The Value Of Instruments With Intermediate And Long...

TD Bank would need to take into account when managing interest rate risk the effect of on its net income and net interest income in order to evaluate the input of noninterest income and operating outlays toward the interest rate risk exposure. In particular, a bank with significant fee income should assess the extent to which that fee income is sensitive to rate vicissitudes. From a capital perspective, a bank should consider how intermediate (two years to five years) and long-term (more than five years) positions may affect the bank’s future financial performance. Since â€Å"the value of instruments with intermediate and long maturities can be especially sensitive to interest rate changes, it is important for a bank to monitor and control the†¦show more content†¦In addition, become inept of borrowing as much and will pay higher rates of interest on loans. Less business expenditure decelerate the development of a bank, resultant of declines in profit. Banks risk management uses of derivatives is risk and securities can be utilized effectively are for the purpose of risk management. Risk management is an acceptable fiduciary responsibility of banking and financial organization(s) management According to FDIC (2013, pp. 14), TD bank’s risk management plan uses derivatives â€Å"are over-the counter transactions that are privately negotiated between the Parent and the counterparty toward the contract. Exchange traded contracts transacted through organized and regulated exchanges involves principally options and futures. TD bank does not maintain material trading positions. Therefore its hedging undertakings are restricted towards managing balance sheet and interest rate risk exposure. TD bank utilize interest rate derivatives e.g. interest rate futures, forwards, swaps, options in managing interest rate risks in addition the institution use of foreign exchange derivatives, such as futures, forwards and swaps to cope foreign e xchange risks. The institution is exposed to non-trading foreign exchange risk from its investments in foreign operations when TD bank foreign currency assets are greater or less than the liabilities in that currency. The institution does not do credit default swaps, however, credit derivatives such as credit

Student Rights Case Analysis Paper Free Essays

As Americans we have certain expectations to what our rights are, in fact we have a bill of rights to ensure the rights we deserve. In most cases we consider these rights undeniable but sometimes they are deniable when you are a student on campus. Sometimes the legal line is not quite clear on rights that are afforded to students; rather the moral line is clear or not. We will write a custom essay sample on Student Rights Case Analysis Paper or any similar topic only for you Order Now In day to day adult life we expect law enforcement and lawyers to enforce our rights properly but on school grounds staff members are expected to take the role of enforcer and judge. The 4th Amendment protects Americans from unreasonable search and seizure, but students are not afforded the same right on most occasions. It has been established that searching backpacks and items of the like is permissible on school campus but Safford Unified School District #1 v. Redding delves into the more complicated area of body searches. At the age of 13 Savana Redding was called into the office of her school because she had been implicated in distribution of over the counter pain killers and prescription pain pills that were the strength of two Advil. The assistant principal and secretary went through Savana’s book bag and pockets were searched. After no pills were found on Savana’s outer layer of clothing the assistant principal â€Å"then had [the secretary]take Savana to the school nurse’s office to search her clothes for pills. After [the secretary] and the nurse, had Savana remove her outer clothing, they told her to pull her bra out and shake it, and to pull out the elastic on her underpants, thus exposing her breasts and pelvic area to some degree. No pills were found. † (Cornell University Law School, 2010) It is important to also point out that Savana’s parents were not notified until after the search and the assistant principal had not gotten details of when Savana had been distributing pill or where she kept these pills. Soon after Savana was pulled out of school and the legal proceedings began. It was decided by the Ninth Circuit Court that Savana had indeed had her 4th Amendment right had been violated. The court found that the circumstances did not warrant such an invasive search â€Å"because the suspected facts pointing to Savana did not indicate that the drugs presented a danger to students or were concealed in her underwear, [the assistant principal] did not have sufficient suspicion to warrant extending the search to the point of making Savana pull out her underwear. [the secretary] and [the nurse] said that they did not see anything when Savana pulled out her underwear, but a strip search and its Fourth Amendment consequences are not defined by who was looking and how much was seen. †. Cornell University Law School, 2010) Savana had a clean disciplinary record and the assistant principal had not even found out when the supposed pills were in Savana’s possession or how many were in her possession. The main problem with this search was that, while the measures may have been considered appropriate, there was no reasonable explanation for the extremes that the searc h went to because there was no proof a student would be hiding a non-dangerous contraband in her underwear. The 4th Amendment protects Americans from unreasonable search and seizure, but the school system only allows that protection sometimes. Schools