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Contemporary Issues In Accounting Essay Sample

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GRE AWA Analytical Writing Issue Essay Sample Solution106

GRE AWA Practice - GRE ISSUE ESSAY 106 GRE AWA Analytical Writing ISSUE Essay Sample Solution - 106

Beauty lies in the eyes of the beholder. This saying holds true in the modern world where you can consider yourself to have an appealing personality only if it appears the same to the people who are looking at you. Everyone likes to be in the company of people who are entertaining, jovial, witty, successful, wealthy etc. Therefore, it is obvious that creating an appealing image has become very important in contemporary society. The reality behind the image is not of any consequence as people can now hide their actual selves from the eyes of the public by effectively utilizing their right to privacy.

The importance of your image in the eyes of others assumes alarming proportions if you are a person whose career depends on his image. Politicians are an example of people who fall in this category. It is imperative that such people create an appealing image for themselves or else they may not get the kind of support that they require from the society. They have to show to the world that they are honest, trustworthy and responsible. The actual truth may be far from what is being projected, but it is necessary to present an appealing image or else the politicians are unlikely to be voted into power. This is the reason why whenever elections are around the corner; there is a huge drive to dig out the past of the leaders of the opposition parties so that their images can be tarnished in some way or the other. All this happens because it is a well known fact that having an annoying or disagreeable image will adversely affect the vote bank of the politicians.

It is true that the actual reality behind the images is more important, but the bitter truth is that the society no longer wishes to see the reality. Who would be interested in dining with a host who is formal and has a disagreeable disposition? What if such a host is the owner of a business establishment? He will not be able to get the best out of his employees if they do not like him at all. They will probably switch companies the moment they get a chance. This is because no matter what the boss is like in reality, all employees would like to work for a boss who appears to be pleasing and this can be done only if the boss presents an image of himself that is appealing in the eyes of the others. Therefore, the owner of the business will have to forcibly present himself as an agreeable person who is open to discussions with his employees and is willing to make adjustments for the comfort of the people who work under him. He may be an entirely different person in reality, but it will be more important for him to create an appealing image for himself if he wants his business to be successful.

The present society is easily swayed by the pleasing attitude of others. Everybody wants to be with those people who are good to get along with and are pleasing as well. Therefore, it is evident that it is far more important to create an appealing image rather than concentrating on the reality behind that image, especially if you are keen on succeeding in life.

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PPT - Contemporary Issues Sample By Instant Essay Writing PowerPoint Presentation

Contemporary Issues Sample By Instant Essay Writing PowerPoint PPT Presentation

In order to have effective analysis of current issues the learning has considered Costa Rica as a destination. In the support of this, it can be stated that travel and tourism sector is one of most beneficial industry that provides great contribution to economic development of Costa Rica.

There are number of issues that impacts the sustainable development of travel and tourism activities within Cosat Rica. It has been spotted that the technology is considered as one of commonly used tool to boost productivity but it also impacts travel and tourism sector in negative manner.

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Issues currently driving change in the travel and tourism sector

Moreover, the natural disasters have also impacted the natural beauty of Costa Rica. It has been spotted that the Costa Rica is considered as place that covers earthquake and volcanoes occurrence aspects. Increased ratio of earthquake and volcanoes has affected the natural beauty of various attractions present in the Costa Rica.

Economic changes also impacts the working of travel and tourism sector in diverse manner. It has been identified that the government of Costa Rica has increased the tax rates on service industry which has impacted the overall operations of travel and tourism sector in negative manner.

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Number of sources has been accessed to identify the key issues that present in tourism sector of Costa Rica. In the support of this, it can be said that the contemporary issues with in industry influences the public image and their responses towards leisure activities.

It has also been identified that the government has increased tax rates on the service industry that can reduced the overall profit margin ratio of the organisation. In other words, it can be asserted that it influence inbound and outbound tourism activities within Costa Rica.

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Travellers are becoming more attracted towards tourism activities that provides exploration of new destination all around the world as it amends their experience level.

Income level advancement also motivates customers to invest more on leisure activities. This is also one of reason that are now more attracted towards the destination that present in different geographical area.

Number of business organisations has entered in sector to provide low cost accommodation services so that customers can have better satisfaction level.

