Mind Is Not a Vessel to Be Filled, but a Fire to Be Kindled Essay

â€Å"Education† may be an ordinary word to most people, but very few actually understand the deep meaning beneath it. In this dynamic world, we need to be equipped with the necessary skills and hard work to survive. Understanding the education system is integral to allow students to understand the purpose of studying, the purpose of going to school everyday. Is education in Singapore really â€Å"holistic†? Are there flaws? What is education? By definition, it would be something along the line of â€Å" transferring knowledge†. I beg to differ. In my opinion, education consists of more than just knowledge. From Kindergarden to University, students are put through the daily routine of waking up early in the morning, going to a place where teachers teach â€Å"the same old stuff†. By that, I am referring to knowledge. Knowledge is power, you might say. Indeed, being knowledgeable helps you stand out among the rest during the tests and examinations. But is that all about education ? Acing the tests and getting a degree? I’m afraid no. Years after years, Singapore universities and institutions are well-known on the global front for being able to produce students with top grades. These results just keep getting better and better. Foreigners come to Singapore for education. Most people might therefore think education in Singapore is perfect. I also acknowledge that these are true, but only to a certain extent. On the other spectrum ( which is usually not shown), there are students who are not performing as well as their peers, students who are doing well but facing a lot of unnecessary stress. This is prevalent as well. The obsessive reliance of tuition to produce grades, online forums to discuss ways to â€Å"headstart my child in education†. I find no meaning in these. This is passive learning. Similarly, there are exceptional cases which bring out the ugly truth about education in Singapore. Students faking degrees to earn scholarships, jobs , graduates saying vulgarities during graduation ceremony to ‘rejoice’ over the achievements, even local scholar prosecuted overseas for doing unethical things such as watching child pornography. If education in Singapore is so perfect, why would such disgraceful incidents occur? Let us look at some possible reasons. Memorizing dictionaries, memorizing textbooks, doing thousands of assessment books, attending endless tuitions and supplementary classes†¦ These are some things most pupils in Singapore are going through. They have my sympathy. Everything I have described until now is about passive learning, which revolves around results and lacking in true meaning of education. Now, let us zoom into another aspect. Imagine this : a child who does his work consistently, revises on daily basis, reads newspapers everyday. Everything without being told. Seems like a utopian child? No. It is possible. The only thing he has compared to other students is the passion. The burning passion inside him to learn, to absorb knowledge. This drive pushes him to do everything on his own. There is no tuition, no supplementary classes, reasonable number of assessment books. Yet, this child is scoring ‘A’s for his subjects. In Singapore schools, Ministry of Education is encouraging a whole new approach towards â€Å"holistic† education. Co-curricular activities, Community Involvement Program, Civics & Morals Education†¦ these are programmes put in place after much effortful planning of the education ministries. There are even more recent policies such as not revealing top students for national examinations such as Primary School Leaving Examinations. I respect them for that. However, there are rooms for improvement. CCA, short for co-curricular activities, is a word that is often hung in the pupils’ mouth. Whether they say it out of pride in a good way or bad way, I do not know. This brings me to the point of CCA mismatch. Students who feel they are â€Å"not good enough† for a CCA only after a few years in that CCA, students who feel indignant as they feel they could have gotten into â€Å"better CCA†. What are the consequences of this? Students not attending CCAs regularly, students complaining about how ‘ sien ‘ ( boring and uninteresting) their CCA is. This leads to stereotyping about CCAs and split between different CCAs, especially Sports vs Non-Sports. While you might say it is good that CCAs are bonded together as a team, the purpose of bonding is wrong. They are making fun of other people and things they do. In the long run, this will not work. Another thing is when pupils do not attend CCAs, the school has no choice but to use deterrence methods such as demerit points. To tackle this whole situation, there is Direct- School- Admission put in place to reduce scenarios like this however the success is limited. After talking about limitations of the current education system put in place, I have some suggestions. What I will say is also something simple : passion. Again, a simple word yet deep meaning behind it. If a student is an active learner, problems such as late/no submission of work, lack of focus during lessons, loss of notes, game/social networking addiction etc will all be eliminated at once. Students will not complain ‘ Life is Tough’ or ‘ There is too much work yet too little time’ etc. Teachers no longer have to chase after the students for work, give students boring supplementary classes. Teachers no longer have to scold students, which deviates their focus on teaching that will result in drop in productivity. This will lead to more supplementary/remedial classes which make students get tired of learning. Ultimately, they lose passion in learning. This evil cycle of mad chase, forced homework, drilled practice will keep on going until the students change their attitude. If the students take charge of their own learning, they will automatically focus during lessons and give constructive feedback that can engage the whole class in a positive manner. This will accelerate learning so much that the teachers will be more willing to teach and even plan fun activities for pupils to play and learn at the same time. At the same time, the students will strive to do their best in everything including daily worksheet, assignments. Ultimately, success ( which is good grades people chase after) will follow them. Therefore, I strongly feel that passion is much more important than knowledge. To put this passion in them, I think teachers, parents and students themselves all play a crucial role to ‘kindle the fire’ within them. They can help create encouraging environment to allow pupils to share their opinions on certain topics and letting them think ‘out of the box’. They can reduce things such elitism stereotyping to encourage the pupils to exchange feedback healthily and letting them learn from one another. Occasionally, having useful motivation courses in schools by professionals also might help. Once this fire is lit, the action will follow. Students will start finding joy in learning and unknowingly, they will get good grades without even getting stressed or tired.

Different Worlds, Same Stories Essay

Cultural Diversity: Different Worlds; Same Stories America is a vast, multicultural land, with many different people and many different ways. But still, we tend to categorize whether something is abnormal or not based on certain cultural standards, i. e. , â€Å"ethnocentrism†. This makes for a large gap in understanding cultures such as that of the Trobrian, a unique tribe living on the island of Kiriwiai. One might be surprised to find that while our two cultures have differences, we also share similarities. We both enjoy our own language, celebrations, religion, politics, etc.. We do, however, go about these customs and social observances in a very different manner. A trait that exists in all cultures in sociology is referred to as a â€Å"cultural universal†. There are many examples of cultural universals throughout the world. For example, all cultures have some form of government. However, while Americans are ruled via a democratic republic based on 3 branches of their government, the Trobrian people are governed based on a paramount chief system. The two cultures both have a system of politics, but they also have a different way of going about it. This difference illustrates what is known as â€Å"cultural particulars†. Cultural relativism is the principle that an individual human’s beliefs and activities should be understood in terms of his or her own culture. The reason for cultural relativism is because of the lack of understanding of cultural particulars. The people of Trobrian are very different from Americans. Their money is in skirts and banana leaves. They roam around half-naked. Their inheritance goes through their mother, and they celebrate things such as harvests and funerals (This celebration is called a â€Å"sigalli†). But the most interesting thing about the Trobrian people is that their power is based on what they can give, not what they can take. Americans would think upon hearing this, that they are an extremely un-advanced, savage people. But that is far from the truth. They recently have adapted fundamentalism and are beginning to question their money source, showing possibilities for advancement. As an American, I feel that it would be unsatisfactory to live with a people such as with the Trobrians, but that is only because of the way I grew up and my own culture. In some ways it makes them stronger; in some ways it makes them weaker. But we should never look down on another people because of the way their culture molded them. We should all have open minds and respect for diversity. People can judge very quickly, but it takes time to understand how a culture truly operates. Ethnocentrism, cultural universals, cultural particulars, and cultural relativism are all basically just fancy ways of saying we are alike in some ways, we are not alike in others, and that we should not judge others based on our own cultural norms.

Chapter 12 Outline

Chapter 12: The Second War for Independence and the Upsurge of Nationalism I. Identifications 1. Rush-Bagot Agreement: 2. Second Bank of the United States: 3. Adams-Onis Treaty: 4. Panic of 1819: 5. Tallmadge Amendment: 6. Missouri Compromise: 7. John Marshall: 8. Monroe Doctrine: II. Guided Reading Questions On to Canada over Land and Lakes 1. Why was the United States Navy able to have success in the fight for Canada? Washington Burned and New Orleans Defended 2. How did Andrew Jackson achieve some measure of retribution in New Orleans for the British actions in Washington? The Treaty of Ghent 3. Was the Treaty of Ghent advantageous to the United States? Explain. Federalist Grievances and the Hartford Convention 4. Despite an upsurge in patriotism elsewhere, what did some New England Federalists propose at the Hartford Convention, and what was the ultimate impact of the Hartford Resolutions on the Federalists? The Second War for American Independence 5. What were the long term effects of the War of 1812? Nascent Nationalism 6. What evidence of nationalism surfaced after the War of 1812? â€Å"The American System† 7. In what ways could nationalism be seen in the politics and economics of the post-war years? The So-Called Era of Good Feelings 8. To what extent was James Monroe's presidency an Era of Good Feelings? The Panic of 1819 and the Curse of Hard Times 9. Explain the causes and effects of the Panic of 1819. Growing Pains of the West 10. What factors led to the settlement of the West in the years following the War? Slavery and the Sectional Balance 1. Why was Missouri's request for statehood so explosive? The Uneasy Missouri Compromise 12. â€Å"Neither the North nor South was acutely displeased, although neither was completely happy. † Explain. John Marshall and Judicial Nationalism 13. Explain Marshall's statement, Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the Constitution, are constitutional. Judicial Dikes Against Democratic Excesses 14. â€Å"John Marshall was the most important Federalist since George Washington. † Assess. Monroe and His Doctrine 15. How could a militarily-weak nation like the United States make such a bold statement ordering European nations to stay out of the Americas? Monroe's Doctrine Appraised 16. Evaluate the importance of the Monroe Doctrine in subsequent American history.

