Citibank Performance Evaluation Case Study

Annual Report Consolidated and Statutory Financial Statements at December 31, 2006 101st fiscal year Fiat S. p. A. Financial Statements at December 31, 2006 234 Financial Review of Fiat S. p. A. 238 Income Statement 239 Balance Sheet 240 Statement of Cash Flows 241 Statement of Changes in Stockholders’ Equity I am enough of an artist to draw freely upon my imagination. Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world. Albert Einstein 242 Income Statement pursuant to Consob Resolution No. 5519 of July 27, 2006 243 Balance Sheet pursuant to Consob Resolution No. 15519 of July 27, 2006 244 Notes to the Financial Statements 301 Appendix – Transition of the Parent Company Fiat S. p. A. to International Financial Reporting Standards (IFRS) Financial Review of Fiat S. p. A. The financial statements illustrated and commented on in the following pages have been prepared on the basis of the company’s statutory financial st atements at December 31, 2006 to which reference should be made. In compliance with European Regulation no. 606 of July 19, 2002, starting from 2005 the Fiat Group has adopted International Financial Reporting Standards (â€Å"IFRS†) issued by the International Accounting Standards Board (â€Å"IASB†) in the preparation of its consolidated financial statements. On the basis of national laws implementing that Regulation, starting from 2006 the Parent Company Fiat S. p. A. is presenting its financial statements in accordance with IFRS, which are reported together with comparative figures for the previous year. Operating PerformanceSpecifically: Personnel and operating costs, totalling 199 million euros, comprise 58 million euros in personnel costs (60 million euros in 2005), and 141 million euros in other operating costs (121 million euros in 2005), which include the costs for services, amortisation and depreciation and other operating costs. These costs increased as a w hole by 18 million euros from 2005 as a result of non-recurring charges. In 2006, the average headcount was 140 employees, compared with an average of 133 employees in 2005.The company’s Income Statement is summarised in the following table: Investment income – Dividends – (Impairment losses) reversals – Gains (losses) on disposals Personnel and operating costs net of other revenues Income (expenses) from significant non-recurring transactions Financial income (expenses) Financial income from significant non-recurring transactions Income taxes Net income Personnel and operating costs net of other revenues total 120 million euros, compared with 109 million euros in 2005. IThe Parent Company earned net income of 2,343 million euros in 2006, 1,226 million euros higher than in 2005 when the result included net non-recurring income of 1,714 million euros. (in millions of euros) Business Solutions S. p. A. (for a total of 147 million euros), net of the revaluat ion of the investments held in Fiat Netherlands Holding N. V. (376 million euros due to the positive performance of the CNH and Iveco subsidiaries), Magneti Marelli Holding S. p. A. (144 million euros) and minor companies. 2006 2005 2,461 62 2,099 – (120) – (24) – 26 2,343 (424) 8 (431) (1) (109) 1,133 (62) 858 (279) 1,117 Investment income totals 2,461 million euros compared with investment expense of 424 million euros in 2005 and consists of dividends received during the period and reversal of impairment losses (net of write-downs) of investments. Specifically: Dividends total 362 million euros and were received from the subsidiaries IHF – Internazionale Holding Fiat S. A. (259 million euros), Fiat Finance S. p. A. (75 million euros) and other companies.In 2005 dividends received from investments totalled 8 million euros. I Impairment loss reversals (net of write-downs) of 2,099 million euros resulted from the revaluation of the investments in the subsi diaries Fiat Partecipazioni S. p. A. (1,388 million euros mainly connected to Fiat Auto), Iveco S. p. A. (946 million euros) and Fiat Netherlands Holding N. V. (96 million euros connected to CNH), all written-down in previous years, net of the impairment loss recognised on the investment in Comau S. p. A. (330 million euros).I Other revenues , totalling 79 million euros (72 million euros in 2005), principally refer to the change in contract work in progress (agreements between Fiat S. p. A. and Treno Alta Velocita – T. A. V. S. p. A. ), which is measured by applying the percentage of completion to the total contractual value of the work, to royalties for the use of the Fiat trademark, calculated as a percentage of the revenues generated by the Group companies that use it, and the services of executives at the principal companies of the Group.The increase from 2005 is mainly attributable to higher charges for the use of the trademark. No Income (expenses) from significant non- recurring transactions is reported in 2006. In 2005 a gain of 1,133 million euros (net of related costs) was recorded on the transaction regarding the termination of the Master Agreement with General Motors. In 2006, there were net financial expenses of 24 million euros, arising from the interest charges on the Company’s debt, which was partially offset by the gain resulting from derivative financial instruments.In 2005 there were net expenses of 62 million euros mainly arising from the interest expenses connected with the Mandatory Convertible Facility. No Financial income from significant non-recurring transactions is reported in 2006. In 2005 this item included income of 858 million euros resulting from the capital increase of September 20, 2005 with the simultaneous conversion of the Mandatory Convertible Facility. The income represents the difference between the subscription price of the new shares issued and the stock market price of the shares at the subscription date, net of issuance costs.I In 2005, net impairment losses recognised on investments totalled 431 million euros, mainly due to losses from the investments in Fiat Partecipazioni S. p. A. (811 million euros connected mainly to the losses of Fiat Auto), Teksid S. p. A. , Comau S. p. A. and 234 Financial Review of Fiat S. p. A. The income tax revenue of 26 million euros is the net result of the remuneration for the tax loss brought into the national tax consolidation by Fiat S. p. A. in 2006 to offset the income reported by the Group’s Italian companies, and the IRAP charge recognised for the period.Income tax expenses of 279 million euros in 2005 consisted of the reversal of deferred tax assets of 277 million euros, recognised in the financial statements at December 31, 2004 in relation to the settlement subsequently made with General Motors for the termination of the Master Agreement. Financial Review of Fiat S. p. A. 235 Balance Sheet Highlights of the Parent Company’s Ba lance Sheet are illustrated in the following table: (in millions of euros) Non-current assets – of which: Investments Working capital Total net invested capital Stockholders’ equityNet debt (liquid funds) At December 31, 2006 At December 31, 2005 14,559 14,500 167 14,726 10,374 4,352 5,168 5,118 303 5,471 7,985 (2,514) Current financial payables consist of the overdraft with the subsidiary Fiat Finance S. p. A. and short-term financing received from that company, as well as payables to factoring companies for advances on receivables. Non-current financial payables consist almost entirely of loans repayable in the 2010-2013 period granted by the subsidiary Fiat Finance S. p. A. at market rates as part of the recapitalisation of subsidiaries discussed above.At December 31, 2005 financial receivables related to short-term financing of 2,700 million euros granted to the subsidiary Fiat Finance S. p. A. and due in 2006, and to cash deposited on the current account held with that company. For a more complete analysis of cash flows, reference should be made to the Statement of Cash Flows set out on the following pages as part of the statutory financial statements of the Parent Company Fiat S. p. A. Reconciliation between the Parent Company’s equity and its result for the year with those of the GroupNon-current assets mainly include investments in the relevant subsidiaries of the Group. The net increase of 9,382 million euros in investments as compared to December 31, 2005 stems from net write-ups arising from the reversal of previously recognised impairment losses and recapitalisations of 6,361 million euros carried out during the year in the subsidiaries Fiat Partecipazioni S. p. A. (6,000 million euros), Fiat Netherlands Holding N. V. (121 million euros) and Comau S. p. A. (240 million euros), in order to re-balance the equity structure inside the Group and cover losses, as well as the re-purchase from Mediobanca S. . A. of 28. 6% of the shares of Ferrari S. p. A. (893 million euros) upon exercise of the call option provided for in the 2002 agreements, which brought the investment to an 85% stake. Working capital, which totalled 167 million euros, consists of inventories net of advances received, trade, tax and employee receivables/payables, other receivables/payables and provisions. The 136 million euro decrease over December 31, 2005 is mainly attributable to the refund of VAT receivables by the Tax Authorities.Stockholders’ equity at December 31, 2006 totalled 10,374 million euros, reflecting an increase of 2,389 million euros as compared to December 31, 2005 due to the positive result of the year (2,343 million euros) and other minor changes (including 28 million euros resulting from marking to market the fair value carrying amount of the Mediobanca shareholding). Pursuant to the Consob Communication of July 28, 2006, set out below is a reconciliation between the Parent Company’s equity at December 31, 2 006 and its result for the year then ended with those of the Group (Group interest). (in millions of euros) Stockholders’ equity atDecember 31, 2006 Financial Statements of Fiat S. p. A. Elimination of the carrying amounts of consolidated investments and the respective dividends from the financial statements of Fiat S. p. A. Elimination of the reversal of impairment losses (net of recognised impairment losses) of consolidated investments Equity and results of consolidated subsidiaries Consolidation adjustments: Elimination of intercompany profits and losses on the sale of investments Elimination of intercompany profits and losses in inventories and fixed assets and other adjustments Consolidated financial statements (Group interest) 2006 Net result 10,374 2,343 14,211) – 13,404 (346) (2,099) 1,229 – (205) 9,362 (41) (21) 1,065 For a more complete analysis of the changes in stockholders’ equity, reference should be made to the relevant table set out in the following pages as part of the statutory financial statements of the Parent Company Fiat S. p. A. Net debt totalled 4,352 million euros at December 31, 2006 compared with net liquid funds of 2,514 million euros at December 31, 2005. The use of the liquid funds balance at the beginning of the year and the subsequent accumulation of debt are the consequence of the previously mentioned recapitalisations of subsidiaries and purchase of Ferrari S. . A. shares. A breakdown of net debt is illustrated in the following table: (in millions of euros) Financial receivables, cash and cash equivalents Current financial payables Non-current financial payables Net debt (net liquid funds) 236 Financial Review of Fiat S. p. A. At December 31, 2006 At December 31, 2005 (85) 1,627 2,810 4,352 (3,076) 557 5 (2,514) Financial Review of Fiat S. p. A. 237 Income Statement (in euros) Dividends and other income from investments (Impairment losses) reversal of impairment losses of investments Gains (losses) on the disposal of investments Other operating income Personnel costsOther operating costs Income (expenses) from significant non-recurring transactions Financial income (expenses) Financial income from significant non-recurring transactions Result before taxes Income taxes Result from continuing operations Result from discontinued operations Net result Balance Sheet (*) Note 2006 2005 (1) 362,418,522 2,099,350,000 425,380 79,238,202 (57,899,516) (141,006,254) – (24,846,809) – 2,317,679,525 (25,695,447) 2,343,374,972 – 2,343,374,972 7,713,904 (430,788,686) (1,300,134) 72,853,610 (60,027,274) (121,360,013) 1,133,110,377 (61,685,499) 857,636,269 1,396,152,554 278,827,554 ,117,325,000 – 1,117,325,000 (2) (3) (4) (5) (6) (7) (8) (9) (10) (*) Pursuant to Consob resolution no. 15519 of July 27, 2006 effects of transactions with related parties on the Income Statement of Fiat S. p. A. are included in the specific income statement schedule reported in the followi ng pages and also provided in the comments of the single items and in Note 30. (*) (in euros) ASSETS Non-current assets Intangible assets Property, plant and equipment Investments Other financial assets Other non-current assets Deferred tax assets Total Non-current assets Current assets Inventories Trade receivablesCurrent financial receivables Other current receivables Cash and cash equivalents Total Current assets Assets held for sale TOTAL ASSETS STOCKHOLDERS’ EQUITY AND LIABILITIES Stockholders’ equity Capital stock Additional paid-in capital Reserve under law no. 413/1991 Legal reserve Reserve for treasury stock in portfolio Extraordinary reserve Retained earnings (losses) Treasury stock Gains (losses) recognised directly in equity Stock option reserve Net result Total Stockholders’ equity Non-current liabilities Provisions for employee benefits and other non-current provisions Non-current financial payablesOther non-current liabilities Deferred tax liabili ties Total Non-current liabilities Current liabilities Provisions for employee benefits and other current provisions Trade payables Current financial payables Other payables Total Current liabilities Liabilities held for sale TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES Note At December 31, 2006 At December 31, 2005 (11) 771,530 37,252,689 14,499,594,748 20,134,319 1,573,473 – 14,559,326,759 675,599 39,658,553 5,117,531,801 5,335,175 4,501,747 – 5,167,702,875 – 154,692,452 84,173,202 626,428,489 608,105 865,902,248 – 15,425,229,007 – 215,652,499 3,075,893,885 799,919,053 95,235 4,091,960,672 – 9,259,663,547 6,377,257,130 1,540,856,410 22,590,857 446,561,763 24,138,811 6,134,851 (553,411,863) (24,138,811) 162,764,566 27,399,708 2,343,374,972 10,373,528,394 6,377,257,130 681,856,410 22,590,857 446,561,763 27,709,936 334,633 (811,736,863) (27,709,936) 134,267,390 16,102,522 1,117,325,000 7,984,558,842 18,104,487 2,810,029,000 20,000,576 3, 438,000 2,851,572,063 29,170,653 5,262,000 16,861,109 – 51,293,762 26,790,951 184,660,883 1,627,429,902 361,246,814 2,200,128,550 – 15,425,229,007 30,990,501 385,182,033 557,382,830 250,255,579 1,223,810,943 – 9,259,663,547 (12) (13) (14) (15) 10) (27) (16) (17) (18) (19) (20) (21) (22) (23) (10) (24) (25) (26) (27) (*) Pursuant to Consob resolution no. 15519 of July 27, 2006 effects of transactions with related parties on the Balance Sheet of Fiat S. p. A. are included in the specific balance sheet schedule reported in the following pages and also provided in the comments of the single items and in Note 30. 