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Current trends influencing the change in the travel and tourism sector

It can be said that the eco-tourism activities has also been increased in diverse manner. It is considered as one of emerging trend in the travel and tourism sector

Number of visitors visit Costa Rica to amend their experience in regard to sports. Football is one of major sport in Costa Rica so sports lover visit to destination and experience football.

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Chenoweth, J. 2009. Is tourism with a low impact on climate possible. Worldwide Hospitality and Tourism Themes. 1(3). pp.274 – 287.

Morgan, M. 2004. From production line to drama school: higher education for the future of tourism. International Journal of Contemporary Hospitality Management. 16(2). pp.91–99.

Robinson, M. and Novelli, M. 2005. Niche tourism: an introduction. Niche tourism: Contemporary issues, trends and cases, 1-14.

Briedenhann, J. and Wickens, E. 2004.

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Contemporary Issues In Managing Human Resources Business Essay

Contemporary Issues In Managing Human Resources Business Essay Introduction

What is workforce diversity in a company? Workforce diversity is when a company in today’s changing economy recruits employees regardless of their disabilities, national origins, education, height, culture and many more that we can list of. But most importantly, companies hire diverse employees so that they can diversify their customer base.

We have come to a conclusion that to achieve workforce diversity, managers will need 5 keys that will enable them to manage a diversity team in its most effective and efficient way for the company. By having the 5 keys, managers are actually going beyond good intentions in managing the diverse team. A good head start in the company actually helps the diverse team to be open minded about his leader.

The first key that managers do is to show their diverse faces. Many times when the companies are putting a job advertisement, they leave out the diverse group of people to participate it in. Customers are future job applicants that will always want to find something to relate. If managers are to do this, it will leave the customers an impact that this organization has no value of diversity. As a conclusion, managers are giving the diverse team equal respect as they are an asset for the company’s wealth.

The second key that managers do is inserting the value of diversity into practice. Managers are able to manage properly if there is a signal that shows commitment to all employees including diverse group. Managers from top to front-line must receive regular and ongoing diversity training. By putting diversity into practice, it has developed a sense of trust between the diverse group that actions speak louder than words and the managers actually care about their well-being.

The third key that managers do is making diversity goals part of project plans. Managers include workforce diversity into their project plan to determine whether the policies and programs incorporated are effective by allowing his diverse team to voice out the diversity questions during projects. This will allow the communication process to be effectively executed between diversity groups and individuals.

The fourth key that managers do is attained and retains the workforce diversity group. As commitment to diversity is often discussed in small or large meetings, managers are able to understand their differences and make it a positive advantage. One of the differences that managers are about to make is supporting the affinity groups that sent out a positive message inside and outside the company.

The last key that managers do is using the assessment tool. By using this tool, it allows individuals to understand their current degree of intracultural sensitivity. At times it will turn off people, but if you have an instrument to show them, it will make a real difference. Because when people understand their problems, solutions can be executed smoothly and willingly.

All in all, managers that can manage workforce diversity well will lead to increase in productivity of the company. This is because in order to attract the talented employees, managers make diversity as part of their processes. It can also turn diverse background into company’s assets by targeting and emerging into diverse market. Therefore, managers play a big role in opening and maintaining doors to the diverse group.

We have given 4 companies as examples of why workforce diversity is becoming the trend for companies to execute it to suit the ever changing global market.

Company 1: MasterCard Worldwide

One of the companies that its managers can manage workforce diversity well is MasterCard Worldwide. In fact, this company is ranked Top50 companies in DiversityInc that are still approaching the diversity management. The reason why these companies are filling up the survey by DiversityInc is because it provides 3 benefiting reason for the companies. First, surveys filled in by companies, automatically creates an overall blueprint that allows companies to be aware of which to focus on their diversity management. It also serves as a strategic tool as companies are able to manage and monitor on their progression. Second, the surveys can identify what are the trend and best practices in other organization. It is a guideline for companies across the globe to improve their standard of diversity management. Lastly, it forces the companies to track the important data and understand the results that affect diversity. By doing this, companies are actually putting effort into looking for space of improvements.