Business insurance and how it affact on the taxes Essay

Business insurance and how it affact on the taxes - Essay Example The tax on insurance premium does not in reality have an effect on the individual policy holder in drastic ways. The more flourishing an insurance cover provider is, the higher their taxation on the insurance premium. Both IRS publication 334 (small business tax guide) and IRS publication 535(business expenses) are readily available in the internet and are a perfect resource for many business owners. Certain types of enterprises should be cautious, and make sure they get skilled tax assistance when they are preparing their income and when they are listing their premium deductions. This is as a result of the tax avoidance schemes which have been caught by IRS over the years. These unscrupulous people have made taxation in businesses exceedingly difficult no for everyone i.e. even for the fair tax payers. There is two common set of laws that are usually applied during the deduction of premiums. One of these laws is that insurance premiums have to be to the advantage of the enterprise and should be intended for a business purpose. The other is that, insurance covers benefitting groups e.g. managers, employees and owners alike and identifying the enterprise, are good. Those premiums that are paid for the advantage of one, normally the owner of the business are bad. There are a number of commonly accepted premium deductions. One of these is credit insurance. Credit insurance is used to cover losses from bad debts for business in order for it to continue running its activities. Another one is group hospitalization and employees’ medical insurance. This one also includes the long term care insurance. Liability insurance is also another one. It helps to protect the business from any losses which would arise from the liabilities within the business. Malpractice insurance also accepts premium deduction. This insurance covers one on personal liabilities for professional

Racism of African Americans in the US Research Paper

Racism of African Americans in the US - Research Paper Example The racist actions continue to haunt us and therefore we must struggle and address this issue with sincerity and consciousness so that we will stop to hurt each other as it has happened in the past. We must design the solution to the racism problem and stick to it so that eventually the society will be free with prevailing equality of all people regardless of their skin color or origin. This paper gives an analytical discussion of the racism of the African Americans in the United States. The origins of racism are described and the modern racist actions in the US explained with an inclusion of the role of the media in racism and the fights against racism. The origins of racism Racism in America traces back to 1400s during the era of colonization. The Europeans colonized the Americas and Africans during this period. The colonizers believed that they were superior and these ideas were used to as a justification of the forceful taking of land, discrimination, and exploitation of other ra ces. The European wanted labor force for their plantations and industries within their colonies in the Americas. Because of this, the European slave traders captured African slaves from parts of west and central Africa during the Trans-Atlantic trade. These slaves were then shipped across the Atlantic Ocean to the Americas where they provided forced labor in harsh conditions. The slavery and discrimination during this period led to the death of very many African slaves. This illustrated how the adventures of the European with an exploration spirit led to the discovery of new lands in America and Africa, which eventually led to slavery. There were many cases of cruelty against the American natives during the colonial period. The European colonizers of America wanted to obtain the northern territories of America. Because of the need to conquer America, there were many massacres, wars and displacement of Native Americans. The Trail of tears for example led to the deaths of very many Na tive Americans most of whom were restricted their rights to food with forceful displacements and imposition of various treaties by the colonial master. The early racism against the black community was experienced soon after the European colonialists settled in Virginia. The court rulings in the 18th century were supportive of the slavery of the black people from Africa and sometimes the native communities of America. Racism and discrimination in the United States was institutionalized in the 19th century. Discriminatory and racist laws disenfranchised the people of African descent especially in the southern part of America. Even if they were allowed poll taxes and to vote, shocking acts of terror against the African American was done by the KKK group. This period recorded the worst cases of racism against the black Americans. This is the time when there was rampant segregation, demonstration of the white supremacy and racial discrimination against people of the African descent. More over, there were many race riots during this period and violence against the black community1. After the Second World War, there was the Great Migration of African Americans from the southern states of America to the north. These people moved in search for employment in the industrial centers within the northern part of America. Cities such as New York, Boston, and Chicago thus received many black American immigrants from the south. Because of this migration,

Architecture advancements Research Paper Example | Topics and Well Written Essays - 1250 words

Architecture advancements - Research Paper Example The Romans had great architects who created admirable and great monuments and buildings located all over the Roman Empire. Primarily, Romans adopted the Etruscan arch as practical architectural devices, and secondly, they constructed aqueducts from these arches. More so, they made cement so as to effectively use these architectural devices. This way, they were able to use these architectural devices in a useful and productive manner. Furthermore, Romans established many beautiful buildings for themselves. Architectural works had been part of the Roman Empire, but with time, Rome architects became more skilled and so, architect evolved to be a profession. This paper provides an explanation of some of the architectural achievement in Rome, noting the developments of arch, aqueducts, and dome among others. The advancement of art work in Rome was to a larger extended developed from Romans predecessors the Etruscans and others. However, most borrowed artistic forms were expressed in their practical dominating spirit (Anderson, 2012). Notably, architecture has been the success of ancient Romans, for instance, Romans were the first people to make of architecture in handling various problems such as infrastructure and urban management among others (Garwood and Blasi, 2012). Due to the popularity of architectural works, architects and engineers advanced their skills and became the designers of great buildings, temples, bridges, imperial palaces, water supply systems, and churches among others. Therefore, Romans modified the techniques that were initially developed by Etruscans and the Greeks so as to allow their architects construct these great infrastructures (Garwood and Blasi, 2012). According, Romans modified the dome, vaults and arches which played a fundamental role in building palaces, aqueducts, public buildings and baths, and theaters among others (Hitchens and Roupp, 2001). Romans adopted architectural features particularly of the arch from the Etruscans, and they also used classical orders of the Greek temple to construct many temples, but they modified these features to come up with a very unique architectural style (Dierckx and ‘Mark Twain Media’, 2012). Arguably, the Romans learned from the Etruscans on how to construct round arches, but they created new and better ways to modify the arch to a barrel vault together with two arches at right angles to each other (Hitchens and Roupp, 2001). The arch was modified by the Romans and was used to support extra structure for building, and typically, this arch was constructed out of concrete, brick as well as stone. The Romans designed the Etruscan arch, which was very famous and often accredited to Romans, and they adopted this arch from the Etruscans, and literally, the arch is constructed by a series of blocks placed together with a key stone placed in the center of the top. Romans put the arch to good practical and decorative use, for instance, they used the arches to make use ful innovations like aqueducts. Indeed, the Romans effectively made use of the Etruscan arch, for instance, as the Etruscans used the arch as a single stone structure to construct gateways, the Romans used the arch in diverse ways. For instance, they combined arches with the use of concretes to construct architectural structures of greater size (Dierckx and ‘

Issues in child development Essay Example | Topics and Well Written Essays - 1500 words

Issues in child development - Essay Example Every childs development is judged by their intellectual function, their inventiveness, their ego strength, their relatedness to their peers and adults, and capacity to deal with new events that come across their like each day in their social life. Depression may be simply defined as a state of sadness. Many may feel depressed for a short time when things do not go their way, but when this feeling persists and interferes with daily activity a doctor may diagnose an individual with clinical depression and order medication. Genetic predisposition, personal problems, and seasonal hormonal changes are some of the many things that may trigger depression. A depressed individual may encounter feelings of despair and sadness, constant fatigue, constant headaches, among other things. If left untreated, depression may lead to suicide. (Mood Disorders, 2003) Most mothers aspire to provide a nurturing environment for their children. Depressed mothers generally want the best for their children, but their illness prevents them from achieving this goal. Depressed mothers have a much different opinion of themselves as mothers and of their childrens behaviour. They may see themselves as inadequate and think that they have little control over their childs development and they may perceive many aspects of their childs normal behaviour in a negative light. (Gurian, 2003) Many report feeling overwhelmed at the responsibilities of raising a child. Under so much stress, depressed mothers will face the normal frustrations of raising children much differently than normal mothers would. In many cases, the mother may criticize the child to the point of insulting him. Verbal abuse has been linked to lack of self esteem in children, especially when done at a young age. Some depressed mother will go even further and react violently to her childs petty

Youth Justice in the UK Essay Example | Topics and Well Written Essays - 750 words

Youth Justice in the UK - Essay Example Between arrest and sentence, it could take anywhere between 70 to 170 days. In spite of the efforts of schools and parents, training and employment, services for tackling drug and alcohol abuse, as part of the developed strategy, youth crime have not fallen much. Crime and Disorder Act 1998, sections 37 to 43 deal with crime, warnings, punishments, rehabilitation and various programmes to improve a lot of youth offenders. In spite of many efforts and Acts, youth justice had not been achieved in the UK. Â  United Nations has taken steps for international youth justice. UN Youth Flash like websites encourages youth online participation. UN General Assembly defined youth as persons between the age group of 15 and 24, both inclusive and according to this definition, UN says that approximately 1 billion youth live in the world today and 85% of them are in developing countries and 60% of them are in Asia alone. UN identifies as priority issues of youth are education, employment, hunger and poverty eradication, health, environment, drug abuse, juvenile delinquency, leisure-time activities, girls and young men, the full and effective participation of youth in the life of society and in decision making. UN hopes that Governments of the world take care of these matters. UN believes in empowering youth in development and peace, keeping in mind their aspirations, and that they are the key agents for social change economic development and technological innovation. UN recognizes that it is nece ssary to encourage their imagination, ideas, energy, and vision while noting that they represent society's hope, but have uncertain future. Their intellectual contribution and ability to mobilize support is not overlooked. UN tries to maximize the resources, funding, eradicate inequalities of economic, social and political conditions, ethnic prejudice and unemployment. UN is working against gender discrimination, insecure livelihoods, conflict, exclusion, homelessness, continuous deterioration of the environment, hunger, malnutrition, disease and lack of education and employment opportunities. Â  In 1965, UN has asked the Member States to endorse the Declaration on the Promotion among Youth of the ideals of Peace, mutual respect and understanding between peoples. In 1995 it strengthened its commitment by directing international community to address youth problems like drug abuse, juvenile delinquency, and social development under Universal Declaration of Human Rights, which also cover rights of health, education, and employment along with disability support. Global Youth Conferences insist on 'empowering youth for action' and that youth issues should be tackled from local, national, regional and international levels. Youth should be treated as a challenge and a resource and should be allowed for economic, social, cultural and political participation. UN reiterates working for and with Youth while laying stress on inter-cultural, inter-regional and international interactions to promote World Youth Forum of the United Nations System. Â  