are allowed to search backpacks but not strip search students. Some things seem obvious to outside eyes, like the fact that you shouldn’t strip search 13 year old children, but when you are in charge of 100s of children sometimes certain things get distorted. The assistant principal in this case was trying to make an example of Savana by showing how strict the school was on their drug policy, but he went too far. Risking the emotional damage a child might face from something like a strip search is never worth proving a point. Strip searching may be warranted in a situation like a student seeing another student carrying a weapon in their under garments, but in a situation where there is no real danger to other students it is extreme. As adults we expect all of our rights to be given to us but unfortunately adults don’t always feel the need to extend those rights to children. The judgment in this case could not have been fairer. Hopefully right infringements like this won’t happen to others thanks to Savana stepping forward. References Cornell University Law School.  (2010).  Legal Information Institute.  Retrieved from http://www.law.cornell.edu/supct/html/08-479.ZS.html How to cite Student Rights Case Analysis Paper, Essays

BP and Theories of Regulation

Question: Interest Theory and what of the role of regulators (politicians)? What are the motivations of politicians as regulators? Answer: 1. Introduction This study is about the public interest theory and the role of politicians as regulators, their motivations and its repercussions on the society. The argumentative study is presented through an analysis of the research publication by Jean Houdet and Charles Germaneau. The methodology undertaken is to make an analysis in three parts. The first part gives an internal introduction and regulatory theories. The second part is an argumentative presentation that argues on the role of politicians who act for the benefit of a few interest groups through an analysis of the research publication by Houdet and Germaneau. The third part presents the requirement for a standard accounting practice and regulation that will meet the changing business needs. The study concludes with the fact that politicians as regulators play according to a few interest groups while framing regulations at the cost of the society and environment. A single, unified accounting practice is required. 2. Internal Introduction The first part of the study is an internal introduction. This part makes an analysis of the financial accounting theory and the need for theories of regulations. Special emphasis is given to the role played by politicians and the factors which motivate these politicians to intervene in objectives and functioning of governing regulators. 2.1 Financial Accounting Theories Financial accounting theories are classified as normative and positive theories. 2.1.1 Positive Accounting Theory This is a positive theory which predicts and explains accounting practices and is based on the economic theory that focuses on agency relationship as they provide resources to the firm such as owners and managers, managers and debt providers. It assumes that self-interest drives an individuals action to increase his wealth and increase his self-interest. 2.1.2 Normative Accounting Theories These theories identify the objectives of GPFR such as the conceptual framework. Normative Accounting Theories are classified as current-cost accounting, exit-price accounting, and deprival value accounting. 2.1.3 Systems Oriented Theories They are of three types namely: Stakeholder Theory: It has two branches which are ethical (or normative branch) and managerial (or positive branch). It describes that all stakeholders such as employees, lenders, shareholders, customers, government and interest groups have a right to get the information provided to them. Legitimacy Theory: Organizations should ensure that their operations remain within the norms of societal requirements, are legitimate. Through disclosures in annual reports, organizations consider the rights of the investors as well as the public in general. Institutional Theory: Organizations tend to take the same form and characteristics within their field. This theory overlaps with the stakeholder and legitimacy theory. 2.2 Role of regulators The objective of accounting is to provide access to information so that interested parties may take decisions. Accountants and accounting standards require regulations. Regulations help to benefit the society in general rather than to serve a particular interest group. Regulations are required To protect public interest For healthy competition. When there are windfall profits Information asymmetries Profit skimming To correct inequitable and inefficient market practices 2.3 Theories of regulation Public Interest Theory Capture Theory Economic Interest Group Theory 2.3.1. Public Interest Theory The Public Interest Theory gives a normative justification for regulations. It depicts that regulations are formed to correct inequitable and inefficient market practices. This theory gives importance to regulations to benefit the society instead of benefitting vested interests. The government should work as a neutral arbiter(Deegan 2006) It helps in healthy competition, stabilizes the economy and ensures social objectives in policy-making Deepwater oil spill damage of BP depicts the way markets are unregulated and inefficient. It also shows that government lacks neutrality which was the main criticism of public interest theory. 2.3.2 The capture theory Organizations that come under regulations will ultimately control regulators as decisions made by regulators will impact the industry significantly. Interest groups use government regulators like politicians as protective gears to serve their own interests. 