Over the years, MasterCard Worldwide has done its homework in making the appropriate effort to improve its diversity management. The results were astonishing as they achieve as the Top 15 companies that are managing diversity well. MasterCard Worldwide dreams of a world beyond cash, understanding of evolving payment needs of their customers and innovation solutions to meet the customer’s needs. To achieve this dream, diversity is needed because it’s the root of insight and the heart of innovation. With a team of diverse employees, MasterCard Worldwide is able to have more ideas and faster product cycles that result in high value for shareholders.

MasterCard Worldwide has a global diversity strategy that will be able to pull out the full potential of their employees. The structures of their diversity strategy are able to lead to greater innovation and productivity as employees are able to respect their individual strengths, views and experiences. The 3 strategies used in the company are talent management, brand and reputation, and business impact. MasterCard Worldwide is not only hiring people with diverse background but also train them to be constantly developing in knowledge and skills. This allows employees to be fully prepared to deliver what is given no matter what circumstances. Seeking for partnership and sponsorship to helps strengthen MasterCard Worldwide to be a global diversity company represents brand and reputation of its company. Lastly, the impact that allows the company to use it diverse talented pool to generate innovative products and service for customers’ needs. This allows the company to target varies market that they operate without having any problems.

MasterCard Worldwide executes the strategy by taking action in carrying out its implementation. The company has allow a self-governed group called the Business Resource Group that consist of individuals who come together based on interest, experience, gender and ethnicity. The individuals help identify the needs of a diverse market for consumers and providing feedbacks on new ideas that will reach out the communities. Other initiative taken by MasterCard Worldwide to execute its diversity strategy is by forming a few other groups known in the company called EAST, Latin Network and LEAD. EAST is Empowering Asian Employees for Success and Thought Leadership. This group consists of employees who are affinity to Asia, directing efforts to enhance the understanding of trends in Asia. As for Latin Network, it consists of employees who are affinity to Latin to build a connecting bridge between Hispanic consumer segment and organization. Lastly, LEAD is Lifting Employees of African Descent which provides opportunity to growth in services that influence the purchasing of this minority group.

All in all, MasterCard Worldwide believes that diversity sits at the root of innovation. By encouraging employees to express their diverse opinions and ideas brings the company to a whole new level in productivity and innovation. Making them feel empowered and recognized is what makes the company feels it has made a difference. After all, diversity workforce is not only asset for the company but it is a necessity to compete in today’s ever changing marketplace.

Company 2: Colgate Palmolive

Colgate Palmolive is a company that produces oral products such as toothpastes and tooth brushes. They have been operating for more than 200 years since 1806 and funded more than 400 products around the world.

Colgate Palmolive’s diversity not only includes obvious traits, like nationality, culture, race and gender but they also encompasses many differences that are not so easily seen, such as life experiences, religion, sexual orientation and family situations. Their concept of diversity had goes beyond that of race, creed, ethnicity and gender. The worldwide director of global diversity for Colgate Palmolive, Eugene Kelly leads the diversity of the company to place in the DiversityInc Top 50 for the fourth consecutive year and in the top 10 for the second year in a row. So how does he manage the workforce diversity in such a huge company?

He said that: The rich diversity of our people is the key to our success. "Our objective is to live our managing with respect principles by fostering an inclusive workplace that mirrors the diversity of the global marketplace. Such an environment will provide all Colgate people with the opportunity to make unique contributions to our overall business success." These objectives had led the company to work in peace and people in the company were treated equally. He also said that the company welcomed and will encourage every single individuals in the company, they value diversity and incorporate into work life so that the company will become even more effective and efficient.

Colgate Palmolive offers very good work and life benefits for their employees such as paid leave, flexible working hours, health and wellness service, and fitness facilities. Besides that, the company’s commitment to diversity includes employee network groups, community support, and support for local educational institutions. They also support community groups and organizations such as the development and advancement of diverse groups and women in the workforce.

For more than 35000 Colgate’s employees around the globe, they celebrated differences, promote an inclusive environment and value the contributions of all workers and employees. They said that the diversity of thinking had helped them to encourage creativity and innovations for the company to increase their competitive advantage in the global market world. They also believe that their diversity effort will have important impacts on the company that leads them to greater position in the world.

Finally, the recognizing and valuing the many differences are the main objective that is very vital to their culture. The way they manage workforce diversity in the company had brought them to today’s result, a worldwide huge company. Although they are a big company with many different types of employee around the world, they still manage to maintain the diversity in the company by treating everyone equally without bias.