Discuss the War of 1812. Begin with a short background of the conflict Essay

Discuss the War of 1812. Begin with a short background of the conflict and the reasons for a U.S. declaration of war. How did the war change America Disuss at least three major long term results of the War - Essay Example The war of 1812 was a war that was fought chiefly between the government of the United States of America and the British empire (Chiefly British North America/Canada). Without question there had been a strongly strained relationship between the United States and the British Empire since the conclusion of the war of independence. The war was fought both the land and sea, and there were a number of different agents involved such as the Americans, United Empire Loyalists, Quà ©bà ©cois, The British, Upper & Lower Canadians, American Indians etc. After the British had defeated Napoleon on the European more resources were freed up for the war effort and as such a more aggressive strategy was employed. Although neither side lost any major territory in the war the war was concluded with a number of treaties (Such as the Rush-Bagot Treaty) which helped lead to the un-militarized great lakes and helped lead to an un-militarized borderbetween Canada and the United states that remains to this day. As with any historical event such as a war it is often the case that the issues surrounding it are not cut and dry. In the case of the war of 1812 the reasoning behind the declaration of war was not as simple as one would think. According to Horseman (1962) it was the case that the British engaged in a naval conflict with the United States that saw the commandeering of American vessels and seizing sailors on the grounds that they were deserters from British naval forces and as such were co-opted into British Service. Moreover, Strong trade restrictions were placed by the British on the United States and France (Which hurt American commercial interests) and lastly many American Indians were being supported by the British to impede American expansion into the West (Of the American Continent). Ultimately these grievances helped push James Madison to give a long speech to the U.S. Congress regarding American interests and

Public transport information systems Essay Example | Topics and Well Written Essays - 1000 words

Public transport information systems - Essay Example The plan for the journey should be chalked out in such a way that it will become very efficient for people to access it, moreover, with the system of electronic ticketing and all sorts of information regarding the fare. Background of Public Transport Information System In many developed and developing nations the need of an integrated public transport has been felt long ago and many countries including USA, UK, various other European countries, India, etc. governments of these countries have already installed the system in many of their cities and have made several plans for making the system more effective. For example, in UK the Government already had a 10 year plan that it will provide an integrated system of Public Transport Information System wherein people will gain in confidence on its service. In any country, this service is always based on based on the aim of providing clean, fair, efficient and safe mode of transportation. The key objective is to provide information all tim e on transport facilities by operators and authorities in charge of the public transport system. (Department of Transport, UK, pg. 2-3) In UK, there was a Public Transport Act of 2000 wherein it is said guidance has been detailed on how and how much information should be delivered, when asked, by local authorities and in what way the information should be made available to the customers. In this regard, the operators and the authorities should consult with the bus user groups and the traffic commissioner. (Department of Transport, UK, pg. 2-3) The information that is being delivered by the traffic operators and authorities are issued on paper but a great deal of information can be issued electronically. This will not only save time but also will deliver the information within the correct timeline, inclusive of all sorts of delay and incidents. On this purpose, equipments and systems has been routed for both buses and rails. (LIU p 1-2) In this regard, there are two types of informat ion. One is the Journey Planning Information and another being the In-Journey Information which includes information at stop or station. (LIU p 1-2) The information on Journey Planning is facilitated by a range of network owners and service provider websites and also from the National Railways Telephone enquiry service. In order to provide information on public transport through very often a series of regional centers linked with one another. Sometimes, in many countries, particularly in European countries, these regional centers are being run by a group of local authorities, bus operators and passenger transport executives who have partnership on the contract. These regional centers which provide information on local basis can be developed and linked together so as to enable service on national level with the provision of national real time information. (Nijkamp, p.137-139) In the other type of information system, called the In-Journey information, the system is based on real time information system which is being provided by the individual operators, which has been tested and proven in several trail sites. (Nijkamp, p.137-139) The development of the pubic information transport system frequently focuses on another key area of collation and delivery on information of fare so the passenger’

Knowledge Management in Supply Chain Management Essay

Knowledge Management in Supply Chain Management - Essay Example The research provided efficient solutions to the problems and including the integrating system and providing effective IT solutions in the supply chain management. It also provided some recommendations to the major problems of KM in the company. The implementation plan revealed the type of knowledge and resource required in the KM project. The conclusion provided a summary in brief the main discussion on the topic under study. Knowledge Management in Supply Chain Management in Dell Company Introduction Knowledge management has become an emerging key issue in many organizations. Dell Company, which is an American conglomerate computer technology, is among the industries that incorporate knowledge management in the supply chain management process. The corporation has more than 103,300 workers worldwide, and it is among the leading technology industries. The company engages in design, development, manufacturing and marketing or distributing of diverse computer services globally. The emp loy corporate responsibility and business model of culture, compliance and credibility in order to achieve effective performance. Increased technology advancement has forced many organizations to employ effective methods; thus, use of knowledge management in many organizations has become the significant aspect. Knowledge management (KM) is a strategic tool or framework employed  to design, represent and distribute as well as enable adoption of experiences in business process. KM in supply management has become the leading area of concern and managerial challenges. For instance, the supply chain management has become one of the key areas that utilize knowledge management in order to achieve a competitive advantage. KM is increasing as a significant business asset in the supply chain management. However, Dell Company face varied challenges of incorporating knowledge management in the supply chain management process. Dell’s operates its business across the product line includi ng desktop computers, network services, computer notebooks and storage products. The company owner, Michael Dell established the business based on the sidestepping dealer concept. The company started selling  personal computer products straight to clients; thus evading the issue of delay and outlays of supply chain issues. Better financial performance contributed to its successful implementation of using direct sales model. However, despite the recent industrial growth, the company faces varied challenges. The foremost problem is increased technology changes; thus holding inventories an immense liability. Therefore, the organization employs knowledge management in supply management in order to design, manufacture, market and delivers computer products effectively across the globe. The company manages KM through aligning the organizational strategies and employs logistics as well as provides IT solutions effective for managing knowledge. Problem Identification and Analysis Increase d technology changes have become the main concerning the issue in the company’s supply chain management. Technology changes are significant because it enables the company to design or employ new business strategies that can enable them improve business performance (Dwivedi and Butcher (2009, p.123). Dell Company  is among

Appropriate Climate Responsive Technologies for Inclusive Growth and Sustainable Development Essay Example for Free

Appropriate Climate Responsive Technologies for Inclusive Growth and Sustainable Development Essay Life is strange; we don’t know what would be the next moment of it? What will it bring to us? What will it take from us? If it will raise us to the top of our happiest moment or it will throw us in the dark of death? We only knew to respond its moves. Its human nature to keep hope for the best. We never ever think about the end of life, instead we always think about the most remarkable, comfortable easy-going journey of life. And to do this, we have been working since our very first scientific finding of Fire†¦ Change is being the law of nature, and we made it a habit to respond the change. We responded, but we forgot to respect it. Now, climate change is the most serious challenge human society has ever faced and everybody including business houses have already realized the gravity of the issue. Greed for the energy and power of the human society is leading to the emission of carbon right from the ancient time. And now we are suffering with climate change. Climate change is a global environmental problem which has been receiving intense political attention both at domestic and international levels. The United Nations Framework Convention on Climate Change(UNFCCC) defines ‘climate change’ as a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods. The major characteristics of climate change include rise in average global temperature, ice cap melting, changes in precipitation, and increase in ocean temperature leading to sea level rise. Precisely at a time when India is confronted with development imperatives, we have been severely impacted by climate change. Like other developed countries, several sections of Indian populance are not being able to buffer themselves from impacts of global warming. With close economic ties to natural resources and climate-sensitive sectors such as agriculture, water forestry, India is facing a major threat and requires serious adaptive capacity to combat climate change. As a developing country, India can little afford the rise economic backlashes that industrialized nations can. With 27. 5% of the population still below the poverty line, reducing vulnerability to the impacts of climate change is essential. Although not an emitter historically , India currently has one of the fastest growing economies in the world with a government target 8% GDP to achieve development priorities, a share of one sixth of the global population, and changing consumption patterns, India’s emissions are set to increase dramatically. The International Energy Agency predicts that India will become the third largest emitter of greenhouse gases by as early as 2015. Besides this, developing countries are still emitting carbon greenhouse gases at higher rates, contributing to the climate changes. Use of the fossile fuels, coal at large extent is the basic reason for the carbon emission. Power sector is 28. 9% of greenhouse gas emission, while domestic sector where coal LPG, wood kerosene are being used as fuel is contributing 6. 4% followed by industrial sector 12. % and construction sector 9. 7 %( required for production of steel, cement brick, etc. ) Technology simply means the application of scientific knowledge for practical purposes, has a very vital role in the strategies to mitigate climate change. In 1987, the United Nations released the Brundtland Report, which included what is now one of the most widely recognized definitions: Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. The World commission on Environment Development has defined ‘Sustainable Development’ as balancing the fulfillment of the human needs with protection of the natural environment so that these needs can be met not only in the present, but in the indefinite future. In simple words, we want a development which lasts for the infinite time without any harm to the nature as well as society. The word sustainable has been used in too many situations today, and ecological sustainability is one of those terms that confuse a lot of people. You hear about sustainable development, sustainable growth, sustainable economies, sustainable societies, and sustainable agriculture. Everything is sustainable. The term ‘Inclusive growth’ includes the overall development of population with correct wealth distribution, development of poor underprivileged , and deprived part of society by way of providing education for all, better agriculture production, and industrial development. Inclusive growth by its very definition implies an equitable allocation of resources with benefits incurred to every section of the society. But the allocation of resources must be focused on the intended short and long term benefits of the society such as availability of consumer goods, people access, employment, standard of living etc. It sets a direct relationship between macro and micro determinant of the economy and its growth. The micro dimension includes the structural transformation of the society and macro dimension includes the country’s gross national product (GNP) and gross domestic product (GDP). To maintain rapid and sustainable growth is some time very difficult this is because resources vapourises during the allocation and may give rise to negative externality such as rise in corruption which is major problem in the developing nation. But however it has created an environment of equality in opportunity in all dimension of livelihood. Such as employment creation, market, consumption, production, and has created a platform for people who are poor to access good standard of living. If we focus on the inequality between poor and rich household in a country we can reach to an optimal solution so that we can minimize the difference.