238 Fiat S. p. A. Financial Statements at December 31, 2006 Fiat S. p. A. Financial Statements at December 31, 2006 239 Statement of Changes in Stockholders’ Equity Statement of Cash Flows (in thousands of euros) 2006 2005 (in thousands of euros)A) Cash and cash equivalents at beginning of period B) Cash flows from (used in) operating activities durin g the period: Net result for the period Amortisation and depreciation Non-cash gain from extinguishment of the Mandatory Convertible Facility Non-cash stock option costs (Impairment losses) reversals of impairment losses of investments Capital losses/gains on the disposal of investments Change in provisions for employee benefits and other provisions Change in deferred taxes Change in working capital Total C) Cash flows from (used in) investment activities: Investments: – Recapitalisations of subsidiaries – AcquisitionsOther investments (tangible and intangible assets and other financial assets) Proceeds from the sale of: – Investments – Other non-current assets (tangible, intangible and other) Total D) Cash flows from (used in) financing activities: Change in current financial receivables Change in non-current financial payables Change in current financial payables Capital increase Sale of treasury stock Dividend distribution Total E) Total change in cash and cash equivalents F) Cash and cash equivalents at end of period 495 325 2,343,375 2,882 – 11,297 (2,099,350) (329) 7,990 3,438 151,872 421,175 1,117,325 2,918 (859,000) 10,041 430,789 (93) ,100 277,000 (76,028) 905,052 Capital stock Additional paid-in capital Reserve under law no. 413/1991 Legal reserve Reserve for treasury stock in portfolio Extraordinary reserve Retained earnings (losses) Treasury stock Gains (losses) recognised directly in equity Stock option reserve Net result for the period Total Stockholders’ equity At December 31, 2004 Capital increase for conversion of the Mandatory Convertible Facility 4,918,113 – 22,591 446,562 26,413 1,632 (813,435) (26,413) 74,397 6,062 2,141,000 Valuation of stock option plans and other changes Net result for the period At December 31, 2005 10,442 1,117,325 1,117,325 ,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 Valuation of stock option plans and other changes Net result for the period At December 31, 2006 1,459,144 681,856 4,655,922 Fair value adjustments recognised directly in equity 1,297 (1,297) 1,698 (1,297) 59,870 10,041 59,870 (*) (*) Treasury stock at December 31, 2005 consists of 4,331,708 ordinary shares for a total nominal value of 21,659 thousand euros. (6,361,126) (919,412) (15,529) (165,193) – (1,808) 2,357 313 (7,293,397) (a) – 261 (166,740) 2,991,721 2,804,767 1,070,047 – 5,800 – 6,872,335 113 608 (753,091) – 14,548 – 401 – 738,142) 170 495 At December 31, 2005 Capital stock Additional paid-in capital Reserve under law no. 413/1991 Legal reserve Reserve for treasury stock in portfolio Extraordinary reserve Retained earnings (losses) Treasury stock Gains (losses) recognised directly in equity Stock option reserve Net result for the period Total Stockholders’ equity 6,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 Allocat ion of the net result for the prior period Fair value adjustments recognised directly in equity 859,000 (3,571) 5,800 258,325 3,571 28,497 11,297 (1,117,325) – 28,497 2,343,375 2,343,375 7,097 6,377,257 1,540,856 22,591 446,562 24,139 6,135 (553,412) (24,139) (*) 162,764 27,400 2,343,375 10,373,528 (*) Treasury stock at December 31, 2006 consists of 3,773,458 ordinary shares for a total nominal value of 18,867 thousand euros. (a) In 2005, the item â€Å"Capital increase† is shown net of the repayment of the Mandatory Convertible Facility (3 billion euros), as it did not give rise to cash flows. Statement of total recognised income and expenses for 2006 and 2005 (in thousands of euros) Gains (losses) recognised directly in the fair value reserve (investments in other companies) Gains (losses) recognised directly in equityTransfer from cash flow hedge reserve Net result for the period Total of recognised income (expense) for the period 240 Fiat S. p. A. Financial Stateme nts at December 31, 2006 2006 2005 28,497 28,497 – 2,343,375 2,371,872 58,958 58,958 912 1,117,325 1,177,195 Fiat S. p. A. Financial Statements at December 31, 2006 241 Income Statement Balance Sheet pursuant to Consob Resolution No. 15519 of July 27, 2006 pursuant to Consob Resolution No. 15519 of July 27, 2006 (in thousands of euros) Dividends and other income from investments (Impairment losses) reversal of impairment losses of investments Gains (losses) on the disposal of investmentsOther operating income Personnel costs Other operating costs Income (expenses) from significant non-recurring transactions Financial income (expenses) Financial income from significant non-recurring transactions Result before taxes Income taxes Result from continuing operations Result from discontinued operations Net result 242 Fiat S. p. A. Financial Statements at December 31, 2006 Note 2006 (1) 362,419 2,099,350 425 79,238 (57,900) (141,006) – (24,847) – 2,317,679 (25,696) 2,34 3,375 – 2,343,375 (2) (3) (4) (5) (6) (7) (8) (9) (10) of which Related parties (Note 30) 33,200 (51,901) (17,765) 2005 7,714 430,789) (1,300) 72,854 (60,027) (121,360) 1,133,110 (61,685) 857,636 1,396,153 278,828 1,117,325 – 1,117,325 of which Related parties 24,256 (54,477) 106,259 (in thousands of euros) ASSETS Non-current assets Intangible assets Property, plant and equipment Investments Other financial assets Other non-current assets Deferred tax assets Total Non-current assets Current assets Inventories Trade receivables Current financial receivables Other current receivables Cash and cash equivalents Total Current assets Assets held for sale TOTAL ASSETS STOCKHOLDERS’ EQUITY AND LIABILITIES Stockholders’ equity Capital stockAdditional paid-in capital Reserve under law no. 413/1991 Legal reserve Reserve for treasury stock in portfolio Extraordinary reserve Retained earnings (losses) Treasury stock Gains (losses) recognised directly in equity Stock o ption reserve Net result Total Stockholders’ equity Non-current liabilities Provisions for employee benefits and other non-current provisions Non-current financial payables Other non-current liabilities Deferred tax liabilities Total Non-current liabilities Current liabilities Provisions for employee benefits and other current provisions Trade payables Current financial payables Other payablesTotal Current liabilities Liabilities held for sale TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES Note (11) (12) (13) (14) (15) (10) (27) (16) (17) (18) (19) At December 31, 2006 772 37,253 14,499,595 20,134 1,573 – 14,559,327 – 154,692 84,173 626,429 608 865,902 – 15,425,229 of which Related parties (Note 30) 10,029 2,408 84,173 146,908 At December 31, 2005 of which Related parties 676 39,658 5,117,532 5,335 4,502 – 5,167,703 5,262 – 215,652 3,075,894 799,920 495 4,091,961 – 9,259,664 7,687 3,075,894 106,007 (20) 6,377,257 1,540,856 22,591 4 46,562 24,139 6,135 (553,412) (24,139) 162,765 27,400 2,343,375 10,373,529 21) (22) (23) (10) (24) (25) (26) (27) 18,104 2,810,029 20,001 3,438 2,851,572 26,791 184,661 1,627,430 361,246 2,200,128 – 15,425,229 6,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 2,810,029 – 17,801 1,405,554 319,078 29,171 5,262 16,861 – 51,294 30,991 385,182 557,383 250,255 1,223,811 – 9,259,664 5,262 2,622 4,975 434 215,379 Fiat S. p. A. Financial Statements at December 31, 2006 243 Notes to the Financial Statements Principal activities Fiat S. p. A. (the â€Å"Company†) is a corporation organised under the laws of the Republic of Italy and is the Parent Company f the Fiat Group, holding investments, either directly or indirectly through subholdings, in the capital of the parent companies of business Sectors in which the Fiat Group operates. The head office of the company is in Turin, Italy. The financial statements of Fiat S. p. A. are prepared in euros which is the currency of the economic environment in which the company operates. The Balance Sheet and Income Statement are presented in euros, while the Statement of Cash Flows, the Statement of Changes in Stockholders’ Equity, the Statement of Total Recognised Income and Expenses and the amounts stated n the Notes are presented in thousands of euros, unless otherwise stated. As the Parent Company, Fiat S. p. A. has additionally prepared the consolidated financial statements of the Fiat Group at December 31, 2006. Significant accounting policies Basis of preparation The 2006 financial statements are the separate financial statements of the Parent Company, Fiat S. p. A. , and have been prepared in accordance with the International Financial Reporting Standards (â€Å"IFRS†) issued by the International Accounting Standards Board (â€Å"IASB†) and adopted by the European Union.The designation â€Å"IFRS† also includes all the revised International Accounting Standards (â€Å"IAS†) and all the interpretations of the International Financial Reporting Interpretations Committee (â€Å"IFRIC†), previously known as the Standing Interpretations Committee (â€Å"SIC†). In compliance with European Regulation no. 1606 of July 19, 2002, starting from 2005 the Fiat Group has adopted the International Financial Reporting Standards (â€Å"IFRS†) issued by the International Accounting Standards Board (â€Å"IASB†) for the preparation of its consolidated financial statements. On the basis of national legislation implementing that Regulation, he annual statutory accounts of the Parent Company Fiat S. p. A. as of December 31, 2006 have been prepared for the first time also using those accounting standards. As a consequence the Parent Company Fiat S. p. A. is presenting its financial statements for 2006 and its comparative figures for the prior year in accordance with IFRS. The accou nting principles applied are the same as those used in the preparation of the Company’s Balance Sheets at January 1, 2005 and December 31, 2005 and its 2005 Income Statement in accordance with IFRS; these statements are provided in theAppendix attached to these Notes, to which reference should be made. The Appendix provides reconciliations of the Company’s equity and Income Statement reported under its previous accounting principles (Italian accounting principles) and IFRS, together with Notes, as required by IFRS 1 – Firsttime adoption of IFRS. Certain reclassifications have been made with respect to the figures published in the Appendix to the 2006 First-half Report. The comparative figures for the previous period were consequently reclassified. These reclassifications have no effect on the net result or stockholders’ equity.The financial statements have been prepared on a historical cost basis, modified as required for measuring certain financial instr uments. Format of the financial statements Fiat S. p. A. presents an Income Statement using a classification based on the nature of its revenues and expenses given the type of business it performs. The Fiat Group presents a Consolidated Income Statement using a classification based on function, as this is believed to be more representative of the format selected for managing the business sectors and for internal reporting purposes and is coherent with international practice in the automotive sector.Fiat S. p. A. has elected to present current and non-current assets and liabilities as separate classifications on the face of the Balance Sheet. A mixed format has been selected by the Fiat Group for the Consolidated Balance Sheet, as permitted by IAS 1, presenting only current and non-current assets separately. This decision has been taken in view of the fact that both companies carrying out industrial activities and those carrying out financial activities are consolidated in the 244 Fi at S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial Statements Group’s financial statements.The investment portfolios of financial services companies are included in current assets in the Consolidated Balance Sheet, as the investments will be realised in their normal operating cycle. Financial services companies, though, obtain funds only partially from the market: the remaining are obtained through the Group’s treasury companies (included in industrial companies), which lend funds both to industrial Group companies and to financial services companies as the need arises. This financial service structure within the Group means that any attempt to separate current and non-current debt in the Consolidated BalanceSheet cannot be meaningful. This has no effect on the presentation of the liabilities of Fiat S. p. A. Assets are depreciated using the policies and rates described below. Lease arrangements in which the lessor maintains substanti ally all the risks and rewards incidental to the ownership of an asset are classified as operating leases. Lease payments under an operating lease are recognised as an expense on a straightline basis over the lease term. Depreciation Depreciation is charged on a straight-line basis over the estimated useful lives of assets as follows:The statement of cash flows has been prepared using the indirect method. In connection with the requirements of the Consob Resolution No. 15519 of July 27, 2006 as to the format of the financial statements, specific supplementary Income Statement and Balance Sheet formats have been added for related party transactions, so as not to compromise the overall reading of the statements. Annual depreciation rate Buildings Plant Furniture Fixtures Vehicles 3% 10% 12% 20% 25% Land is not depreciated. Intangible assets Impairment of assets Purchased and internally-generated intangible assets are ecognised as assets in accordance with IAS 38 – Intangible As sets, where it is probable that the use of the asset will generate future economic benefits and where the cost of the asset can be determined reliably. The company reviews at least annually the recoverability of the carrying amount of intangible assets, property, plant and equipment and investments in subsidiaries and associates, in order to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the carrying amount of an asset is written down to its recoverable amount.The recoverable amount of an asset is the higher of fair value less costs to sell and its value in use. Intangible assets with finite useful lives are measured at purchase or manufacturing cost, net of amortisation charged on a straight-line basis over their estimated useful lives and net of any impairment losses. Property, plant and equipment Cost Property, plant and equipment is measured at purchase or manufacturing cost, net of accumulated depreci ation and any impairment losses, and is not revalued. Subsequent expenditures are capitalised only if they increase the future economic benefits embodied in the asset to which hey relate. All other expenditures are expensed as incurred. In particular, in assessing whether investments in subsidiaries and associated companies have been impaired, their recoverable amount has been taken as their value in use, as the investments are not listed and a market value (fair value less costs to sell) cannot be reliably measured. The value in use of an investment is determined by estimating the present value of the estimated cash flows expected to arise from the results of the investment and from the estimated value of its ultimate disposal, in line with the requirements of paragraph 33 of IAS 28.Fiat S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial Statements 245 When an impairment loss on assets subsequently reverses or decreases, the carrying amount of the as set or cash-generating unit is increased up to the revised estimate of its recoverable amount, but not in excess of the carrying amount that would have been recognised had no impairment loss been recorded. The reversal of an impairment loss is recognised immediately in income. Measurement Financial instruments Investments in subsidiaries and associates are tested for mpairment annually and if necessary more often. If there is any evidence that these investments have been impaired, the impairment loss is recognised directly in the Income Statement. If the company’s share of losses of the investee exceeds the carrying amount of the investment and if the company has an obligation to respond for these losses, the company’s interest is reduced to zero and a liability is recognised for its share of the additional losses. If the impairment loss subsequently no longer exists it is reversed and the reversal is recognised in the income statement up o the limit of the cost of the investment. Presentation Financial instruments held by the company are presented in the Balance Sheet as described in the following: I Non-current assets: Investments, Other financial assets, Other non-current assets. I Current assets: Trade receivables, Current financial receivables, Other current receivables, Cash and cash equivalents. I Non-current liabilities: Non-current financial payables, Other non-current liabilities. Current liabilities: Trade payables, Current financial payables (including payables for advances on the sale of receivables), Other payables. IThe item â€Å"Cash and cash equivalents† consists of cash and deposits with banks, units with liquidity funds and other highly traded securities that are readily convertible to cash and which are subject to an insignificant risk of changes in value. The liability relating to financial guarantee contracts is included in Non-current financial payables. The term financial guarantee contracts refers to contracts und er which the company guarantees to make specific payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.The present value of the related receivable for any outstanding commissions is classified in Non-current financial assets. Investments in subsidiaries and associates are stated at cost adjusted for any impairment losses. The excess on acquisition of the purchase cost and the share acquired by the company of the investee company’s net assets measured at fair value is, accordingly, included in the carrying value of the investment. Investments in other companies, comprising non-current financial assets that are not held for trading (available-forsale financial assets), are initially measured at fair value.Any subsequent profits and losses resulting from changes in fair value, arising from quoted prices, are recognised directly in equity until the investment is sold or is impaired; the total profits and losses recognised in equity up to that date are recognised in the Income Statement for the period. Minor investments in other companies for which a market quotation is not available are measured at cost, adjusted for any impairment losses. Other financial assets for which the company has the intent o hold to maturity are recognised on the trade date and are measured at purchase price (being representative of fair value) on initial recognition in the Balance Sheet, inclusive of transaction costs other than in respect of assets held for trading. These assets are subsequently measured at amortised cost using the effective interest method. 