Company 3: Dell

According to Dell, they believes that in order to be a successful company and a great place to work, their business must be able to take advantages to the similarities and differences of all team members. Dell CEO Kevin Rollins found the key to the diversity of the urban labor force business to gain a competitive advantage.

Dell believes that a fully dedicated workforce is a competitive advantage. That’s why their definition of diversity and inclusion is simple. It’s about helping Dell succeed with a global workforce that is highly talented, committed and reflective of our global customers.

Diversity is an inevitable fact. With a large global employee base at Dell, they’re a collage of races, ethnicities, religions, age, levels of disability, backgrounds, lifestyles and cultures. Inclusion is about respecting, recognizing, honoring, embracing and ultimately, take advantages the differences they born with to build a better community, workforce, workplace and world.

At Dell, the managers are committed to building a diversity environment that is reflective of a diverse global marketplace and an inclusive culture where everyone is occupied. The managers efforts to ensure that each employee is heard and valued and that personal strengths and perspectives or view are assets to the company, rather than being left at the door.

To achieve Dell’s vision for an even more diversity and inclusive global company, the managers established a global diversity strategy, which is reviewed regularly by the Global Diversity Council. Their strategy focuses on:

•Strong, visible leadership commitment and clear expectations of accountability for diversity and inclusion.

•True commitment to diversity and inclusion built into their business practices.

• Completely integrate these behaviors in their talent and performance management.

In addition, more than 1500 executives, the managers and employees in Dell are participates on cross-functional teams to ensure that diversity is integrated into every aspect of their business. These teams exchange best practices, promote accountability and align Dell's diversity initiatives with divisional and corporate objectives across the company.

Dell diversification initiatives focus on three businesses needs to avert the workforce diversity in their company:

•To provide a great customer experience, which requires a workforce reflective of our customers.

•To access the best and brightest talent the marketplace has to offer.

•To focus on global expansion with employees who understand the various cultures, giving us a competitive advantage.


Since the beginning, the Ford Motor Company has taken phases to make sure that it is workforce has replicated the public’s in which it organizes business. In that short period of 5 years, Ford Motor has well-known production or sales operations in Canada, United States, France, and United Kingdom and also at some of the parts in Russia, Eastern Europe and Scandinavia. Today, Ford Motor Company remains to attract highly experienced faithful factory that imitates a comprehensive spectrum of race, culture, ethinicity, age, perspective, physical ability, religion and sexual orientation.

Supplier Diversity and Empowerment

Supplier diversity program in Ford Motor Company inspires large dealers to work with a minority-and women- owned businesses to allow diverse populations over wealth creation. Moreover, Ford has joined with CVM Diversity Question to generate an communicating ,internet based reporting program called M-Tier, which is the following evolution in Supplier Diversity Reporting. This system will path diverse supplier outgoings at all levels of Ford’s value chain and assist Ford traders in launching their own Tier 2 reporting programs. Since the foundation of their Supplier Diversity Empowerment, they have obtained over $35 billion of goods and services from minority –and women-owned business enterprises.

Employee Resource Groups (ERGs)

More than a decade, their ERGs have delivered outreach, support and improvement to employees who share ethnicity, religion, race, disabilities, life experience or backgrounds. ERGs hold educational and cultural events and care many diversity-related efforts such as college campus recruiting, summer internship program, collaborate with the company to produce a spectacular annual Black History Month and many more programs that they are doing now. The membership is open to all Ford employees. They also had created lots of association such as Ford Asian-Indian Association, Ford Chinese Association (FCA), Ford Employees dealing with Disabilities (FEDA), Ford Parenting Network (FPN) and many more association. All these associations are fully supported by the Ford employees and the public.

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Contemporary Issues in Finance

Contemporary Issues in Finance

Published: 23rd March, 2015 Last Edited: 23rd March, 2015

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The very first steps towards international accounting standards date back to 1959, when a founding partner of a major European firm of independent accountants urged that work begin on this subject (Choi, Frost, & Meek, 1999). Since then, the work of accounting and non-accounting organizations culminated in the setting up of the International Accounting Standards Committee (IASC) in 1973. In 1997 the IASC changed its structure to "bring about convergence between national accounting standards and practices and high quality global accounting standards."