Attitude of Unlisted Companies Towards IFRS

Attitude of Unlisted Companies Towards IFRS SECTION I INTRODUCTION The adoption of international financial reporting standards across the European Union from 1st January 2005 is one of the biggest events in the accounting history. This is especially important after the capital markets were rocked by some big accounting frauds in recent years. In the first phase, 7000-plus listed European companies will have to implement new financial reporting standards from January 2005 (Fuller, Jan 2005). When European Union moved towards one market across Europe, it faced the prospect of different financial reporting regimes across EU participants. To achieve true scale of financial integration, it has become necessary to adopt common financial reporting standards. In June 2002, the European Commission adopted a regulation requiring all listed EU companies in regulated markets to prepare their financial statements in accordance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS). The regulation is applicable only on consolidated accounts and companies are free to choose their national GAAPs for subsidiaries and associate companies. The regulation came into force from January 2005. Companies Act 1985 governs the use of UK GAAP by UK based companies. Similarly other EU states have their own laws for accounting standards. The EU states have now modified their national laws to include IFRS regulation to offer a common financial reporting standard. Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 has extended the application, on a non-compulsory basis, of the EU IFRS regulation to all non-charitable organisations. In the last quarter of previous century, the world economies have moved towards globalisation. Multinational companies are manufacturing and selling across the world and many of these firms are listed at foreign stock exchanges. Globalisation of markets and establishment of multinationals led to increased desire and awareness about international markets. This was soon followed by globalisation of financial markets which increased the value of understanding of international financial results and reporting formats. Rapid improvement in communication technologies and easy access through internet has further spread the profile of international investor. Now a day international investors are not limited to some portfolio managers in big banks. International investors are now as diverse as sophisticated equity manager to a small investor in a remote town. Investors too have diversified their portfolio by international equities and bonds. This rapid globalisation has fuelled the desire to h ave common international standards that could be understood and followed across nations. The ever increasing network of investors has not only opened new financing sources to countries, it has also put some pressure on the financial regulatory authorities to design and improve their financial reporting systems in a manner that is easily understood by wider audiences. The regulatory authorities have on one hand evolve the financial reporting system to match the ever increasing demands of international investors and on the other hand make sure that companies in their countries are not faced with sudden increase in time, resources and knowledge needed to cope with new regulations.   In 1973, 9 countries included UK formed International Accounting Standards Committee (IASC) with an aim to develop common accounting standards. The membership has now grown well over hundred countries with each country, especially bigger economies, bringing in their own perspectives of accounting standards. IASC had to deal with accounting conflictions in coming up with common acceptable accounting standards. One would immediately think whether IASC has been successful in resolving all the conflicts with all member countries and the answer would easily be no. To fully satisfy more than hundred accounting bodies from across the world is almost an impossible task. Yet IASC has done a commendable job and from 1 January 2005, International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS) is applicable in more than 90 countries. In EU, IFRS is compulsory only for listed companies. The standards that UK listed companies will follow are not those issued directly by the International Accounting Standards Board, but are those that have been endorsed by the European Commission. EU has now endorsed IFRS, except for IFRS 6 and some of the IFRIC interpretations, and some changes in IAS 39 relating to the fair value of financial instruments (PwC, 2005a). While the EU regulation is only enforceable on listed companies, it also says that a member state has an option to extend the use of IFRS to unlisted companies within their jurisdiction. Department of Trade and Industry (DTI), the government trade body responsible for company regulation in UK, has said that while there is no mandatory move to IFRS for unlisted companies, the unlisted companies would still be allowed to adopt IFRS over UK GAAP from 2005 onwards. The basic aim of new financial reporting standards is same as that of existing standards – to provide information about financial performance and position of a company to different stakeholders. Internal stakeholders – management – normally have a good grip of what’s going in the business. It is external stakeholders like investors, auditors, suppliers and creditors who need to be informed in a succinct and clear manner about financial implications of business decisions. The IFRS would aim to present a more complete picture of a business by making operating income a more encompassing number. As an example, the financial implications of stock options were kept out of income statements. Companies merely mentioned the number of stock options granted. But now onwards, companies will have to incorporate the fair costs of granting stock options in their income statements. This will allow investors to assess the true costs of executive remuneration. Though the overall aim is same, the differences in implementation and financial reporting do occur due to social, economic and political backgrounds of different nations. Will it be a good policy to allow two different accounting standards in UK – one standard for listed companies and another for unlisted companies. UK’s Accounting Standard Board clearly sees there is no merit in having two separate standards. ASB issued a Discussion Paper in March 2004 highlighting its strategy for convergence with IAS and says that convergence of UK accounting standards to IAS is a foregone conclusion. It has already introduced many changes in recent past to bring UK’s GAAP in line with IFRS. Smaller companies, even listed ones, will find it difficult to cope with extra work due to IFRS. Alternative Investment Market (AIM) realises that most of its companies won’t be in a position to meet IFRS requirements soon. So it changed its regulatory status in October 2004 and is now an â€Å"exchange regulated market† and out of purview of European Commission regulation on regulated markets. Now companies listed on AIM have time until January 2007 to implement IFRS. Accounting Standards Board is also sensitive to the needs placed on business in making a transition from UK accounting standards to IFRS. Big businesses probably have sufficient resources to cope with the change in one year. But the smaller businesses will find it difficult to make all required changes in one year. ASB has proposed a series of changes that would be implemented in 2005 and 2006 which will bring UK financial reporting standards more in line with IFRS. Thereafter ASB will carry out a series of step changes by replacing one or more UK standards. So by the end of 2005-2006, UK standards will almost be in line with IFRS and unlisted companies transition to IFRS in 2007 would be smooth. This research analyses the attitude of unlisted companies towards IFRS. Many research and surveys have been carried out on the acceptance and readiness of listed companies for transition to IFRS. But the issue has not been explored in depth with respect to unlisted companies. The research is based on primary and secondary data. Primary data is collected via interviews and questionnaires with companies and their auditors. A total of [34] interviews – [20] with companies and [14] with their auditors – were conducted to obtain primary data. [52] questionnaire responses by postal survey were also analysed. The results show that there is definitely a much scope in improving International Financial Reporting Standards for unlisted companies. Respondents were concerned about the costs associated with transition to IFRS and also the additional burden that will come with regular enhanced reporting. That IFRS will help in globalisation of capital markets and probably cheaper costs of capital is not of much significance for unlisted companies registered in UK. This research would be useful for institutes and associations framing accounting standards for unlisted companies. Mostly accounting standards have been framed with an eye for listed and large companies. But unlisted companies have much lesser resources to spend on large regulatory requirements and hence should have different reporting requirements that match the benefits obtained from such reporting. The time limitation and resource constraint mean that the primary data via interviews and questionnaire surveys could only be collected through a limited number of respondents. It would be useful to cover a larger data base before implementing the changes. Also more users of data in unlisted companies like banks and creditors should be contacted before policy formulation. The remaining paper is divided in the following sections. Section II is a literature review on justification and applicability of IFRS, and state of readiness in companies. Section III discusses the methodology used in this research. Section IV covers analysis of data obtained through the primary data collection and its interpretation. The paper concludes with section V. SECTION II LITERATURE REVIEW In June 2000, the European Commission proposed a new directive requiring that all publicly traded companies in the member states to adopt International Accounting Standards Board (IASB) standards by no later than January 2005. On 19 July 2002, the European Parliament and the Council approved the IAS regulation (EC) 1606/2002 which said ‘For each financial year starting on or after 1 January 2005, companies governed by the law of a Member State shall prepare their consolidated accounts in conformity with the international accounting standards adopted †¦ if, at their balance sheet date, their securities are admitted to trading on a regulated market of any Member State’ (EU, 2002). Rationale for EU’s adoption of International Financial Reporting Standards The main aim of International Financial reporting Standards is to bring convergence among different national financial reporting standards. Over time, the evolution of different national financial reporting standards has been influenced by local social, political and economic environments. Some of the major reasons for differences in accounting standards are: Political – Capitalist or Communist. Capitalist and communist countries have almost contrasting fundamental economic approach and their accounting standards reflect the same. Stage of economic development. Developed countries generally have better accounting standards in terms of transparency and clarity. Corporate finance – debt or equity. Companies in continental Europe are financed more by debt than the companies in UK. Accounting standards have over time evolved to reflect the importance placed by different sources of financing on different aspects of financial statements. Legal and taxation systems. Convergence will help investors and analysts to compare companies across borders in a better way. But it also implies that either member countries will lose their independence to make national accounting standards that reflect local economic conditions or if they start introducing some changes, IFRS may slowly lose its main strength of common standard. Local, political and economical conditions may force national accounting bodies to introduce variations in IFRS. EU has already introduced some changes in the IAS 39 dealing with financial instruments. It is beyond the scope of this research to see which member countries have introduced variations in IFRS. Convergence between UK GAAP and IFRS ASB has declared its intention to converge UK GAAP with IFRS. It has issued a number of