246 Fiat S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial Statements Other non-current assets, Trade receivables, Current financial receivables and Other current receivables, excluding assets eriving from derivative financial instruments and all financial assets for which quotations on an active market are not available and whose fair value cannot be reliably determined are measured at amortised cost using the effective interest method if they have a pre-determined maturity. If financial assets do not have a predetermined maturity they are measured at cost. Receivables with a due date beyond one year that are non-interest bearing or on which interest accrues at below market rate are discounted to present value using market rates.Valuations are performed on a regular basis with the purpose of verifying if there is objective evidence that a financial asset, taken on its own or within a group of assets, may have been impaired. If objective evidence exists, the impairment loss is recognised as a cost in the Income Statement for the period. Non-current financial payables, Other non-current liabilities, Trade payables, Current financial payables and Other payables are measured on initial recognition at fair value (normally represented by the cost of the transaction), in cluding any transaction costs.Financial liabilities are subsequently measured at amortised cost using the effective interest method, except for derivative financial instruments and liabilities for financial guarantee contracts. Financial liabilities hedged by derivative instruments are measured according to the hedge accounting criteria applicable to fair value hedges; gains and losses resulting from subsequent measurement at fair value, caused by fluctuations in interest rates, are recognised in the Income Statement and are set off by the effective portion of the gain or loss resulting from the respective valuation of the hedging instrument at fair value.Liabilities for financial guarantee contracts are measured at the higher of the estimate of the contingent liability (determined in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets) and the amount initially recognised less any amount released to income over time. Derivative financial instrume nts Derivative financial instruments are used solely for hedging purposes, for the purpose of reducing foreign exchange rate risk, interest rate risk and the risk of fluctuations in market prices. In accordance with the conditions of IAS 39, derivative inancial instruments qualify for hedge accounting only when, at the inception of the hedge, there is formal designation and documentation of the hedging relationship, the hedge is expected to be highly effective, the effectiveness can be reliably measured and the hedge is actually highly effective throughout the financial reporting periods for which it was designated. All derivative financial instruments are measured at fair value, in accordance with IAS 39. When financial instruments have the characteristics to qualify for hedge accounting the following accounting treatment is dopted: I Fair value hedge – If a derivative financial instrument is designated as a hedge of the exposure to changes in fair value of a recognised asse t or liability that is attributable to a particular risk that could affect the Income Statement, the gain or loss resulting from remeasuring the hedging instrument at fair value is recognised in the Income Statement. The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in the Income Statement. Cash flow hedge – If a derivative financial instrument is esignated as a hedge of the exposure to variability in the future cash flows of a recognised asset or liability or a highly probable forecast transaction that could affect the Income Statement, the effective portion of the gain or loss on the derivative financial instrument is recognised directly in equity. The cumulative gain or loss is reversed from equity and reclassified into the Income I Fiat S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial Statements 247 Statement in the period in which the hedged transaction is recognised.Gains or losses associated with a hedge (or part of a hedge) which is no longer effective are immediately recognised in the Income Statement. If a hedging instrument or a hedging relationship is terminated, but the transaction being hedged has not yet occurred, the cumulative gains and losses recognised in equity until that time are recognised in the Income Statement at the time the transaction occurs. If a hedged transaction is no longer considered probable, the unrealised gains and losses that remain in equity are immediately recognised in the Income Statement. ividing the costs incurred by the total costs forecast for the whole construction). Any losses expected to be incurred on contracts are fully recognised in the Income Statement and as a reduction in contract work in progress when they become known. If hedge accounting cannot be used, the gains and losses resulting from changes in the measurement of the derivative financial instrument at fair value are immediatel y recognised in the Income Statement. Sales of receivables Inventory Inventory consists of work in progress on specific contracts and in particular relates to long-term construction contracts signed by Fiat S. . A. with Treno Alta Velocita – T. A. V. S. p. A. under which Fiat S. p. A. as general contractor performs the coordination, organisation and management of the work. Work in progress refers to activities carried out directly and is measured by applying the percentage of completion to the contract fee, thereby recognising the margins deriving from the work performed to date. The cost to cost method is used to determine the percentage of completion of a contract (by Any advances received from customers for services performed are presented as a reduction in inventory.If the amount of advances exceeds inventory, the excess is recognised as Advances in the item Other payables. Receivables sold in factoring operations are derecognised from assets if and only if the risks and rewards relating to their ownership have been substantially transferred to the buyer. Receivables sold with recourse and without recourse that do not satisfy this condition remain in the company’s Balance Sheet even if they have been sold from a legal point of view; in this case, an obligation of the same amount is recognised as a liability for the advances received.Assets held for sale Any amounts in this item will consist of non-current assets (or assets and liabilities included in disposal groups) whose carrying amount will be recovered principally through a sale transaction rather than through continuing use. Assets held for sale (or disposal groups) are measured at the lower of their carrying amount and fair value less disposal costs. Employee benefits The expense related to the reversal of discounting pension obligations for defined benefit plans are reported separately as part of the Group’s financial expense. Post-employment plansThe company provides pension pl ans and other postemployment plans to its employees. The pension plans for which the company has an obligation under Italian law are defined contribution plans, while the other post-employment plans, for which the company generally has an obligation under national collective bargaining agreements, are defined benefit plans. The payments made by the company for defined contribution plans are recognised in the Income Statement as a cost when incurred. Defined benefit plans are based on the employees’ working lives and on the salary or wage received by the employee over a predetermined period of service.The employees’ severance indemnity (trattamento di fine rapporto or TFR) is considered to be a defined benefit plan and is accounted for in the same way as other defined benefit plans. The company’s obligation to fund defined benefit plans and the annual cost recognised in the Income Statement are determined by independent actuaries using the projected unit credit m ethod. The portion of net actuarial gains and losses at the end of the previous reporting period that exceeds the greater of 10% of the present value of the defined benefit bligation and 10% of the fair value of the plan assets at that date is deferred and recognised over the remaining working lives of the employees (the â€Å"corridor method†); the portion of actuarial gains and losses that does not exceed this threshold is deferred. In the context of IFRS first-time adoption, the company elected to recognise all cumulative actuarial gains and losses at January 1, 2004 (date of first-time adoption of IFRS by the Fiat Group), although it has adopted the corridor method for those arising subsequently. 248 Fiat S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial StatementsThe liability for obligations arising under defined benefit plans and due on termination of the employment contract represents the present value of the obligation adjusted by act uarial gains and loses deferred as the result of applying the corridor approach and by past service costs for employee service in prior periods that will be recognised in future years. Other long-term benefits The accounting treatment of other long-term benefits is the same as that for post-employment benefit plans except for the fact that actuarial gains and losses and past service costs are fully ecognised in the Income Statement in the year in which they arise and the corridor method is not applied. Equity compensation plans The company provides additional benefits to certain members of top management and to certain employees through equity compensation plans. Under IFRS 2 – Share-based Payment, these plans are a component of employee remuneration whose cost is measured by the fair value of the stock options at the grant date recognised in the Income Statement on a straight-line basis from the grant date to the vesting date, with a counter entry to equity.Changes in fair v alue after the grant date do not have any effect on the initial measurement. The company has applied the transitional provisions of IFRS 2 and as a result the Standard is applicable to all stock option plans granted after November 7, 2002 but which had not yet vested by January 1, 2005, the effective date of the Standard. Detailed disclosures are also provided for plans granted before that date. Fiat S. p. A. Financial Statements at December 31, 2006 – Notes to the Financial Statements 249 Taxes Use of estimatesThe company recognises provisions when it has a legal or constructive obligation to third parties, when it is probable that the settlement of the obligation will require the outflow of resources and when a reliable estimate can be made for the amount of the obligation. The tax charge for the period is determined on the basis of prevailing laws and regulations. Income taxes are recognised in the Income Statement other than those relating to items credited or charged dir ectly to equity, in which case income taxes are also recognised directly in equity.Changes in estimates are recognised in the Income Statement for the period in which the change occurs. Deferred tax assets and liabilities are determined on the basis of all the temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its corresponding tax basis. Deferred tax assets resulting from unused tax losses and temporary differences are recognised to the extent that it is probable that future taxable profit will be available against which they can be utilised.Current and deferred income taxes and liabilities are offset when there is a legally enforceable right to offset. Deferred tax assets and liabilities are measured by using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. The preparation of financial statements and related disclosures that conform to IFRS requires management to make est imates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and iabilities at the date of the financial statements. Actual results could differ from those estimates. Estimates are used in accounting for depreciation and amortisation, impairment losses and reversals of impairment losses on investments, the margins earned on construction contracts, employee benefits, taxes and provisions. Estimates and assumptions are reviewed periodically and the effects of any changes are recognised in the period in which the estimate is revised if the revision ffects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Provisions Treasury stock The cost of purchase of treasury stock is accounted for as a reduction of equity. The effects of any subsequent transactions with those shares are similarly recognised directly in equity. Dividends received and receivable Di vidends received and receivable from investments are recognised in the Income Statement when the right to receive the payment of this income is established and only if declared from post-acquisition net income.If dividends are declared from pre-acquisition net income, those dividends are deducted from the cost of the investment. Revenue recognition Revenue is recognised to the extent that it is probable that economic benefits will flow to the company and when the amount of revenue can be measured reliably. Revenue is presented net of any adjusting items. Revenue from services and revenue from construction contracts is recognised by reference to the stage of completion (the percentage of completion method).Revenues arising from royalties are recognised on an accrual basis in accordance with the terms of the relevant agreement. Financial income and expenses Financial income and expenses are recognised and measured in the Income Statement on an accrual basis. Fiat S. p. A. and almost a ll its Italian subsidiaries have elected to take part in the national tax consolidation programme pursuant to articles 117/129 of the Consolidated Income Tax Act (T. U. I. R. ); the election has been made for a three year period beginning in 2004.Fiat S. p. A. acts as the consolidating company in this programme and calculates a single taxable base for the group of companies taking part, thereby enabling benefits to be realised from offsetting taxable income and tax losses in a single tax return. Each company participating in the consolidation transfers its taxable income or tax loss to the consolidating company and Fiat S. p. A. recognises a receivable from that company for the amount of IRES corporate income tax paid over on its behalf. In the case of a company