Convergence with International Accounting standard (IAS) and International financial Reporting Standards (IFRS) has gained momentum in the recent years due to the global financial landscape and significant transformation of accounting policies. The changes in the business climate have increased global competition which results as market-based economies, and rapid technological changes. Capital markets operate more efficiently when investors have access to high quality financial information

For integrating the economy of the countries all the countries are going in the direction of adopting IAS and IFRS to make themselves comparable in the global economic environment. It is essential for a company to prepare the financial reports as per Generally Accepted Accounting Principle (GAPP) of the country. But since the business of the companies are not limited up to home country it is essential to make the financial accounts as per the GAAP of operational country and then it is required to reconcile all such reports for the purpose of consolidation as per GAPP of the country to which the parent belongs. This increase the cost of preparing the financial report and also it is difficult to make the segment of the report in as per the GAPP of all countries. For effective evaluating the position of the company the Accounting standards followed must be same in both the countries, and for this purpose the International Accounting Standards were issued by the International Accounting Standard Committee. (IASC)

IASC was the body which issued International Accounting Standards from 1973 to 2000. In 2001 IASC was replaced by International Accounting Standards Board (IASB). IASB is independent body and consists of members from nine different countries around the globe having variety of functional backgrounds.

International Financial Reporting Standards (IFRS), the new version of International Accounting Standards (IAS) are issued by International Accounting Standards Board (IASB). The International Accounting Standards Committee (IASC) Foundation, based in London, is the oversight body of the IASB and is governed by 22 trustees, chaired by former US Federal Reserve chairman. The IASC Foundation is funded by contributions from the major accounting firms, private financial Institutions and industrial companies throughout the world, central and development banks, and other International and professional organisations.

IASB adopted all the existing IAS (numbered 1 to 41) issued by IASC (before 2001) and decided that it will make amendments in the present IAS and all future standards issued will be called IRFS. IASB is reviewing the IAS and has amended as well as replaced some of them with new IFRS. Several interpretations of Standards have also been issued. Broadly, IFRSs refers to the entire body of IASB and IASC pronouncement.

Over 70 Countries have either approved or mandated application of IFRS for their domestic listed companies including Austria, Finland, France, Russia, Sweden, Germany, UK, Australia, Singapore, Taiwan, and Mauritius etc. till 2009. With the emergence of global financial markets, IFRS is increasingly becoming relevant and overshadowing regional accounting standards.

The purpose of this IFRS is to ensure that the financial statements under IFRS an entity, as well as their interim financial reports concerning a portion of the exercise covered by such financial statements, contain high quality information and provides benefit to users.

Globalisation of IFRS is also necessitated as global financial markets are integrating and investors are looking for more consistency in the financial reporting of multinational corporations.

The Asian crises of 1997-1998 marked an impetus for supporting international accounting standards, where many countries either adopted international accounting standards in their entirety, or with minor changes. Several companies in countries that did not implement international accounting standards, adopted international accounting standards nonetheless for their own financial statements in order to be able to compete in international markets (Hansen, 2003). Similar accounting adoption steps have been taken by Australia, Canada, and Russia, as well as in several countries in the Middle East and North Africa.

In India, The Institute of Chartered Accountants of India (ICAI) has announced that IFRS will be mandatory in India for financial statements from the periods beginning on or after 1 April, 2011. The existing accounting standards will be revised to make them compatible with IFRS. The banks are also not so far in accepting the new IFRS. The Reserve Bank of India has stated that for preparing financial statements all the banks have to adopt IFRS and make their records as per it from the periods beginning on or after 1 April, 2011.

The Adoption of IAS and IFRS will change the accounting policies in India, which look like a big task but it will be a benefit to Indian companies now their financial records can be comparing with anyone in the world. The Multinational Corporation can also free from making different-different annual records as per the Local GAPP of their working country. It will also give our professional a chance to be global. They also get the new countries for work new job opportunities.

International Financial Reporting Standards have been widely adopted by countries across the world and this has been achieved by transposing International Financial Reporting Standards into local regulations with the convergence.

Forensic Accounting Practices

Opportunity and Greed are the driving forces for theft. It is easy to put enough zeroes behind a number, and it's amazing how equally flexible morals become. After all how many years in prison would anyone do for accumulate a half a billion dollars illegally in his bank account?

