve said it!
If you don’t like money, then it will be hard for you to earn it. In business, you have to want something badly in order to get it. The sole purpose of a business is to make money for it’s shareholders. Sure, there are many other motives to do business like self esteem, fame, desire to achieve something etc. but the primary motive is money and if someone tells you otherwise, let me tell you that they are LYING. Also, it is standard practice to judge the success or failure of a business by checking it’s profitability. So go ahead and say it - “I Love Money”.
This brings me to the interesting part of this post i.e. how to “make money easily”.
by nikhil on February 16, 2009
in Research
EDIT: This post is the first in a series where Nikhil Vachani, a Chartered Accountant at KPMG will comment on an auditor’s perspective on various business. Nikhil has studied business and finance and has been in the accounting profession for a number of years. He will contribute a series of posts over the coming months.
Post the Satyam scandal; everyone has one line of questioning in their minds. “Where were the auditors?”, “What were they doing?”
Everyone talks about this term - “auditing”, but very few people actually understand what exactly an audit entails and what the auditor’s responsibilities are.
First and foremost it is essential to establish a definition of what an audit means.
Does it mean 100% verification of all details? Does it mean finding faults within organizations or detecting fraud (as most people think)?
Although many would define an audit as the abovementioned statements, the real definition of an audit is a bit different from what people think it is.
An audit refers to “obtaining reasonable assurance as to whether or not the financial statements of a company give a true and fair view and are free from material errors”.
- Reasonable Assurance - refers to assurance that is not 100%. I.e. the auditors are saying that although the financial statements are correct, they are not 100% error free. This is due to the limitations placed on auditors due to time and money. As an auditor spends only 3-4 weeks in a company which operates for 365 days a year, it is next to impossible to verify each and every transaction. Hence auditors take a sampling approach - i.e. - they test transactions on a sample basis (by randomly selecting a few transactions out of hundreds, that would statistically represent the entire set) and hence use the words “reasonable assurance” and NOT “absolute assurance”.
- Materiality - Even if the auditors come across errors they will not report them if they are not material. Materiality differs from organization to organization and there are numerous ways of calculating it. One method, for example, depends upon the level of revenues generated by a Company. For example, if a Company earns revenue of Rs. 1 crore during the year, the auditors decide (as per International accounting standards) that 1% of the revenue amount is considered material - i.e. - Rupees 1 lac is the materiality limit. Any errors below this limit will not be considered material and hence they will not be reported. Therefore there may be some error of Rs. 90,000 but it may not change the opinion of the auditor, as it is not MATERIAL.
- True and Fair- True means materially correct and fair refers to “free from bias” - i.e. - an auditor must be independent. He or she should not have any ulterior motive while expressing an opinion. The auditors CANNOT take any favors from the clients or accept any gifts or items that will impair their independence.
Lastly, I would like to highlight the fact that detection of fraud is not the responsibility of the auditor. It is the Company which is responsible for preventing and detecting any fraud that has or can occur. The auditors are only responsible to express an opinion on what is given to them. AUDITORS ARE NOT WATCHDOGS, but professionals who just assess information given to them in good faith.
(6 votes, average: 4.50 out of 5)
Loading ...