Recycling Letter

Mr. Smith: Thank you for presenting this recycling opportunity of business to the Owl Recycling Factory. The recycling and reusing of materials such as the ones that you have brought to our attention reduce pollution for our environment every day. There is a slight problem, however, with the state in which your materials will be given to us. Owl Recycling Company must first separate different substances from one another before sending them out to be reused.Since the four materials in your dump truck are ground into a fine powder, the Owl Recycling Company will need to carry out a procedure other than what we normally would use to separate them. As you know, the materials included aluminum soda cans, steel cans, milk jugs, and soda bottles. We fortunately have many useful tools in our factory such as a conveyor belt, a large tank filled with water, another tanks with sugar water, powerful magnets, and nets to skim our tanks. I would like to propose to you our plan to separate your rec yclable powder mixture.Due to the materials being on your property, we need your OK on our plan before we can begin our recycling work. Our plan is as follows: First of all, as the items are going down the conveyor belt, the magnets hanging above with attract all of the steel products. With those out of the way, we will be left with the aluminum, the milk jugs, and the soda bottles. The next step would be to put the remaining materials into the tank filled with sugar water. The sugar water has a density of 1. 5 g/cm^3, the soda bottles have a density of 1. g/cm^3, and the milk jugs have a density of . 95 g/cm^3. This means that these items would float and could be skimmed out by the nets. The remaining material, the aluminum cans (with a density of 2. 7 g/cm^3), would be left behind at the bottom because they are more dense than the sugar water. The skimmed out materials would then be placed into the tank filled with regular water. The density of water is 1 g. cm^3. The soda bottles would sink and the milk jugs would float and be able to be skimmed out by the nets.After these steps, all four materials would be successfully separated. The density of these products are a vital role in the separation of these materials. If a object or particle is more dense than the liquid it is placed in the item will sink, while if the object is less dense the item will float. This is how the water and the sugar water can help separate the materials remaining after the use of the magnets. We hope that you will accept our plan for separating your recyclable materials. Thank you for doing business with us to help preserve our environment. Read also: â€Å"Co Curricular Activities Letter†

Companies Are Incorporated And Operated On The Premises Of Agency Theory Accounting Essay