With increasing white collar crimes, for example in the case of Enron, WorldCom, Parmalat, insurance scams, and computer crime, there is a need for a new breed of accountants- Forensic Accountants (FAs). With some magnifying glasses, computer print-outs, and calculators, this glamorous profession of forensic accounting is prospering with every passing day. Certainly Forensic Accounting is the best way to curb white-collar frauds. it is also known as Designing Accountants or Fraud Buster. Forensic Accountants are certainly a threat to the green eye shade image of the companies. In the aftermath of fraud FAs assess the accounting systems and accounts presentation if the numbers reflect reality.

In India the formation of Serious Fraud Investigation Office is the landmark creation for the Forensic Accountants. Growing cyber crimes, failure of regulators to track the security scams, series of co-operative banks bursting - all are pinpointing the need of forensic accounting, irrespective of whether we understand the need or not. This statement is enough for the chartered accountants in India to foray in this field. It is new child on the block. Both CBI and CID do the forensic accounting work. Until recently there was no separate community in India but now the movement of forensic community is gaining the momentum.

In addition to the specialized knowledge about the techniques of finding out the frauds, patience and analytical mindset is also needed. We have to look beyond the numbers and grasp the substance of the situation.

Mayur, certified by the ACFE in 2001 brings out a bi-monthly magazine White Crimes on forensic accounting is of the view that in India, it(forensic accounting) is still a new concept", and adds that even banks are hesitant in approaching certified fraud examiners, and are mostly dependent on their internal auditors.

The growing number of regulator and the administrative agencies will demand the services in the nature of forensic practice. The Chartered Accountants in India is making plans to explore this field. Chartered Accountants are going to find essentially a type of forensic practice. The changing nature of the Accounting and Auditing & assurance standards also confirms this.

Financial crimes

Wipro Spectra mind lost the telemarketing contract to Capital one due to an organized crime. The telemarketing executives offered fake discounts, free gifts to the Americans in order to boost the sales of the Capital one. The internal audit revealed the fact and surprisingly it was also noted that the superiors of these telemarketers were also involved in the whole scenario.

In India CA can encompass the use of accounting and auditing skills and will use computers as an audit tool. C A's can be trained in forensic accounting. Forensic accounting Techniques includes data mining, fraud detection, Generalised Audit software(GAS), Audit Command Language(made by ALL Service Limited), Interactive data extraction analysis (ALL Dimension services ltd, 2002), etc. ACL is widely accepted in India for Private equities and other stakeholders as an effective tool to verify the accounts of companies and present a clear and transparent picture of the financial health of the entity concerned.

Gordon (1999:1) observed, "The world does not trust financial reports." ,Forensic accountants are now in a position to turn the Satyam scandal into an opportunity during tough times for getting jobs. A latest report suggests that the country needs more than 6,000 such professionals to check corporate frauds in India.

There is an acute shortage of forensic accounting skill sets in India and the demand of forensic accountants to fight corporate frauds in the country effectively increasing day by day. There are only 400 forensic accountants in the country though India loses approximately $40 billion because of frauds. There is one forensic accountant to handle the fraud worth $0.1 billion (Rs 480crore). If the shortage continues then India might witness some really serious frauds.

An effective accountant must be bright, honest, personable, passionate about his work and technically competent. The FA's task is exciting yet dangerous and the time is ripe for this career as this is the need of the hour.

Economic Value Added

Performance Measurement systems was developed as a means of monitoring and maintaining organisational control, which is the process of ensuring that an organisation pursues strategies that lead to the achievement of overall goals and objectives (Nanni, et al 1990). PM is a forward-looking system of measurements it plays a vital role in every organisation and assist managers to predict the company's economic performance and spot the need for changes in operations. It can provide information required for making day to day decisions and judgments and enable the organisation to ensure that they are achieving continuous improvements in their operations in order to sustain a competitive edge over the competitor and to increase market share and profits.