2.3.3 Economic Interest Group Theory It prescribes that interest groups become regulators wherein regulations serve particular parties for private interests such as politicians. It is also called as the Coalition-building theory 2.4 Motivation of politicians as regulators Politicians are pressurized by powerful interest groups in regulatory intervention. The incentives that politicians get from these interest groups are: To be re-elected To maintain control and power To attract support for re-election successfully Politicians compete to increase their wealth and income and help interest groups to achieve their narrow self-interests thereby shaping regulatory practices. State power is made to fit demands by interest groups. Interest groups provide political support through campaign and vote contributions. The deep-water horizon spill by BP is an example of how BP used political power to protect itself from the environment crisis it created through its oil-spill. 3. Argumentative Analysis of Research Publication This part describes the research publication that is taken for analysis. The methodology used for the analysis is through an argumentative study that supports the research publication on the Deepwater Horizon Oil Spill by Joel Houdet and Charles Germaneau. The analysis argues to support that politicians are regulators who act for interest groups and studies the motivations behind the role of politicians as regulators. 3.1 Description of the Research Publication British Petroleum has an annual profit of over $23.6 billion which is the largest for an Australian Corporation. It employs around 100,000 employees around the world. On 20 April 2010, in the Gulf of Mexico, the Deepwater Horizon rig exploded(Houdet Germaneau 2011). BP was held responsible for damages to the environment along with Transocean, MOEX and Anadarko. Bob Dudley the CEO of BP accepted responsibility for the incident stating that (Wilson Kuszewski 2011) The well integrity had failed Undetected hydrocarbons had entered the wall and ignited the Deepwater Horizon The well was not sealed by a blowout preventer It has caused 11 deaths as well as environmental havoc through hurricanes and seasonal threats to areas around the Gulf Coast (Hiscock 2012). 3.2 Argument supporting the role played by politicians as regulators The research publication on the BP deepwater oil spill exposes the environmental damage caused by the oil spill. But the corporation tried to get off the issue through manipulative activities. Regulations are required to protect the society and environment. But when regulations are manipulated, it backfires on the society. BP used political power to make the government act in its favor and act against the public interest. 3.2.1 Arguments supporting this position BP has not disclosed the ecosystem and social damages fully nor has it exposed the calculation methodologies of its $40.9 billion pre-tax charge. It was more of political bargaining that resolved the amount that determined the loss to the environment than a technical calculation says the research publication(Houdet Germaneau 2011). The White House withheld information regarding the oil spill by blocking the information to the public. Immediate impacts in the Gulf of Mexico after the oil spill could be seen with the naked eye. Dolphins averaging 200 are dying annually; shrimp fisheries have closed and deep-water corals show tissue damages are some examples of the environmental disaster. About 20 valuable categories of ecosystem services around the Gulf of Mexico have been affected(Houdet Germaneau 2011). Other events in recent years include the removal of the mining tax by Rio Tinto and BHP Billiton through political intervention and bringing in a new tax policy so that the mining industry does not pay much tax(WordPress 2011). President Obama was criticized for blocking foreign crews from helping with the clean up. 3.2.2 Result of the Deepwater Oil Spill Gulf Coast States lost around $65 billion revenue annually through tourism The commercial fishing industry from the Gulf Coast lost about 40% of its 2008 sales which was equal to $4.3 billion loss The Gulf of Mexico producing about 73% of domestically harvested shrimps was reduced by 50% after the oil spill(Smith, Smith Ashcroft 2011) British Petroleum was claimed guilty of willful misconduct and gross negligence and was asked to pay $18 billion by a federal judge for violating the Clean Water Act. BP had recorded a $43 billion towards costs for the oil clean up which is a meager amount compared to the damage BP had spent eight times the bill towards its auditing firm to block its audit file report which was against the transparency code of accounting(Cohn 2014) Interest groups who influence public policies are collective organizations who involve in lobbying and influence government ministers, parliament and party platforms so that they can change public policies in their desired direction(Vromen Cook (eds.) 2012). 4. New Accounting Standards There are about 500 organizations that are involved in standard-setting. International bodies set standards of accounting for a number of products and services. However, the problem of standardization prevails because(Edwards Walker (eds.) 2009) Benefits and costs of standards are not evenly distributed members across communities There is a problem of identifying the optimal criterion Choosing a socially optimal standard and a social welfare criterion is difficult Issues like the oil spill of BP and, the mining tax issue by BHP Billiton and Rio Tinto are some examples analyzed stating the need for new accounting standards and regulations and the role of politicians as regulators who manipulate regulations 4.1 AASB The AASB or the Accounting Standard AASB 137 has been set to ensure measurement bases and recognition criteria that apply to contingent assets, contingent liabilities, and provisions. Disclosure of adequate information in the notes helps users for decision-making. The AASB 137 gives guidance towards implementing new measures(AASB 2010). Generally Accepted Accounting Principles or GAAP are promulgated by the FASB or the Financial Accounting Standards Board and includes the SFAS or Statements of Financial Accounting Standards providing accounting guidelines. 