Companies are incorporated and operated on the premises of Agency Theory. The Agency Theory spells out that there should be a working relationship between the direction of the company and the investors of the company in order to maximise the stockholders wealth. The way for the traditional research of corporate administration was set up by Berle and Means ( 1932 ) , when they presented an bureau theory to divide ownership from control. This theory to divide ownership from control led to the development of the bureau theory. The early rivals of the bureau theory assert that the bureau relationship is a contract under which one party ( the principal ) engages another party ( the agent ) to execute some service on their behalf. ( Coase, 1937, Jenson and Meckling, 1976 and Fama and Jensan, 1983 ) . The bureau theory is of import, yet different writers and research workers see it from controversial positions. The footing of the bureau theory appears from the separation of direction and fundss Sleifer & A ; Vish, ( 1996 ) . Agency theory is widely used as a model in many research of corporate administration. It is used in research state of affairss where the benefit on one party ( the principal ) is dependent on the behavior and actions of 2nd party ( the agent ) . The constructs and rules of corporate administration are chiefly based upon the bureau theory. Good corporate administration requires an effectual board to take the company so that it creates wealth for the stockholders and besides to run into other stakeholders ‘ outlooks. For illustration, Barclays Board of Directors, guided by Group Chairman Marcus Agius, runs the concern on behalf of stockholders. As a scheduled company on the London Stock Exchange, Barclays meets the footings with the UK Combined Code on Corporate Governance. Barclays Executive Committee includes the most superior leaders in the concern, headed up by Group Chief Executive John Varley. It has proclaimed the enlargement of its Executive Committee and alters to its organisation and senior direction undertakings, puting its concerns to convey strongly in the developing fiscal services industry. Stockholders are placed as one of the stakeholders that directors must see throughout their determination doing on how a corporation can and should be set and implement way Jonker J, ( 2003 ) in Freeman ( 1984 ) . Although the bureau theory is expected to make a smooth and good relationship between the principal and the agent, there are some jobs which arise because of the impossibleness of absolutely undertaking for every action of an agent whose determination affects both his ain public assistance and the public assistance of the principal, ( Brennan, 1995 ) . Agency theory is concentrating at everyplace bureau connexion, in which one party ( the principal ) designate work to another ( the agent ) , who carry out that work. The theory is related with work outing two jobs that can happen in bureau relationships. The first is the bureau trouble that happens when ( a ) the yearning or aim of the principal and agent clang and ( B ) it is difficult or dearly-won for the principal to corroborate that the agent had acted appropriately. The 2nd is the trouble of hazard sharing that happens when the principal and agent have dissimilar attack in the way of the hazard. The job here is that the principal and the agent may prefer different actions because of the different hazard penchants ( Elsenhadt, 1989 ) . Barclays Capital and/or its associates may, from clip to clip, have topographic points in, and may, as chief or agent, purchase or retail the Securities. Barclays Capital shall non be lawfully responsible to any single on any base for any dead or costs go oning straight or indirectly out of the exercising of or dependence on any of the appraisal or in sequence set out herein. ( hypertext transfer protocol: //www.barx.com/legal/index.html ) From the bureau theory position, the aim of corporate administration is to guarantee that directors resort to value maximising schemes ( Shleifer and Vishny, 1997 ) . There have besides been efforts to linkthe â€Å" resource based position † and the â€Å" managerial rents theory † ( Castanians and Helfat, 2001 ) with corporate administration, in the strategic direction literature. This position maintains that corporate administration variables are the factors, which are considered cardinal and of import to the effectivity of Corporate Governance. Corporate Governance ‘s cardinal variables are closely associated with the success or failure of companies and a cardinal managerial resource or human capital and therefore a possible beginning of competitory advantage to the house. Many companies have failed in the United Kingdom and this has stimulated argument about Corporate Governance. The prostration of the Maxwell Publishing Group in the late eightiess stimulated the Cadbury Report in 1992. In the 1990s instances like the Poly Peck, BCCI and Marconi farther necessitated a demand for proper Corporate Governance. In looking at all these incidences of Corporate Governance inefficiencies and ineffectualness, it is noticeable that some instances are clearly a affair of concern planning and hapless decision-making by direction. The strategic planning is the exclusive duty of the board. This therefore points it out that the board composing plays a major function in the success or failure of the concern. As is clear now, BP could hold put in more honest to extra diminish or maintain off from the jeopardy of sloping oil into the ocean. Even with Green Project Management, if BP ‘s pick was non to pass more in a hazard response strategy, so possibly they should hold approximate the party costs necessary for a clean-up activity as they are at present commencing. ( hypertext transfer protocol: //sustainablecitiescollective.com/richmaltzman/ ) The prostration of many companies is as a consequence of fraud. Fraud could be in signifier of cover-up and deception by direction or in some instances it could be the combination of both. The WorldCom in the United States and Maxwell, BCCI and Poly Peck in the United Kingdom are authoritative and living illustrations. Another issue is the inquiry of regulative inadvertence, as highlighted in the instance of Enron. Then Combined Code was introduced in the UK to reconstruct the investor ‘s assurance following many prostrations and company failures of those large corporations. The Directors are accountable for internal control in HSBC and for reconsidering its efficiency. Events have been planned for saving assets against illegal usage or disposition ; for continuing good accounting records ; and for the consistence of pecuniary information used within the concern or for journal. Such events are considered to pull off instead than make off with the hazard of dislocation to achieve concern aims and can merely offer reasonable and non complete declaration aligned with important misstatement, mistake, losingss or fraud. The actions besides allow HSBC Holdings to unclutter its duties under the Handbook of Rules and Guidance issued by the Financial Services Authority, HSBC ‘s guide supervisory organic structure. ( hypertext transfer protocol: //www.hsbc.com )2.2.2 The Original Combined Code-1998The Combined Code is made up of three chief studies. The original combined codification incorporates the recommendations of the Cadbury, Greenbury and Hampel studi esCadbury Report ( Cadbury, Sir Adrian, 1992 )The Committee issued a scope of recommendations for good corporate administration in a Code of Best Practice. The Cadbury study addressed four chief countries viz. , Board of Directors, Non-executive managers, Executive managers and Company Accounts. The chief recommendations of the Cadbury study are explained below: ( ICSA 2003 pp 151 – 152 ) .Board of managersThe board should run into on a regular basis, supervising the public presentation of the executive direction. Control over the company should be exercised jointly by the board of managers as a whole, with a clearly recognized division of duty between the main executive and the president to avoid domination of the board by a individual person or by a little group of executive managers. The Code argued that it was desirable to divide these functions, so that the same individual did non transport out both. It did non province that the same individual should ne'er be both president and main executive, but recommended that when this did go on, there should be a strong independent component on board to move as a counter-force, with a recognized senior member to take them. The board should hold formal agenda of affairs specifically reserved to it for determination to guarantee way and control is steadfastly in its custodies and does non let power transportation to an almighty main executive or president.Non-executive managersThere should be a sufficient figure of non-executives, suitably qualified for the positions to transport weight. Non-executive managers should be able to convey independent judgement and experience to the deliberations of the that the executive managers on their ain would miss. Non-executive managers should be selected through a formal procedure and they should be appointed for a fixed term. Reappointment at the terminal of that term should non be automatic.Executive managersThe service contract of an executive manager should non transcend three old ages without stockholders blessing. The intent of this demand was to put a bound to the size of the pay-off for a manager who is forced to go forth the company, or illustration as a hapless public presentation and stockholder force per unit area. The wage of the executive managers should be decided by a wage commission, dwelling entirely or chiefly of non-executives.The histories of the companyThe board should set up an audit commission of at least three non-executive managers, with written footings of mention. The board of managers should show a balanced and apprehensible appraisal of the company ‘s fiscal place to the stockholders including a statement in the one-year study about the company ‘s abi lity to go on as a traveling concern. The managers should describe to the stockholders on the full system of the internal control in the company. The board of Lloyds group believe that superior administration is innermost to achieving the Group ‘s regulating thought of maximizing stockholder monetary value in surplus of clip. That has been highest in managers ‘ attending when seting on the values restricted in the combined codification on corporate administration issued by the Financial Reporting Council. ( hypertext transfer protocol: //www.guardian.co.uk/business/ ) A board incorporating executive and non-executive managers with wide cognition guide the Lloyds group.A The choice of managers is measured by the board and, supervising the necessities in the articles of association, they must stand for ballot by the stockholders at the first one-year general meeting following their choice and must go forth, and may acquire up for re-election by the stockholders, as a lower limit every three old ages. ( hypertext transfer protocol: //www.lloydsbankinggroup.com/ )Greenbury Report ( Greenbury, Sr Richard, 1995 )In 1995 a commission was set up to look into the wage bundle and service contracts of the managers. The concern was centered around the ‘fat cat issue ‘ . This referred to the managers who paid themselves immense wages. There was another concern sing the failure of wage bundles to supply a suited inducement for managers to execute better. The study recommended the followers are other things: Directors ‘ wage and service contrac ts ; Disclosure and Approval and Remuneration Committee ( ICSA 2003, pp 152 – 153 ) .Directors ‘ wage and Service contractsA wage commission dwelling wholly of non-executive managers should make up one's mind the wage of the executive managers ‘ .The maximal notice period in an executive manager ‘s service contract should usually be 12 months, compared to the three old ages maximum recommended by the Cadbury codification. In exceeding fortunes notice periods of up to two old ages might be sensible, by merely on occasion should a notice period exceed this. The Report included general recommendation about wage, but most of these were slackly phrased and unfastened to wide reading. They included nevertheless: Executive wage should non be inordinate, but the wage commission should offer wage bundles that are sufficient to pull, retain and actuate person of the needed quality. The public presentation related elements of the wage should make a nexus between the involvements of the manager with those of the stockholders. The public presentation standards should be ‘relevant, stretching and designed to heighten the concern affairs ‘ .Matters for the wage commission to see should include the phasing of any reward strategy s, the nature of any portion option bundle and the deductions of each component of the wage bundle for payments into the manager ‘s pension strategy. Puting an upper bound to options granted as portion of a manager ‘s wage strategy should non be issued at a price reduction. Before Greenbury, it was rather usual in the UK to allow portion options to managers with an exercising monetary value at some price reduction to the current market monetary value. Share options should be granted to managers in phased sums over clip the in individual big awards. A steadfast line should be taken on the payment of compensation to managers dismissed for unsatisfactory public presentation. In the public perceptual experience, a high wage off to an outgoing main executive can look really much like a wages for failure. The Board of Ladbrokes Plc manus over the Remuneration Committee with the liability for the scheme in regard of the executive managers and senior executives. In regard of other workers the executive managers have been manus over answerability to run within the wage scheme and program construction recognized by the Board. The Board at the advice of the Nomination Committee makes agenda to the committee, which discuss with the Chairman of the Remuneration Committee. The Committee normally request the Chief Executive and the HR manager to be present at commission conference about suggestion depicting to the payment of the executive managers, other than when their single payment is conversed. The Company Secretary takes stairss as secretary to the Committee. The Committee and Board think that it is in the security of stockholders to protect some of the betting and bet oning industry ‘s most superb and profitable individuals by given that to the full spirited wage. The Committee has judgement to believe corporate presentation on environmental, societal and administration ( ESG ) affairs when seting the wage of executive managers. The commission has warrant that ESG hazards are non being lifted by the motive agreement for senior direction accidentally interesting