EVA (Economic Value Added) was developed by a New York Consulting firm, Stern Steward & Co in 1982 to promote value-maximizing behavior in corporate managers (O'Hanlon. J & Peasnell.K, 1998). It is a single, value-based measure used to evaluate business strategies, capital projects and to maximize long-term shareholders wealth. It is assumed under EVA that Value has been created or destroyed by the firm during the period can be measured by making a comparison between profits and the cost of capital. The outcome of it helps the managers to take the decision and withdraw value-destructive activities and invest in projects that are critical to shareholder's wealth, which will lead to an increase in the market value of the company.

According to Management Guru Peter Drucker "EVA is a vital measure that reflects all the dimensions by which management can increase value. EVA is the financial measure that comes closer than any other measure in capturing true economic profit of an enterprise.

EVA is a new measure of corporate surplus that should be shared by the employees, management and shareholders. It focuses on clear surplus in contradiction to the traditionally used profit available to the shareholders. It is used by companies as a performance indicator and also as a basis for executive compensation. Surplus should be derived by deducting cost of capital from profit before interest but after tax.

EVA = NOPAT - WACC X Capital Employed.

Where, NOPAT means Net Operating Profit before Interest and after Tax.

WACC represents Weighted Average Cost of Capital.

Capital Employed = Net Block + Trading Investment + Net Current Assets.

It is free from subjective assumption that needs to be adopted while identifying profit and cost of capital. Cost of equity is derived on the basis of Capital Assets Pricing Model (CAPM).

Advantages of EVA

EVA is more than just performance measurement system and it is also marketed as a motivational, compensation-based management system that facilitates economic activity and accountability at all levels in the firm. Stern Stewart reports that companies that have adopted EVA have outperformed their competitors when compared on the basis of comparable market capitalization.

EVA eliminates economic distortions of GAAP to focus decisions on real economic results, it provides for better assessment of decisions that affect balance sheet and income statement or tradeoffs between each through the use of the capital charge against NOPAT. IT decouples bonus plans from budgetary targets and covers all aspects of the business cycle it aligns and speeds decision making, and enhances communication and teamwork

EVA helps create a mindset throughout the organization that encourages managers and employees to think and behave like owners. It often leads to increased shareholder value through increased capital turnover. EVA has been helpful because it forces companies to pay attention to capital employed and especially to excess working capital. The advent of this concept has provided flexibility to the management in measuring the performance of their business operations. EVA is not a wealth creator; it only measures value.

The experience of some of Indian companies is good after they have implemented EVA, especially NIIT Limited where EVA has doubled after introduction of the concept itself.

Brewer, Chandra & Hock (1999) cite the limitations to EVA like it does not control for size differences across plants or divisions ,is based on financial accounting methods that can be manipulated by managers, may focus on immediate results which diminishes innovation, provides information that is obvious but offers no solutions in much the same way as historical financial statement do Also, Chandra (2001) identifies the two limitations of EVA like it emphasizes on improving business-unit performance, does not encourage collaborative relationship between business unit managers and EPS, PAT and RONW is still not a perfect measure

Brewer et al (1999) recommend using other performance measures along with EVA and suggest the balanced scorecard system. Other researchers have noted that EVA does not correlate as strongly with stock returns as its proponents claim. Chen & Dodd (1997) found that, while EVA provides significant information value, other accounting profit measures also provide significant information and should not be discarded in favor of EVA alone. Biddle, Brown & Wallace (1997) found only marginal information content beyond earnings and suggest a greater association of earnings with returns and firm values than EVA, residual income, or cash flow from operations.

The EVA based performance measurement system which is helpful to company in decisions related to the choice of strategy, capital allocation, merger & acquisitions, divesting business and goal setting. So Management Accountants have to successfully transform traditional management system into value based management system.

Mergers and Acquisitions

The process of mergers and acquisitions has gained substantial importance in today's corporate world. This process is extensively used for restructuring the business organizations. In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well-known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy.

The different Indian sectors that have resorted to mergers and acquisitions in recent times, telecom, finance, FMCG, construction materials, automobile industry and steel industry are worth mentioning. India is now one of the leading nations in the world in terms of mergers and acquisitions.

The merger and acquisition business deals in India amounted to $40 billion during the initial 2 months in the year 2007. The total estimated value of mergers and acquisitions in India for 2007 was greater than $100 billion, which is twice the amount of mergers and acquisitions in 2006.