new standards in December 2004 to speed up the convergence of UK GAAP with IFRS. So sooner, even unlisted companies would be following a substantial portion of IFRS due to this convergence. Comparison of UK GAAP and IFRS Similarities The ultimate goal of UK GAAP and IFRS is same – to present information about financial performance and position to all concerned stakeholders. If the aim is same, then should be the main approach adopted by both accounting standards. The UK’s Accounting Standard Board’s Statement of Principles for Financial Reporting is a vital contributor at macro level standard setting. It plays almost same role as International Accounting Standards Committee’s ‘Framework for the Preparation and Presentation of Financial Statements’. ‘It is a description of the fundamental approach that the Accounting Standards Board (ASB) believes should, in principle, underpin the financial statements of profit-oriented entities’ (ASB, 1999). The Statement of Principles has true and fair concept at its core, much like the focal point in International Accounting Standards. Also like IAS, Statement of Principles insists on financial information being relevant and comparable. It is beyond the scope of this research to highlight each and every similarity between UK GAAP and IAS. Differences Though the overall aim is same, the differences in implementation and financial reporting do occur due to social, economic and political backgrounds of different nations. Main concepts behind UK GAAP and IFRS are same, but when we look at micro level, we see many differences at the individual standards level. Following are the main differences between UK GAAP and IFRS: The Statement of Principles allows use of both historical cost and current value approaches in measuring balance sheet categories. The dual use of historical and current value methods is known as modified historical cost basis (ASB, 1999). Under historical cost, the carrying values of assets and liabilities are stated at the lower of cost and recoverable amount. This approach is more conservative as compared to IAS approach which uses fair value method. Also the choice of historical or current value method is based on subjective analysis of a company’s management and hence it is open to some manipulation. Fair value. If we look at global level, both UK GAAP and IFRS have adopted fair value method as the foundation of their accounting standards. IFRS takes fair value adoption even higher when it says that income statement will include the changes in the fair value of items that have not been yet traded like derivatives. The emphasis in new accounting standards is on mark-to-market fair value of assets and liabilities rather than on actual market price based fair values. Now both realised and unrealised changes in fair values would be incorporated in income statements. The first year of transition will see high volatility in earnings and balance sheet statements. Though this brings higher volatility, it will also test the management skills in proper presentation and explanation of changes. It may also change the benchmarks of success for managements. Acquisitions. Acquisition accounting will change under new accounting standards. Under UK GAAP, companies can choose between purchase and merger accounting. Under IFRS, companies will have to account under purchase method only. Goodwill. UK GAAP allowed amortisation of goodwill and companies had the option of not segregating intangible assets from goodwill. Under IFRS, intangible assets have to be separated from goodwill. Goodwill can not be amortised now but companies will have to undertake annual impairment tests to justify the value of goodwill on the balance sheets. BAT’s profits for year 2004 increased by  £454m because it no longer had to amortise goodwill of that amount (AccountancyAge, 2005b). Consolidation of accounts. Under new accounting rules, companies may have to consolidate certain additional subsidiaries into group accounts. On the other hand companies will have to exclude certain subsidiaries or special purpose vehicles which were not included till now. Research and development costs. Under IAS 39, research costs can’t be carried on the balance sheet and would have to write them off as incurred. Companies would still be allowed to capitalise development in line with UK GAAP. Stock options. Internet and share market last boom in late 1990s led to rapid increase in share options as a way to reward employees. The new requirements to record an expense on income statement for the value of share options granted to employees could have a significant impact on earnings. AstraZeneca said in its pro forma 2004 IFRS numbers that new accounting rules on stock options has made it re-consider the use of stock options in rewarding its employees (Tricks, 2005). Distributable profits. Organisations ability to pay dividends is dependent on their distributable profits. Following are some of the major impacts of IFRS on distributable profits Inability to discount deferred tax liabilities, higher provisions for deferred tax when companies move from historical costs to fair value and inclusion of pension deficits in income statement. All of the above will reduce distributable profits. Many companies would have to financially restructure themselves in order to have sufficient distributable profits to meet dividends paid in last year. Deferred tax credit. Deferred tax credit is available under UK GAAP but not under IFRS. GlaxoSmithKline’s restated its 2004 earning per share by (1.9p) due to non-availability of deferred tax credit under IFRS (AccountancyAge, 2005a). Inclusion of business disposals gains in profits from operations. BAT’s profits for year 2004 increased by  £1.3bn after it included gains from disposals to operating profits (AccountancyAge, 2005b). Adding disposal gains to operating profits will make it harder for investors and analysts to separate the earnings from continuing businesses. Derivative contracts. Under IFRS, some derivative contracts will not qualify as hedges as they wont meet the criteria. UK GAAP allowed deferment of such contracts until transaction took place. IFRS won’t allow the deferment of such contract and would impact the profit and loss account even before the transaction took place. It is better in a way that investors will know the current value of the firm as on date rather than historical costs of such instruments, especially if the duration of financial instruments was long. At the same time, it would increase the burden on the company to calculate the fair value of all such transactions. Agricultural. UK GAAP allowed companies to use a cost model for biological assets and all agricultural produce. But under IAS companies would have to use mark to market method for valuing such assets. Now companies would have to use market valuation even for assets in far off countries. Advantages of IFRS over UK GAAP Common financial language. Adopting common financial reporting standards will open up a company to more markets and investors. The growth in telecommunications has made it easier for smaller investors to invest across physical boundaries. Such investors are normally not as financially sophisticated as some big financial institutions. They would also not like to understand more than one accounting standards as they don’t have required resources in hand to do so. With one common accounting standard, more investors would like to explore companies across nations. Acquisitions. IFRS 3 is more open and transparent than UK GAAP on acquisitions. It will allow investors and analysts to judge faster the success of an acquisition. Many of the companies that have relied on acquisition as a key cornerstone for growth would now come under intense scrutiny and may have to develop a new strategy for growing business.    Consolidation. In IFRS, all entities will have to provide a cash flow statement. Additionally there would be more transparency within the group companies and this should make the consolidation process more straight-forward. Securitisation by businesses is likely to be impacted by the new ways governing how companies can show assets and liabilities on their financial statements. Companies have used securitisation to cash in assets like trade receivables sitting on their balance sheets. Securitisation helps companies to slim down their balance sheets and hence allows companies to show higher return on assets at same earnings. And it was one of the reasons why companies went for securitisation. But stringent criteria for moving assets and liabilities off balance sheet will threaten securitisation. Sue Harding, chief accountant at Standard Poor’s in Europe said that new international accounting standards were sweeping a lot of securitised assets back on to balance sheets (Jopson, Feb 2005). This will help investors compare like to like and avoid companies that have used securitisation only to make-up their balance sheets. There is no harm in using securitisation if used in a proper way and not to deceive stakeholders. But we have seen how corporations like Enron had used securitisation to disguise their true financial position. Annual impairment review. Annual impairment review will benefit investors because the companies then won’t like to take big goodwill cuts in one year and not do anything for years. Annual reviews would help investors judging whether the amount paid by companies in acquiring other company was justified or not. Access to cheaper capital. Increase in investor profile diversification would most probably lower the cost of capital for most of the companies. This is especially true for smaller companies which don’t have financial muscles and resources to tap international investors. Expensing research costs gives better information to investors and other stakeholders because at research stage the chances of success are quite uncertain. Investors can only be sure of development costs bringing in some returns in future. Also by segregating research and development costs, external stakeholders will now have a better chance to differentiate the suitability of costs incurred in developing new products. Multiple listings. Many companies now have multiple listings across different countries. Companies need to prepare financial statements as per each local accounting standard to meet listing requirements. With one accounting standard only it will save a lot of botheration for companies with multiple listings. Dividends. Under IFRS dividends are not provided for until the dividend recommended by the Board is approved by shareholders. This move will bring more convergence between accounting profits and cash flows. Disadvantages of IFRS Fair value. While fair value in a way conveys more up to date value of a company as compared to historic costs, it also puts a question mark on the methods used and the reliability of fair value. Derivative instruments which are commonly traded on various stock exchanges can be easily assigned value. So while valuing some of the assets or liabilities may not be difficult, the question still remains what impact such valuations will have on companies’ business models. Many companies use hedging instruments as a strategic tool rather than for intentional gains. Any short-term swings in such instruments may have a significant impact on income statement and probably adverse market reactions may deter companies’ from using such instruments. Then comes the more important issue of valuing assets and liabilities that don’t have a proper market. The companies may use some valuation model, which itself may not be the right way, to value an asset or liability. The model will incorporate some subjective assumptions. An example would be brand value. A same brand can have two different values for two different companies because of its strategic importance. So at one hand, investors and other external stakeholders are getting more objective information about a companies’ assets and liabilities, they are also getting valuation based on more subjective assessments. Only time will tell whether some individuals or companies will use it to manipulate results. An interesting thing to observe would be the treatment and importance given by analysts to unrealised fair value of assets and liabilities. Some investors may try to separate unrealised gains and losses from other operational performance. It may also prompt companies to issue adjusted earnings excluding unrealised gains and losses. An important point to note about fair value principle is that the financial statements should not be seen as perfect prediction of things to come. That depends on the strategic and business decisions management will take in future. Just having a fair value of assets and liabilities doesn’t mean that the company will be able to extract those values in future.    