careless activities. ( http: //ar2008.ladbrokesplc.com/remuneration-report )Disclosure and blessingGreater revelation about the wage of single manager ‘s.The one-year study and histories should unwrap for each named manager the elements of wage, such as wages and fees, one-year and deferred fillips, compensation for the loss of office, portion options and any other long -term inducement strategy. An account and Justification should be provided whenever any component of the wage other than basic wage is pension able. A revelation should be made of nay manager with a notice period in surplus of 12 months in his her service, contract, together with an account of the grounds. The elaborate revelations on the manager ‘s wage should be checked any external hearers. The president of the wage commission should go to the one-year general meeting, where the stockholders should hold an chance for a inquiry sand reply session. The audit commission of Unilever includes a least of three or more non-executive managers ; two of them stand forA a quorum. The commission assists the boards in fulfilling their error undertakings in regard of the truthfulness of Unilever ‘s fiscal statements ; hazard direction and internal control activities ; conformance with legal and narrow petitions ; the public presentation, makings and independency of the outside hearers ; and the presentation of the internal audit intent. The commission is besides in a straight-line accountable, expose to local regulations refering stockholder indorsement, for the proposal, wages and failure to notice of the external hearers. The disclosure commission includes the Group Controller, the Chief Legal Officer, the Group Treasurer and the NV Corporate Legal Counsel. The rule of the commission is to help the boards make certain that fiscal and other information that have to be revealed openly by Unilever is revealed in a timely mode and that the information that is revealed is absolute and right. ( hypertext transfer protocol: //www.unilever.com/investorrelations/corp_governance/ )The wage commission studyThere should be a study in the one-year study and histories on managers ‘ wage policy demoing how wage compares with other, similar companies. All fillip strategies should depend on satisfactory public presentation standards. Long term inducement strategies should be submitted o the stockholders for the blessing, in progress of presenting them. The Greenbury study did non give guidelines of make up one's minding what constitutes ‘satisfactory public presentation ‘ , and as a consequence this component of the recommendations has been interpreted widely. For illustration, there were no guidelines about inducements for longer term public presentation. The study should include a statement on the company ‘s policy for allowing portion options and other long term inducement strategies, together with a justification for any going from that policy in the policy under the reappraisal.Hampel Report ( Hampel Committee, 1998 )The commission was set up in 1995 to reexamine the advancement of the execution of the findings of the Cadbury and Greenbury Committees. The Hampel study proposed the consolidation of the Cadbury study, Greenbury study, and Hampel study into one amalgamate codification. The Hampel study described its undertaking as ‘reviewing the substance and execution of the Cadbury codification.2.2.3 The revised combined code – 2003The original Combined Code was proposed by Hampel and latter it was revised and brought update by Higgs in 2003. The key alterations made by Higgs are in the alterations of the composing of managers. He proposed the addition of non- executive managers and the assignment of a senior independent executive manager.Contentss of the revised codificationThe function and duties of the board, the president and the NED ‘s are more clearly defined. The functions of president and main executive should be separate- the president should fulfill the standards for independency on assignment, but should non, thenceforth, be considered independent when measuring the balance of board rank. The president is give clear duties, including the debut of new managers and guaranting the proper flow of information to board members. No person should be appointed to a 2nd chairmanship of a FTSE 100 company. At least half of the board larger companies, excepting the president, should be independent NED ‘s. The standard for independency are defined. The board, it commission and managers should be capable to one-year public presentation reappraisal. At least one member of the audit commission should hold recent and relevant fiscal experience. In softening of the line adopted the Higgs Report, it is now acknowledged that: The president nominations commission, anticipate where the commission is sing the assignment of the president ‘s replacement. Smaller companies ( below the FTSE 350 ) may happen it hard to run into the commissariats associating to board and commission composing hence, such companies should hold at least two independent NED ‘s ( instead than a bulk ) and may hold smaller wage and audit companies. Where the companies wish to retain a NED for more than six old ages, their farther assignment will non will non necessitate to be explained in the one-year study but such be capable to â€Å" peculiarly strict reappraisal † . The function of the senior NED should be clarified and the importance of the president ‘s function in pass oning with stockholders and supplying leading to the NED ‘s emphasized. The purpose of the FRC has been to heighten board effectivity and better investor assurance by raising criterions of corporate administration. Companies are encouraged to do an early study on the stairss, which they are taking to implement the new Code, instead than waiting until their coverage year-end. In visible radiation of these amendments of the Code, companies will necessitate to transport out a comprehensive reappraisal of their corporate administration policies and processs and see how best to react. Over the following few months these responses will, no uncertainty, be the topic of considerable investor, regulative and media involvement.2.2.4 The revised combined code – 2005In 2004, the Financial Responsible Council established the Turnbull Review Group that saw the issue of the ‘Guidance for Directors on the Combined Code ‘ . The chief accent of the Turnbull study was to fasten internal control ( Turnbull Report, 1999 ) .Significance of Internal Controls and hazard directionThe significance of internal controls has been sketched in Turnbull study as follows: A dependable technique of internal control adds to preservation the stockholders ‘ spending and the company ‘s resources. A company ‘s strategy of internal control as a important duty in direction of hazards that is of import to the executing of its concern aims. Internal control smoothes the advancement of the success and competency of operations ; aids guarantee the dependableness of internal and external exposure and helps fulfilment with Torahs and ordinances. Efficient pecuniary monitoring, every bit good as the saving of appropriate clerking records, is a important edifice block of internal control. They aid certify that the company is non without cause uncovered to preventable fiscal hazards and that fiscal informations employed inside the concern and for diary is consistent. They besides add to the saving of belongings, together with the turning away and find of cozenage. A company ‘s aims, its internal constitution and the background in which it maps are repeatedly developing and, as a consequence, the hazard it tackles is repeatedly changing. A sound system of interior influence accordingly depends on a methodical and usual appraisal of the nature and sum of the jeopardy, which the company is uncovered. Since net incomes are, in portion, the recompense for booming risk-taking in concern, the ground of internal control is to help administer and form hazard suited instead than to acquire rid of it. The hazard direction system in J Sainsbury plc has been prepared all over the twelvemonth and up to the day of the month of countenance of the Annual Report and Financial Statements. Acknowledging that hazard is an intrinsic fraction of making concern, the strategy is intended to acknowledge major menaces and do available declaration that these hazards are wholly recognized and handled. It is besides maintained by a hazard policy and regulations on how to be relevant the scheme, which are connected all the manner through the Company. The success of the process is reconsidered two times a twelvemonth by the Audit Committee, which so reports to the Board. The Functioning Board maintain up a hazard registry, which is often re-examined by the Committee and officially, conversed with the Board. The registry holds the important hazards facing the Company and recognizes the possible influence and chance of the hazard at both a gross ( pre mitigating controls ) and a net ( station mitigating controls ) phase. Where the net hazard needs extra behaviors, these are decided with exact timelines. These workss are narrowly checked until they are wholly applied. ( http: //www.j-sainsbury.co.uk/ )Aim of the studyTo guarantee that concerns have sound internal controls embedded in the concern processes as the companies pursue their aims. To guarantee that the internal control remain relevant over clip in the continually germinating concern environment and to enable each company to use it in a mode which takes history of its peculiar fortunes. The guideline on internal controls requires the managers to exert judgement in reexamining how the company has implemented the demands of the Combined Code associating to internal control and coverage to stockholders.Internal control demands of the combined codificationThe rule C2 of the combined codification provinces that ‘ The board should keep a sound system of internal control to safeguard stockholders ‘ investing and the company ‘s assets. The proviso C2.1 states ‘That managers should, carry on a reappraisal of the effectivity of the group ‘s system of internal control and should describe to stockholders that they have done so. This reappraisal should cover all stuff controls, including fiscal, operational and conformity controls and hazard direction systems. Turnbull Report, ( 2004 ) . The Board of Marks and Spencer have on the whole duty for administering the concern expeditiously – confirms hazards are directed and it ‘s all under review. Internal controls and hazard direction are intended to boundary the possibility of dislocation to achieve corporate aims. Autonomous declaration is offered by the outside hearers and internal audit, who manus over their decision often to the Audit Committee. They have taken on an integrated method to put on the line direction, autonomous averment and internal controls to attest better connexion across re-examine and assessment of hazard. They are a broad concern with a wide assortment of aims and hazards. The Board is accountable for doing certain that all goes harmonizing to agreement and that describing lines and individual answerabilities are obviously mute. They besides have runing schemes and events covering the whole thing from fiscal planning and coverage, capital outgo, undertaking administration and informa tion security to concern stableness, worker public presentation direction and how they do concern. ( http: //annualreport.marksandspencer.com/governance/governance-report )2.2.5 The revised combined code – 2006This codification supersedes and replaces the Combined Code issued in 2003. It follows a reappraisal by the Financial Reporting Council of the execution of the Code 2005 and subsequent audience on possible amendments to the Code. The Financial Services Authority, as the UK Listing Authority, is obliged by legislative act to transport out a separate audience before listed companies can be officially required under the Listing Rules to unwrap how they have applied this new version of the Combined Code. This audience is expected to get down September 2006 and, capable to positions received, the Listing Rules would be expected to use to the new version of the Combined Code with consequence from some clip in the 2nd one-fourth of 2007. In the interim, in position of the limited nature of the alterations and strong support that they have received, the FRC would promote companies and investors to use the revised Code voluntarily for describing old ages get downing on or after 1 November 2006. The Code holds cardinal and subsequent doctrine and status. The Listing Rule needs listed companies to make a disclosure statement in two parts in relation to the Code. In the primary portion of the declaration, the company has to account on how it be relevant the chief beliefs in the Code. This should cover both chief and back uping values. The signifier and substance of this division of the statement are non set, the significance being that companies should hold a free manus to depict their authorization regulations in the visible radiation of the political orientation, every bit good as any peculiar state of affairs be relevant to so which have guided to a specific method. This â€Å" comply or explain † method has been in operation for over 10 old ages and the lissomeness it proposes has been extensively welcomed both by company boards and by stockholders. It is for investors and others to measure the company ‘s statements.The statement of conformityA company that ha s non complied with the commissariats of the combined codification in full throughout the period must stipulate the Code commissariats, with which it has non complied, for what portion of the period non-compliance continued and give grounds for non-compliance. This is a demand of the Listing Rules of the Stock Exchange. Ignoring the commissariats of the codification is non an option, but the company has good substantial grounds for diverting the commissariats, it is up to the stockholders to make up one's mind whether the ground given by the company is valid or non. If the managers an explain converting the stockholders that the going from the codification commissariats is in the best involvement of the company, the non-compliance is improbable to be an issue.Criticisms of combined codificationThe Higgs and Smith studies were widely welcomed by different boards like the Financial Reporting Council ( FRC ) on the revised combined codification, but besides identified some strong unfav orable judgments were simply on the functions and responsibilities of the president and the period of term of office for managers. The board suggested that the combined codification needed to set more attempt into doing the system work, there would be occasions when a company would take to utilize the â€Å" explain † option, and institutional investors should see such accounts carefully, giving grounds if they did non accept the account.