4.2 FASB The FASB (Financial Accounting Standards Board) in the US provides rules for companies to follow in their financial reporting and to provide useful information to investors and other stakeholders for decision-making. It has issued many Accounting Standard Update (ASU) regarding share-based payment accounting, adoption of US GAAP Financial Reporting Taxonomy, lease accounting guidance, pension accounting and, measuring and recognizing of financial instruments(FASB 2016). Robert Herz, FASB chairman has criticized politicization of accounting. According to him, special interest groups provide inferior accounting methods that do not provide transparent and unbiased information of the entity. He has pointed out to the interference by the SEC and Congress on various accounting issues like lobbying, troubled debt, pensions and special purpose entities. Enron and Worldcom faced political challenges and pressures that almost shook the White House which made it relevant to insulate standard setting from politics. The failure of Wall Street and AIG; false financial reporting by Freddie and Fannie were other national issues that the US faced during the global meltdown that brought in the Sarbanes-Oxley into practice(Herz 2009). 4.3 IFRS In the UK, companies have to follow IFRS while preparing consolidated financial statements. They can also follow UK GAAP. Amendments have been made in July 2015 UK GAAP as changes in the business world required new rules and regulations. 4.4 Need for Standardization Accounting practices must be flexible and should move with the flow of the business world. (Hassler 2015). Past failures, unreasonable goals and structural weaknesses in systems have to be removed. Expectations should be set so that they are reasonably accomplished. An accounting standard that will increase the societal welfare should be identified. Standards should not only involve technical expertise, it should also consider social efficiency Regulatory bodies should not have political interference A new socially superior accounting standard will still remain imperfect and limited in the same way as a new drug for a disease has to be improved upon. 5. Conclusion Regulations play a critical role in the welfare of the society and the economy. Regulations and its framework should work in the public interest. The research publication on the deepwater oil crisis by BP shows how interest groups such as big corporations use political power to manipulate regulations in their favor. Business environment fraud has to be eliminated and steps to be taken to minimize or prevented(Parker, Sale Ussery 2006). Politicians tend to give in to short-term concerns when regulatory policies are against their personal electoral interests. As neutral transmitters of public administration, bureaucracy in politics is indispensable(Hamidi-Ravari 2014). The private interest theory argues that short-term political moves are made for vote-maximizing through modifying regulatory policies.(Mejri Wolf 2013). Bibliography AASB 2010, 'AASB 137: Provisions, Contingent Liabilities and Contingent Assets- July 2004', Federal Register of Legislation, vol V, no. 3, pp. 1-13. Cohn, M 2014, BP Demands Release of McGladrey's Audit of Deepwater Horizon Oil Spill Claims, viewed 19 May 2016, Deegan, C 2006, Financial Accounting Theory, McGraw-Hill Australia Pty Ltd, Sydney. Edwards, J, Walker, SP (eds.) 2009, The Routledge Companion to Accounting History, Routledge, New York. FASB 2016, PricewaterhouseCoopers LLP, viewed 20 May 2016, Hamidi-Ravari, A 2014, 'The Critical Role of the Reporting Entity Concept in Australian Financial Reporting', Essay Series, Research Centre, Australian Accounting Standards Board, ISSN 2202-5723, AASB Research Centre, Victoria. Hassler, A 2015, 'Accounting for the Future', Senior Honors Thesis, Honors Program, Liberty University, ISBN 1530, Digital Commons, New York. Herz, R 2009, The Accounting Cycle: Politics of Accounting Standards Setting, viewed 20 May 2016, Hiscock, G 2012, Earth Wars: The Battle for Global Resources, John Wiley Sons, Solaris. Houdet, J Germaneau, C 2011, 'The Financial Impacts of BP's Response to the Deepwater Horizon Waterspill Comparing Damage Valuation Approach and Highlighting the Need for More Reliable Environmental Accounting and Reporting', Research Gate, pp. 1-5. Mejri, M Wolf, D 2013, 'Crisis Management: Lessons Learnt from the BP Deepwater Horizon Spill Oil', Thesis, Business Management and Strategy, Macrothink Institute, ISSN 2157-6068, Proquest, Cedex. Parker, P, Sale, M Ussery, C 2006, 'Business Environment Fraud: Accounting Happenings', Allied Academics International Conference, vol 11, no. 1, pp. 65-78. Smith, LC, Smith, ML Ashcroft, PA 2011, 'Analysis of Environmental and Economic Damages From British Petroleum's Deepwater Horizontal Oil', Albany Law Review, vol 15, no. 1, pp. 1-23. Vromen, A, Cook, I (eds.) 2012, Contemporary Politics in Australia: Theories, Practices and Issues, Cambridge University Press, Port Melbourne. Wilson, E Kuszewski, J 2011, Shared Value, Shared Responsibility: A New Approach to Managing Contracting Chains in the Oil and Gas Sector, IIED, London. WordPress 2011, 'BHPBilliton: Dirty Energy', Alternative Annual Report 2011, vol II, no. 1, pp. 1-28.