The Latest Trends in India

Acquisition of foreign companies by the Indian businesses has been the latest trend in the Indian corporate sector. There are different key factors includes Favorable government policies, buoyancy in economy, additional liquidity in the corporate sector, and dynamic attitudes of the Indian entrepreneurs are behind the changing trends of mergers and acquisitions in India.

The Indian IT and ITES sectors have already proved their potential in the global market. The other Indian sectors are also following the same trend. The increased participation of the Indian companies in the global corporate sector has further facilitated the merger and acquisition activities in India.

Major Mergers and Acquisitions in India

HindalcoIndia deal of acquiring Canada based Novelis involved transaction of $5,982 million. Tata Steel deal of acquiring Corus Group plc amounted to $12,000 million. Dr. Reddy's Labs deal of acquiring Betapharm worth of $597 million. Ranbaxy Labs deal of acquiring Terapia SA amounted to $324 million. Suzlon Energy acquired Hansen Group through a deal of $565 million. The acquisition of Daewoo Electronics Corp. by Videocon involved transaction of $729 million. HPCL acquired Kenya Petroleum Refinery Ltd. The deal amounted to $500 million. VSNL acquired Teleglobe through a deal of $239 million.

When it comes to mergers and acquisitions deals in India, the total number was 287 involved monetary transaction of US $47.37 billion (out of it 102 cross country deals with a total valuationof US $28.19 billion) from the month of January to May in 2007.

The mergers and acquisition (M&A) activity in Asia Pacific region dropped nearly 30 per cent to $160 billion in the first quarter of 2009 as against $223.21 billion in the same period a year-ago, as per data compiled by global deal tracking firm Zephyr.

India is among the top five countries in the region in terms of the number of M&A activities in the first three months of 2009 with 331 deals, even as the deals saw a 72 per cent decline from the same period a year-ago.

The country had witnessed 571 deals in the first quarter of 2008, while they had been as low as 176 in the fourth quarter, the report revealed. Japan is at the top with as many as 904 M&A deals in the first quarter of 2009, followed by Australia (636), Republic of Korea (620), China (611) and India with 331 deals, the Zephyr quarterly M&A report published by BvDep pointed out.

However, in terms of the value of the deals India is at the 8th place with deals worth $6.85 billion in the reviewed period.

In value terms, Australia has emerged at the top with M&A deals worth $ 35.06 billion, followed by Japan ($ 33 billion), Korea ($ 24.3 billion) and China ($ 22.9 billion).

The metal mining industry topped the table this quarter with Aluminium Corporation of China's pending purchase of $ 7,200 million worth of convertible bonds in Australian Rio Tinto. Interestingly, all the top ten deals in the first quarter were worth over $ 2,000 million with seven being minority stakes and three being acquisitions.

The proposed merger between BhartiAirtel and South Africa's MTN would be India's biggest-ever M&A deal. The potential value of the BhartiAirtel-MTN deal would amount to $23 billion. MTN and its shareholders would acquire around 36 per cent economic interest in BhartiAirtel, while, the Sunil Mittal-promoted BhartiAirtel would acquire 49 per cent stake in South African telecom giant MTN.

The largest M&A transactions involving an Indian company until now Tata Steel-Corus: $12.2 billion On January 30, 2007, Tata Steel purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal, cumulatively valued at $12.2 billion. The deal is the largest Indian takeover of a foreign company till date and made Tata Steel the world's fifth-largest steel group.

Indian Potential of M&A are Good R&D base with access to low-cost, high-quality human resources, Proven capability for chemical process development, raw materials availability within the country, SEZs have no import tariffs and provide income tax concessions, Vibrant downstream industry and a large number of manufacturers provide options, for joint ventures, alliances and acquisitions.

The chemical industry in India is likely to be on the high growth phase in the next few decades with growth rates at around 15% per annum growing at double the Asian growth rate and five times the worldwide growth rates. The Investment opportunity is expected of over $75 billion in the next 10 years, India requires large investments in chemical plants, this industry is expected to grow to an $80 billion industry by 2010, Share of the global industry could increase from 1.9% (2001) to 3.9% (2010), India is also expected to be the 3rd largest polymer consumer by 2010, The sector has been witnessing domestic pharma companies on a major acquisition spree in Europe.

This shows that there are major acquisition opportunities in India not only in the Pharma sector but in the Chemical industry as a whole.

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