Socrates theory Essay Example | Topics and Well Written Essays - 1750 words

Socrates theory - Essay Example The next two sections of the line are of the intellectual. The third is lower forms, and the final is higher forms. Plato uses the line to differentiate between what he views as different kinds of objects and ways we can obtain knowledge. Each line gets smaller the higher it goes, and the smaller the line becomes the closer to absolute truth it becomes. To briefly summarize the story of the cave, Plato envisaged people held prisoner within a cave who only saw the shadows of objects carried by a fire. One person briefly escaped from the cave, saw the sun, and returns to tell the other prisoners what was seen. The prisoners respond by threatening the person that briefly escaped if he continued to tell them about the sun. Plato is saying that people are like the prisoners, in that all people see are illusions, shadows of objects passing by a fire. They are seeing the material world, which he believed to be a copy of the higher forms. The person who escaped was able to see the sun, which represented the highest level of truth in this world: "But, whether true or false, my opinion is that in the world of knowledge the idea of good appears last of all, and is seen only with an effort; and, when seen, is also inferred to be the universal author of all things beautiful and right, parent of light and of the lord of light in this visible wor ld, and the immediate source of reason and truth in the intellectual; and that this is the power upon which he who would act rationally, either in public or private life must have his eye fixed" (Plato). The escaped person's eyes took a while to adjust before they were actually able to see the sun; the person was able to see things at night better first, then reflections in water and such, and then finally objects themselves. This was supposed to represent a gradual increase in the realness of the objects until the sun was able to be seen. When the person went back to the cave and told the other prisoners what he saw, they rejected it. This represents how Plato felt that most people are so used to seeing what they see everyday that they can't comprehend the idea that there is something of a higher truth out there. They've never seen it, and if they've never seen it, then it couldn't possibly exist. Plato was alluding to the fact that he thought that it was dangerous for him and othe r philosophers to tell other people of the truth since most people weren't willing to hear anything of the sort. What Plato didn't realize was that he was in an even larger cave himself. He felt that there was absolute truth, and even though people might not be able to reach it, it still existed in the universe in some shape or form. He thought that because there are things called trees, we can only know that that is a tree because on some higher plane of existence there exists the perfect tree, its original and true form, and that is how people are able to recognize that trees when one is viewed. He felt that true knowledge could only be perceived a priori, and that the physical world was merely a reflection of this true world. A deconstructionist way to argue against this kind of thinking be to would say that there is no such thing as absolute truth, that thinking and language can not be separated, because without language, there is no canvas upon which to paint one's words. This viewpoint would claim that language isn't trying to reflect

Performance Appraisals Research Paper Example | Topics and Well Written Essays - 1250 words

Performance Appraisals - Research Paper Example Performance appraisal is also used in performance management where subordinates are given a chance to appraise their employer’s performance in meeting their expectations and relaying such expectations to employers (DeNisi & Pritchard, 2006). Performance management is used to manage and align organization’s resources so as to achieve the targeted goals. Therefore, the way performance appraisal is managed in an organization is a determinant of whether the organization will fail or succeed. DeNisi and Pritchard (2006) advise that every organization that plans to attain a competitive edge should put performance appraisal among its top priorities. This competitive advantage is highly depends on the way communication skills of the reviewer will guide that of the reviewed.McLean (2010) has outlined the way business communication should be fashioned when doing performance appraisal and other business undertakings. He analyzes that a business communicator should take the respons ibility of preparing several facets such as clarity, conciseness, punctuality and organization before the communication starts. In this case, if the business communicator is preparing for a performance appraisal exercise all these facets are significant so as to attain all set goals of the assessment. When all these facets are considered, the business communicator is said to be well prepared. This preparation involves selecting an appropriate topic to the goals and objectives of the appraisal, doing research on the needed information and covering the topic., putting the information in a logical sequence, and preparing for the best presentation of the interviews for appraisal. From the classical perspective, Mclean (2010) used the Aristotelian model of organization of a communicator. For Aristotle, the organization of a communicator is referred to as logos or logic. This involves making the communication and assessment logical so that it clearly leads to the intended end (Manasa & Re ddy, 2009). This process may involve filtering the needed and unwanted information based on the objectives of the whole exercise. This way, a logical performance appraisal assessment is understood by the reviewed, and they are able to offer their logical responses as well. The second part is that the message should be clear. Vague and wandering communication is not interesting listening or