Dividend. New accounting standards promote payment of dividend from distributable reserves. With the inclusion of unrealised gains and losses and pension deficits, the first few years of new accounting standards may not leave enough of distributable reserves for dividend payments. Securitisation. Securitising assets into special purpose vehicles and re-financing them through had also helped companies raise funds at lower costs. The new accounting standards by restricting the use of special purpose vehicles, would diminish some sources of cheap financing. It is question yet to be fully tested in the practical world that since the assets are same, change in financing options shouldn’t change the returns on total assets. By refinancing at lower rates through securitisation should result in higher financing cost for remaining assets such that the overall costs remain same. But examination of this hypothesis is beyond the scope of this dissertation. But what is mostly observed in capital markets is that when companies announce refinancing, the share price rises. How much of the rise is from relief that company will survive and how much from the fact that the overall costs have lowered is not known. Annual impairment tests. Annual impairment tests are easier said than done. Companies would not only have to devote substantial resources to do that first would have to train its personnel to do that. Assessing true value of a goodwill is not easy. If there is a comparable market then companies can easily value it. Even then it may differ from case to case as it would be very unusual to see exactly two similar companies. Goodwill is very different from tangible assets or technologies and depends a lot on market perception and strategy. Companies would have to review the whole process of valuing goodwill and would have to review the valuation process at constant intervals. Net pension liability. The inclusion of net pension liability on the balance sheet may have severe impact on the shareholders funds. Companies will be required to have annual actuarial valuation of their pension liabilities and the same would be reflected in financial statements. Most of the pension funds invest in equity markets, which have been quite volatile in the recent years. So though over a longer period, the movements in pension liabilities may even out but in short to medium term, it may have a dramatic effect on balance sheets and earning statements. Segmental information. IAS 14 requires companies to report information on their business segments and on a scale more detail than UK GAAP. As of date, no agreed accounting practices have emerged on how much should be disclosed because companies may end up revealing sensitive information to its competitors. If companies disclose the turnover, earnings and expenditure for each segment, its profitable operations may come under intense competition. Ian Dilks of PwC said that â€Å"some companies have found they’re giving much more information than they’re comfortable with on sales and the profitability of product areas† (Tricks, 2005) Expensing research costs may result in listed companies focusing more on products in development stage than in research stage. This will keep their balance sheets healthy but may harm long term prospects. Complex and long IFRS compliant reports. PricewaterhouseCoopers estimates that an IFRS compliant financial report for insurance companies could be up to twice as long as those prepared under existing UK GAAP (Finn Zoon, 2004). The requirement for other industry sectors though may not be as intensive as for insurance sector, their IFRS compliant financial may also be longer and resource intensive than under UK GAAP. Any company that has makes an acquisition will have to do annual goodwill impairment analysis and most of them would like to explain the results also. Comparable formats. IAS 1 is less prescriptive than the UK GAAP when it comes to the format of the balance sheet and income statement. It just distinguishes current and non-current assets and liabilities. Investors, when faced with different formats, may find it difficult to compare companies. Modify organisation structures. Meall (2003) suggested that the additional burden of more financial reporting along different segments may force companies to modify their existing organisational structures within their financial systems to collect and analyse data. Impact of IFRS on different industries IFRS will have different impact on different industries. For some, most of the applied UK GAAP is almost same as IFRS and won’t feel the difference. But for some industries, the difference in accounting standards may have a substantial impact. Financial services and insurance companies are among them. Financial services companies would be affected by substantial change in recognition and measurement of financial instruments under IAS 39. UK GAAP has no equivalent to IAS 4 which deals with insurance contracts. Insurance companies would now have to account for this in their financial statements. Under IFRS, insurance companies would have to book financial instruments such as derivatives at market value rather than historical value allowed under UK GAAP. Many insurers have said that this will distort their earnings (Reuters, 2005a). IFRS will put more stringent criteria for classification of insurance products and this may lead to reclassification of some insurance products as investment products. Other industries that might face higher impact are the ones that heavily use hedging instruments in their day to day operations. Mostly companies using commodity materials like oil as a significant part of their input costs use hedging to smooth over the volatile changes in commodity markets. New accounting standards will reduce Tesco’s projected annual profit of  £2,000m by  £30m only, a reduction of 1.5%. But for some companies the impact would be much more. Royal Sun Alliance said that new accounting rules would reduce its net assets by  £400m (Reuters, 2005a). This is a big number by any standards and shareholders Attitude of Unlisted Companies Towards IFRS Attitude of Unlisted Companies Towards IFRS SECTION I INTRODUCTION The adoption of international financial reporting standards across the European Union from 1st January 2005 is one of the biggest events in the accounting history. This is especially important after the capital markets were rocked by some big accounting frauds in recent years. In the first phase, 7000-plus listed European companies will have to implement new financial reporting standards from January 2005 (Fuller, Jan 2005). When European Union moved towards one market across Europe, it faced the prospect of different financial reporting regimes across EU participants. To achieve true scale of financial integration, it has become necessary to adopt common financial reporting standards. In June 2002, the European Commission adopted a regulation requiring all listed EU companies in regulated markets to prepare their financial statements in accordance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS). The regulation is applicable only on consolidated accounts and companies are free to choose their national GAAPs for subsidiaries and associate companies. The regulation came into force from January 2005. Companies Act 1985 governs the use of UK GAAP by UK based companies. Similarly other EU states have their own laws for accounting standards. The EU states have now modified their national laws to include IFRS regulation to offer a common financial reporting standard. Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 has extended the application, on a non-compulsory basis, of the EU IFRS regulation to all non-charitable organisations. In the last quarter of previous century, the world economies have moved towards globalisation. Multinational companies are manufacturing and selling across the world and many of these firms are listed at foreign stock exchanges. Globalisation of markets and establishment of multinationals led to increased desire and awareness about international markets. This was soon followed by globalisation of financial markets which increased the value of understanding of international financial results and reporting formats. Rapid improvement in communication technologies and easy access through internet has further spread the profile of international investor. Now a day international investors are not limited to some portfolio managers in big banks. International investors are now as diverse as sophisticated equity manager to a small investor in a remote town. Investors too have diversified their portfolio by international equities and bonds. This rapid globalisation has fuelled the desire to h ave common international standards that could be understood and followed across nations. The ever increasing network of investors has not only opened new financing sources to countries, it has also put some pressure on the financial regulatory authorities to design and improve their financial reporting systems in a manner that is easily understood by wider audiences. The regulatory authorities have on one hand evolve the financial reporting system to match the ever increasing demands of international investors and on the other hand make sure that companies in their countries are not faced with sudden increase in time, resources and knowledge needed to cope with new regulations.   In 1973, 9 countries included UK formed International Accounting Standards Committee (IASC) with an aim to develop common accounting standards. The membership has now grown well over hundred countries with each country, especially bigger economies, bringing in their own perspectives of accounting standards. IASC had to deal with accounting conflictions in coming up with common acceptable accounting standards. One would immediately think whether IASC has been successful in resolving all the conflicts with all member countries and the answer would easily be no. To fully satisfy more than hundred accounting bodies from across the world is almost an impossible task. Yet IASC has done a commendable job and from 1 January 2005, International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS) is applicable in more than 90 countries. In EU, IFRS is compulsory only for listed companies. The standards that UK listed companies will follow are not those issued directly by the International Accounting Standards Board, but are those that have been endorsed by the European Commission. EU has now endorsed IFRS, except for IFRS 6 and some of the IFRIC interpretations, and some changes in IAS 39 relating to the fair value of financial instruments (PwC, 2005a). While the EU regulation is only enforceable on listed companies, it also says that a member state has an option to extend the use of IFRS to unlisted companies within their jurisdiction. Department of Trade and Industry (DTI), the government trade body responsible for company regulation in UK, has said that while there is no mandatory move to IFRS for unlisted companies, the unlisted companies would still be allowed to adopt IFRS over UK GAAP from 2005 onwards. The basic aim of new financial reporting standards is same as that of existing standards – to provide information about financial performance and position of a company to different stakeholders. Internal stakeholders – management – normally have a good grip of what’s going in the business. It is external stakeholders like investors, auditors, suppliers and creditors who need to be informed in a succinct and clear manner about financial implications of business decisions. The IFRS would aim to present a more complete picture of a business by making operating income a more encompassing number. As an example, the financial implications of stock options were kept out of income statements. Companies merely mentioned the number of stock options granted. But now onwards, companies will have to incorporate the fair costs of granting stock options in their income statements. This will allow investors to assess the true costs of executive remuneration. Though the overall aim is same, the differences in implementation and financial reporting do occur due to social, economic and political backgrounds of different nations. Will it be a good policy to allow two different accounting standards in UK – one standard for listed companies and another