OB CASE STUDY Essay Example | Topics and Well Written Essays - 1000 words

OB CASE STUDY - Essay Example This will be achieved by drawing parallel between the situation that James has found himself in and the principles driving these motivation theories According to McClelland’s theory, each employee has one of the three motivation drivers that are dominant in him or her depending on their personal aspects. Bruce’s main driving force is achievement. He would like recognition of the work he is doing at the hotel and being rewarded for it. Working twelve hours a shift requires a better pay or at least another demand since, according to Adams Equity theory, Money is not the main factor of motivation but recognition and appreciation is. Bruce’s next source of dissatisfaction in the workplace presents itself in the lack of equity in how the hotel treats its employees. Jeanette Smith, a colleague who joined the hotel at the same time as he and with the same qualifications has been sponsored to take HND in the hotel and catering. Bruce was also promised the same sponsorshi p during recruitment, but no follow-up has been made. Worse still, whenever he approaches the supervisor, he is put off using flimsy excuses about being busy or is told to bring the topic up the following year. This is contrary to what is advocated for in Sirota’s three-factor theory. ... This is what makes Bruce bitter. From this incident of sponsoring Jeanette and leaving Bruce out despite the promise made to him during the interview, it is evident that the organisation does not keep its promises and commitments. Theory X/Y as advanced by McGregor classifies such as an organisation in the X class. Organisation in the X class usually withheld likes (the sponsorship) and did not deliver on promises. The organisation is not concerned about the staff welfare and morale and is instead focussed on one goal, which was to reap maximum benefits from the customers. When Bruce was summoned to the HR department, he was informed that ‘the customers were always right’ the implication of this statement is that the organisation does not care about it employees at all and is willing to subject them to all manners of ill treatment if only to make a profit. Another characteristic of theory X organisation and indeed the Ambrose hotel is being poor listener since they did n ot listen to what Bruce had to say about the incidence. This kind of organisations issue threats to get things done, and Bruce was treated no differently. The organisation should have focussed on how to avoid recurrence of the incidence rather the blaming Bruce for the whole incidence. This would save them potential customer and employee loss. According to Maslow’s Hierarchy of needs, the ideal workplace should provide an individual with the opportunity to advance, in their career in relation to levels four and 5 of his theory. Ambrose hotel was instead curtailing Bruce from advancement through overworking him and withholding the promised sponsorship.

Homeland Security Analysis Speech or Presentation

Homeland Security Analysis - Speech or Presentation Example   The second amendment advocates for a well regulated Militia. It further declares that the right of the militia to own fire arms should not be infringed. It may be indisputable that gun ownership makes a nation safe.   However, the access of the fire arms by criminals may however be uncontrollable.   It is also questionable if the presence of a gun may cause unnecessary harm such as an ordinary argument escalating into a shooting. There are legal issues legal issues/laws that highly conflict with the policy. ii). Background Currently, the Homeland Security is one of the largest federal agencies in the United States of America. The second amendment in the US constitution states that a well regulated militia, is necessary for the security of a free nation and that the citizens have the right to own firearms. Quite often, conflict arises about how the second amendment should be interpreted. Other issues also emerge from a possibility that fire arm ownership causes increased. Ther e is difficulty in establishing a balance between ethical issues, individual's right of self-defense and national security. Each State in the US has fire arm laws clearly stated in their constitution. Most of the States have provisions for the right of an individual to own a firearm. The right to own firearms has been derived directly from the second amendment of the Unites States of America Constitution (William 1994). Most of the State constitutions give reasons for why an individual should be allowed to own firearms. Some these reasons are: a) Self-defense. Twenty four states give this as a valid reason for the use of arms b) State-defense Twenty eight states give this a proper purpose for gun use by individuals. c) Home/Property defense Ten states cite home/property defense as a reason for gun ownership. d) Family defense Five states advocate for this as a reason for gun ownership. e) Hunting and Recreation. Six states give this as another reason for fire arm ownership. The stat e constitutions do not permit confiscation of fire arms except for those used in crimes. iii). Discussion/analysis There is now written limit as to how many guns an individual can own. How many fire arms an individual can own is therefore an individual’s own business. For the sake of security, it is best that every home has access to a gun. Conflict arises from the need to have the public free of guns and the need to allow the public own guns. One can justify each position with the same point. Having guns with the people increases violent crimes and cases of murders by gunshots. On the other hand, ownership of guns increases safety within the public through reduced crimes as people are able to defend themselves. A number of legal issues do arise from the clause on gun/ firearm ownership cited in the second amendment of the constitution of the US. These legal issues are discussed below. a) Right to self defense All state constitutions allow gun ownership for reasons of self de fense. Other than these, recreation activities such as target shooting and hunting are also reasons for firearm ownership. Allowing gun ownership is thus a fundamental step in ensuring personal safety among the citizens. Though there are cases of death reported as a result of gun use in self defense, they are significantly lower to cases of life saving as a result of gun use for self defense. The gun ownership clause thus aids in increased safety among the

What Factors did Account for South Africas 1994 Transition to Essay

What Factors did Account for South Africas 1994 Transition to Democracy - Essay Example This period was associated with racial, social, political and economic segregation which led to apartheid. On February 2nd 1990, President FW Clerk released a speech that hinted to a decisive moment in South Africa’s struggle for democracy (Decalo 7-35)1. The day is highly regarded by many South Africans as it marked the commissioning of the release of Nelson Mandela (11th of February) and other detainees who had been arrested in the process of the struggle. This paved way for open negotiations. South Africa had been going through long struggles for democracy in a sub-society that chiefly consisted of whites at the helm of leadership and power and non-white sub-society with little or no influence in governance matters. Factors that led to the transition in South Africa can be classified as both internal and external. In his book, Coups and Army Rule in Africa: Motivations and Constraints, Samuel Decalo, argues that the transitions that led to democratization in South Africa we re majorly internal. The democratic changes that occurred in SA are also linked to international factors. According to Sola Akinrinade and Amadu Sesay in their book Africa in the Post-Cold War International System (eds.) the external factor that influenced transition in South Africa includes democratization in Eastern Europe and the End of Cold War. ... The limited freedom of expression saw most opposition parties denied access to the media when conducting their political functions. The media content was normally dominated by news on the authoritarian governments. This had to be curbed with revolution being the only effective tool (Decalo 20).4 Another factor suggested by Decalo is the institutional factor (25-35).5 Most of the dynamics that characterized the negotiations were institutionalized in the post apartheid period. This led to a significant stability and consolidation of democracy. The rules, norms, formal and informal principles were widely accepted by the majority making the transition process possible. According to Decalo, the most crucial dynamic that underwent institutionalization is constitutionalism whereby all political groupings and civil organizations accepted the rule of law. The democratic changes that occurred in SA are also linked to international factors. According to Sola Akinrinade and Amadu Sesay in their book Africa in the Post-Cold War International System (eds.) the external factor that influenced transition in South Africa includes democratization in Eastern Europe and the End of Cold War. The end of World War II saw a rise in global political struggle for power between the United States and its associates from the West, and the Soviet Union and the Warsaw Pact, allies of the Soviet Union in Eastern Europe (Akinrinade & Sesay, 92-128).6 According to Akinrinade and Sesay (1998), the Eastern Europe group had less developed governments democratically and in the 1980s, the Soviet Union and its Eastern Europe allies went through vigorous democratic transitions, a period that also saw East and South East Asian countries leave

Patient Information Sheet and consent form Essay

Patient Information Sheet and consent form - Essay Example The results of this test will give us more specific data regarding your fitness and cardiac health that will be used to further customise your pulmonary rehabilitation program. In 2014, all the patients, who participate in pulmonary rehabilitation at the Repatriation General Hospital, will be asked to do this maximal exercise cycle test as part of the standard pre pulmonary rehabilitation assessment. Data of this test will be used to further adjust your pulmonary rehabilitation exercises. If you participate in this research project, there is a 50% chance that you will and a 50% chance that you will not get this maximal exercise cycle test (we will decide this with the help of a computer program). If you will not be asked to do the maximal exercise cycle test, you will be offered the same pulmonary rehabilitation program that has been offered in the Repatriation General Hospital until the end of 2013. Instead of the maximal exercise cycle test, data of the walk test will be used to fit the pulmonary rehabilitation program. Programs without maximal exercise cycle test are offered in most of the centers around Australia. At the end of 2014, we will evaluate, whether the use of the extra maximal cycle test leads to further increase of the effects of pulmonary rehabilitation. If this is the case, the standard use of the maximal exercise cycle test will be continued. If not, we most probably decide to go back to the previously used pulmonary rehabilitation approach. If you agree to particiate, we will use the measurements that will be done as part of your pulmonary rehabilitation measurements (at the start, by the 8th week, and end of the program). So, you will be asked to do three sets of measurements: before the start of the program, after 8 weeks, and at the end of the program. All measurements include: completing a set of questionaires, a walking test, and breathing test. You will