for unlisted companies. UK’s Accounting Standard Board clearly sees there is no merit in having two separate standards. ASB issued a Discussion Paper in March 2004 highlighting its strategy for convergence with IAS and says that convergence of UK accounting standards to IAS is a foregone conclusion. It has already introduced many changes in recent past to bring UK’s GAAP in line with IFRS. Smaller companies, even listed ones, will find it difficult to cope with extra work due to IFRS. Alternative Investment Market (AIM) realises that most of its companies won’t be in a position to meet IFRS requirements soon. So it changed its regulatory status in October 2004 and is now an â€Å"exchange regulated market† and out of purview of European Commission regulation on regulated markets. Now companies listed on AIM have time until January 2007 to implement IFRS. Accounting Standards Board is also sensitive to the needs placed on business in making a transition from UK accounting standards to IFRS. Big businesses probably have sufficient resources to cope with the change in one year. But the smaller businesses will find it difficult to make all required changes in one year. ASB has proposed a series of changes that would be implemented in 2005 and 2006 which will bring UK financial reporting standards more in line with IFRS. Thereafter ASB will carry out a series of step changes by replacing one or more UK standards. So by the end of 2005-2006, UK standards will almost be in line with IFRS and unlisted companies transition to IFRS in 2007 would be smooth. This research analyses the attitude of unlisted companies towards IFRS. Many research and surveys have been carried out on the acceptance and readiness of listed companies for transition to IFRS. But the issue has not been explored in depth with respect to unlisted companies. The research is based on primary and secondary data. Primary data is collected via interviews and questionnaires with companies and their auditors. A total of [34] interviews – [20] with companies and [14] with their auditors – were conducted to obtain primary data. [52] questionnaire responses by postal survey were also analysed. The results show that there is definitely a much scope in improving International Financial Reporting Standards for unlisted companies. Respondents were concerned about the costs associated with transition to IFRS and also the additional burden that will come with regular enhanced reporting. That IFRS will help in globalisation of capital markets and probably cheaper costs of capital is not of much significance for unlisted companies registered in UK. This research would be useful for institutes and associations framing accounting standards for unlisted companies. Mostly accounting standards have been framed with an eye for listed and large companies. But unlisted companies have much lesser resources to spend on large regulatory requirements and hence should have different reporting requirements that match the benefits obtained from such reporting. The time limitation and resource constraint mean that the primary data via interviews and questionnaire surveys could only be collected through a limited number of respondents. It would be useful to cover a larger data base before implementing the changes. Also more users of data in unlisted companies like banks and creditors should be contacted before policy formulation. The remaining paper is divided in the following sections. Section II is a literature review on justification and applicability of IFRS, and state of readiness in companies. Section III discusses the methodology used in this research. Section IV covers analysis of data obtained through the primary data collection and its interpretation. The paper concludes with section V. SECTION II LITERATURE REVIEW In June 2000, the European Commission proposed a new directive requiring that all publicly traded companies in the member states to adopt International Accounting Standards Board (IASB) standards by no later than January 2005. On 19 July 2002, the European Parliament and the Council approved the IAS regulation (EC) 1606/2002 which said ‘For each financial year starting on or after 1 January 2005, companies governed by the law of a Member State shall prepare their consolidated accounts in conformity with the international accounting standards adopted †¦ if, at their balance sheet date, their securities are admitted to trading on a regulated market of any Member State’ (EU, 2002). Rationale for EU’s adoption of International Financial Reporting Standards The main aim of International Financial reporting Standards is to bring convergence among different national financial reporting standards. Over time, the evolution of different national financial reporting standards has been influenced by local social, political and economic environments. Some of the major reasons for differences in accounting standards are: Political – Capitalist or Communist. Capitalist and communist countries have almost contrasting fundamental economic approach and their accounting standards reflect the same. Stage of economic development. Developed countries generally have better accounting standards in terms of transparency and clarity. Corporate finance – debt or equity. Companies in continental Europe are financed more by debt than the companies in UK. Accounting standards have over time evolved to reflect the importance placed by different sources of financing on different aspects of financial statements. Legal and taxation systems. Convergence will help investors and analysts to compare companies across borders in a better way. But it also implies that either member countries will lose their independence to make national accounting standards that reflect local economic conditions or if they start introducing some changes, IFRS may slowly lose its main strength of common standard. Local, political and economical conditions may force national accounting bodies to introduce variations in IFRS. EU has already introduced some changes in the IAS 39 dealing with financial instruments. It is beyond the scope of this research to see which member countries have introduced variations in IFRS. Convergence between UK GAAP and IFRS ASB has declared its intention to converge UK GAAP with IFRS. It has issued a number of new standards in December 2004 to speed up the convergence of UK GAAP with IFRS. So sooner, even unlisted companies would be following a substantial portion of IFRS due to this convergence. Comparison of UK GAAP and IFRS Similarities The ultimate goal of UK GAAP and IFRS is same – to present information about financial performance and position to all concerned stakeholders. If the aim is same, then should be the main approach adopted by both accounting standards. The UK’s Accounting Standard Board’s Statement of Principles for Financial Reporting is a vital contributor at macro level standard setting. It plays almost same role as International Accounting Standards Committee’s ‘Framework for the Preparation and Presentation of Financial Statements’. ‘It is a description of the fundamental approach that the Accounting Standards Board (ASB) believes should, in principle, underpin the financial statements of profit-oriented entities’ (ASB, 1999). The Statement of Principles has true and fair concept at its core, much like the focal point in International Accounting Standards. Also like IAS, Statement of Principles insists on financial information being relevant and comparable. It is beyond the scope of this research to highlight each and every similarity between UK GAAP and IAS. Differences Though the overall aim is same, the differences in implementation and financial reporting do occur due to social, economic and political backgrounds of different nations. Main concepts behind UK GAAP and IFRS are same, but when we look at micro level, we see many differences at the individual standards level. Following are the main differences between UK GAAP and IFRS: The Statement of Principles allows use of both historical cost and current value approaches in measuring balance sheet categories. The dual use of historical and current value methods is known as modified historical cost basis (ASB, 1999). Under historical cost, the carrying values of assets and liabilities are stated at the lower of cost and recoverable amount. This approach is more conservative as compared to IAS approach which uses fair value method. Also the choice of historical or current value method is based on subjective analysis of a company’s management and hence it is open to some manipulation. Fair value. If we look at global level, both UK GAAP and IFRS have adopted fair value method as the foundation of their accounting standards. IFRS takes fair value adoption even higher when it says that income statement will include the changes in the fair value of items that have not been yet traded like derivatives. The emphasis in new accounting standards is on mark-to-market fair value of assets and liabilities rather than on actual market price based fair values. Now both realised and unrealised changes in fair values would be incorporated in income statements. The first year of transition will see high volatility in earnings and balance sheet statements. Though this brings higher volatility, it will also test the management skills in proper presentation and explanation of changes. It may also change the benchmarks of success for managements. Acquisitions. Acquisition accounting will change under new accounting standards. Under UK GAAP, companies can choose between purchase and merger accounting. Under IFRS, companies will have to account under purchase method only. Goodwill. UK GAAP allowed amortisation of goodwill and companies had the option of not segregating intangible assets from goodwill. Under IFRS, intangible assets have to be separated from goodwill. Goodwill can not be amortised now but companies will have to undertake annual impairment tests to justify the value of goodwill on the balance sheets. BAT’s profits for year 2004 increased by  £454m because it no longer had to amortise goodwill of that amount (AccountancyAge, 2005b). Consolidation of accounts. Under new accounting rules, companies may have to consolidate certain additional subsidiaries into group accounts. On the other hand companies will have to exclude certain subsidiaries or special purpose vehicles which were not included till now. Research and development costs. Under IAS 39, research costs can’t be carried on the balance sheet and would have to write them off as incurred. Companies would still be allowed to capitalise development in line with UK GAAP. Stock options. Internet and share market last boom in late 1990s led to rapid increase in share options as a way to reward employees. The new requirements to record an expense on income statement for the value of share options granted to employees could have a significant impact on earnings. AstraZeneca said in its pro forma 2004 IFRS numbers that new accounting rules on stock options has made it re-consider the use of stock options in rewarding its employees (Tricks, 2005). Distributable profits. Organisations ability to pay dividends is dependent on their distributable profits. Following are some of the major impacts of IFRS on distributable profits Inability to discount deferred tax liabilities, higher provisions for deferred tax when companies move from historical costs to fair value and inclusion of pension deficits in income statement. All of the above will reduce distributable profits. Many companies would have to financially restructure themselves in order to have sufficient distributable profits to meet dividends paid in last year. Deferred tax credit. Deferred tax credit is available under UK GAAP but not under IFRS. GlaxoSmithKline’s restated its 2004 earning per share by (1.9p) due to non-availability of deferred tax credit under IFRS (AccountancyAge, 2005a). Inclusion of business disposals gains in profits from operations. BAT’s profits for year 2004 increased by  £1.3bn after it included gains from disposals to operating profits (AccountancyAge, 2005b). Adding disposal gains to operating profits will make it harder for investors and analysts to separate the earnings from continuing businesses. Derivative contracts. Under IFRS, some derivative contracts will not qualify as hedges as they wont meet the criteria. UK GAAP allowed deferment of such contracts until transaction took place. IFRS won’t allow the deferment of such contract and would impact the profit and loss account even before the transaction took place. It is better in a way that investors will know the current value of the firm as on date rather than historical costs of such instruments, especially if the duration of financial instruments was long. At the same time, it would increase the burden on the company to calculate the fair value of all such transactions. Agricultural. UK GAAP allowed companies to use a cost model for biological assets and all agricultural produce. But under IAS companies would have to use mark to market method for valuing such assets. Now companies would have to use market valuation even for assets in far off countries. Advantages of IFRS over UK GAAP Common financial language. Adopting common financial reporting standards will open up a company to more markets and investors. The growth in telecommunications has made it easier for smaller investors to invest across physical boundaries. Such investors are normally not as financially sophisticated as some big financial institutions. They would also not like to understand more than one accounting standards as they don’t have required resources in hand to do so. With one common accounting standard, more investors would like to explore companies across nations. Acquisitions. IFRS 3 is more open and transparent than UK GAAP on acquisitions. It will allow investors and analysts to judge faster the success of an acquisition. Many of the companies that have relied on acquisition as a key cornerstone for growth would now come under intense scrutiny and may have to develop a new strategy for growing business.    Consolidation. In IFRS, all entities will have to provide a cash flow statement. Additionally there would be more transparency within the group companies and this should make the consolidation process more straight-forward. Securitisation by businesses is likely to be impacted by the new ways governing how companies can show assets and liabilities on their financial statements. Companies have used securitisation to cash in assets like trade receivables sitting on their balance sheets. Securitisation helps companies to slim down their balance sheets and hence allows companies to show higher return on assets at same earnings. And it was one of the reasons why companies went for securitisation. But stringent criteria for moving assets and liabilities off balance sheet will threaten securitisation. Sue Harding, chief accountant at Standard Poor’s in Europe said that new international accounting standards were sweeping a lot of securitised assets back on to balance sheets (Jopson, Feb 2005). This will help investors compare like to like and avoid companies that have used securitisation only to make-up their balance sheets. There is no harm in using securitisation if used in a proper way and not to deceive stakeholders. But we have seen how corporations like Enron had used securitisation to disguise their true financial position. Annual impairment review. Annual impairment review will benefit investors because the companies then won’t like to take big goodwill cuts in one year and not do anything for years. Annual reviews would help investors judging whether the amount paid by companies in acquiring other company was justified or not. Access to cheaper capital. Increase in investor profile diversification would most probably lower the cost of capital for most of the companies. This is especially true for smaller companies which don’t have financial muscles and resources to tap international investors. Expensing research costs gives better information to investors and other stakeholders because at research stage the chances of success are quite uncertain. Investors can only be sure of development costs bringing in some returns in future. Also by segregating research and development costs, external stakeholders will now have a better chance to differentiate the suitability of costs incurred in developing new products. Multiple listings. Many companies now have multiple listings across different countries. Companies need to prepare financial statements as per each local accounting standard to meet listing requirements. With one accounting standard only it will save a lot of botheration for companies with multiple listings. Dividends. Under IFRS dividends are not provided for until the dividend recommended by the Board is approved by shareholders. This move will bring more convergence between accounting profits and cash flows. Disadvantages of IFRS Fair value. While fair value in a way conveys more up to date value of a company as compared to historic costs, it also puts a question mark on the methods used and the reliability of fair value. Derivative instruments which are commonly traded on various stock exchanges can be easily assigned value. So while valuing some of the assets or liabilities may not be difficult, the question still remains what impact such valuations will have on companies’ business models. Many companies use hedging instruments as a strategic tool rather than for intentional gains. Any short-term swings in such instruments may have a significant impact on income statement and probably adverse market reactions may deter companies’ from using such instruments. Then comes the more important issue of valuing assets and liabilities that don’t have a proper market. The companies may use some valuation model, which itself may not be the right way, to value an asset or liability. The model will incorporate some subjective assumptions. An example would be brand value. A same brand can have two different values for two different companies because of its strategic importance. So at one hand, investors and other external stakeholders are getting more objective information about a companies’ assets and liabilities, they are also getting valuation based on more subjective assessments. Only time will tell whether some individuals or companies will use it to manipulate results. An interesting thing to observe would be the treatment and importance given by analysts to unrealised fair value of assets and liabilities. Some investors may try to separate unrealised gains and losses from other operational performance. It may also prompt companies to issue adjusted earnings excluding unrealised gains and losses. An important point to note about fair value principle is that the financial statements should not be seen as perfect prediction of things to come. That depends on the strategic and business decisions management will take in future. Just having a fair value of assets and liabilities doesn’t mean that the company will be able to extract those values in future.    Dividend. New accounting standards promote payment of dividend from distributable reserves. With the inclusion of unrealised gains and losses and pension deficits, the first few years of new accounting standards may not leave enough of distributable reserves for dividend payments. Securitisation. Securitising assets into special purpose vehicles and re-financing them through had also helped companies raise funds at lower costs. The new accounting standards by restricting the use of special purpose vehicles, would diminish some sources of cheap financing. It is question yet to be fully tested in the practical world that since the assets are same, change in financing options shouldn’t change the returns on total assets. By refinancing at lower rates through securitisation should result in higher financing cost for remaining assets such that the overall costs remain same. But examination of this hypothesis is beyond the scope of this dissertation. But what is mostly observed in capital markets is that when companies announce refinancing, the share price rises. How much of the rise is from relief that company will survive and how much from the fact that the overall costs have lowered is not known. Annual impairment tests. Annual impairment tests are easier said than done. Companies would not only have to devote substantial resources to do that first would have to train its personnel to do that. Assessing true value of a goodwill is not easy. If there is a comparable market then companies can easily value it. Even then it may differ from case to case as it would be very unusual to see exactly two similar companies. Goodwill is very different from tangible assets or technologies and depends a lot on market perception and strategy. Companies would have to review the whole process of valuing goodwill and would have to review the valuation process at constant intervals. Net pension liability. The inclusion of net pension liability on the balance sheet may have severe impact on the shareholders funds. Companies will be required to have annual actuarial valuation of their pension liabilities and the same would be reflected in financial statements. Most of the pension funds invest in equity markets, which have been quite volatile in the recent years. So though over a longer period, the movements in pension liabilities may even out but in short to medium term, it may have a dramatic effect on balance sheets and earning statements. Segmental information. IAS 14 requires companies to report information on their business segments and on a scale more detail than UK GAAP. As of date, no agreed accounting practices have emerged on how much should be disclosed because companies may end up revealing sensitive information to its competitors. If companies disclose the turnover, earnings and expenditure for each segment, its profitable operations may come under intense competition. Ian Dilks of PwC said that â€Å"some companies have found they’re giving much more information than they’re comfortable with on sales and the profitability of product areas† (Tricks, 2005) Expensing research costs may result in listed companies focusing more on products in development stage than in research stage. This will keep their balance sheets healthy but may harm long term prospects. Complex and long IFRS compliant reports. PricewaterhouseCoopers estimates that an IFRS compliant financial report for insurance companies could be up to twice as long as those prepared under existing UK GAAP (Finn Zoon, 2004). The requirement for other industry sectors though may not be as intensive as for insurance sector, their IFRS compliant financial may also be longer and resource intensive than under UK GAAP. Any company that has makes an acquisition will have to do annual goodwill impairment analysis and most of them would like to explain the results also. Comparable formats. IAS 1 is less prescriptive than the UK GAAP when it comes to the format of the balance sheet and income statement. It just distinguishes current and non-current assets and liabilities. Investors, when faced with different formats, may find it difficult to compare companies. Modify organisation structures. Meall (2003) suggested that the additional burden of more financial reporting along different segments may force companies to modify their existing organisational structures within their financial systems to collect and analyse data. Impact of IFRS on different industries IFRS will have different impact on different industries. For some, most of the applied UK GAAP is almost same as IFRS and won’t feel the difference. But for some industries, the difference in accounting standards may have a substantial impact. Financial services and insurance companies are among them. Financial services companies would be affected by substantial change in recognition and measurement of financial instruments under IAS 39. UK GAAP has no equivalent to IAS 4 which deals with insurance contracts. Insurance companies would now have to account for this in their financial statements. Under IFRS, insurance companies would have to book financial instruments such as derivatives at market value rather than historical value allowed under UK GAAP. Many insurers have said that this will distort their earnings (Reuters, 2005a). IFRS will put more stringent criteria for classification of insurance products and this may lead to reclassification of some insurance products as investment products. Other industries that might face higher impact are the ones that heavily use hedging instruments in their day to day operations. Mostly companies using commodity materials like oil as a significant part of their input costs use hedging to smooth over the volatile changes in commodity markets. New accounting standards will reduce Tesco’s projected annual profit of  £2,000m by  £30m only, a reduction of 1.5%. But for some companies the impact would be much more. Royal Sun Alliance said that new accounting rules would reduce its net assets by  £400m (Reuters, 2005a). This is a big number by any standards and shareholders