Senin, 10 Maret 2008

Australian market dives to 18-month low

Australian market dives to 18-month low

The Australian share market has hit an 18-month low in early trade.

The benchmark ASX 200 index was down as low as 5,090 - 1.5 per cent lower than the opening value - in reaction to falls in the US and Europe overnight, as well as record oil prices and general fears about slowing economic growth.

The US Dow Jones and London's FT 100 were both more than 1.2 per cent down, and Japan's Nikkei index has also opened down over 0.5 per cent at 12:05 AEDT. (image downloaded from :

Continuing concerns about the stability of some US financial firms, and their exposure to bad subprime debts, have also worried world markets.

The latest target was investment bank Bear Stearns whose shares were attacked on rumours of a cash shortage.

The bank strenously denies the rumours, but this did not stop their share price falling 11 per cent.

Local investment banks have followed that lead lower with Macquarie down 3.5 per cent and Babcock and Brown down 2.7 per cent at 12:25pm AEDT.

The ASX was down 0.9 per cent to 5,135 at 12:30pm AEDT.

Miners suffered the biggest falls with their index more than 3 and a half per cent lower on fears that slowing economic growth would hurt demand for mineral resources. (taken from :

Senin, 03 Maret 2008

Assessing the Use and Usefulness of Current Financial Resources for Civilian Military Spouses

Most military installations have the resources available to operate as an independent community. However, immediate access to these resources tends to promote societal disconnection for the civilian military spouse (CMS). This disconnection leaves the CMS with many misconceptions when it comes to certain life skills. The Department of Defense (DoD) has attempted to answer these concerns with the introduction of well being plans to open the door for the CMS to seek personal financial assistance. However, this study found that CMSs pre, ferred to seek financial assistance from formal, nonmilitary resources such as professional financial planner/ counselor and informal financial resources such as family and other military spouses. The findings provided implications for marketing, financial literacy program consistency, and military retention.
Personal financial management is one life skill that has become a concern for military and government officials (Department of Defense [DoD], 2003; Keane, 2001; Tiemeyer, Wardynski, & Buddin, 1999; Varcoe, Lees, Wright, & Emper, 2003). This personal problem is not only costing the military financially but also costing the military its integrity and reputation (Government Account, ing Office [GAO], 2005). In an effort to address these concerns, the Department of Defense (DoD) has initiated three well being programs that encompass various aspects of well being in order to enhance military living. These areas include life skills, community development, child, care, deployment readiness, and transition assistance in addition to a financial management component. The first initiative introduced was the Strategic Well Being Plan in 1999. The goal of this plan was to reduce the economic and emotional strains on the family (Keane, 2001). The personal financial management component in this plan was to provide assistance to military families that would ensure successful management of their financial responsibilities and maintenance of financial stability (Keane, 2001). The second initiative was the Social Com, pact in 2002 as a partnership between the DoD and its military families. The financial management component of this initiative was an improvement from the original Strategic Well Being Plan because it implemented a per, sonal financial management requirement (Deputy Assis, tant Secretary of Defense, 2002). This requirement stated that all military members must attend a financial education course at the member's first duty station assignment. The third initiative was the Financial Readiness Campaign in 2003 with the Department of Treasury. Its objective was to target the junior enlisted personnel and provide their families with a chance to learn more about managing personal finances. The third initiative focused more on financially preparing military members for deployment, reassignment, and separation (Chu, 2003).
Even though financial readiness programs (DoD, 2003) and pre,deployment services are available, the effective, ness of such programs is unclear. As such, knowledge of the financial literacy level of military members and their spouses is lacking (Military Family Resource Center, n.d.). The critical questions are do civilian military spouses (CMS) seek help from financial service organizations when they have financial problems, and what is the avail, ability and effectiveness of that help? For married military members, their families' financial well being is directly related to the military member's level of financial literacy (Burrell, Durand, & Fortado, 2003). However, there is limited research that exists on the financial literacy level of the CMS or on the relationship between the CMS's financial literacy and the family's financial well being.
Problems may be associated with reaching the CMS through these three initiatives. First, the introduction of more than one initiative, literally back,to,back, sends a message of policy inconsistency. Furthermore, the differ, ent branches are adopting one or a combination of the three initiatives and adapting it to meet the needs of their military personnel. This not only leads to conflicting information on guidelines and financial management techniques, but also lends to over,saturation in communi, cation channels with misinformation, particularly for those military spouses who depend on external resources (e.g., Web sites) to address their financial questions. Second, all three initiatives target the primary service member (Chu, 2003; Deputy Assistant Secretary of Defense, 2002; Keane, 2001), leaving the CMS out of the loop. This may leave the spouse with an unmet need and, possibly, an inconsistent message with each service branch (Varcoe et al., 2003). Third, although traditional military culture and negative stigmas associated with help,seeking at military bases have not previously been introduced in the literature as factors that may prohibit the efficacy of personal finan, cial education on military personnel and their families, they have been found to be an issue (Varcoe et al., 2003). Two factors served as the justification for the current research. First, personal financial difficulties have affected the everyday lives of military personnel and their families (Knox & Price, 1995; Tiemeyer et al., 1999). Financial stress could cause poor physical and emotional health (Bower, 2003; Skinner, Zautra, & Reich, 2004; Taffel, 1997) and social difficulties (Crocker & Luhtanen, 2003; Szostak, 1998). Studies have also shown that worker productivity (Cunningham & Hyman, 1996; Garman, Leech, & Grable, 1996; Joo & Grable, 2000) and job satisfaction (Leung, Siu, & Spector, 2000; Szostak, 1998) are influenced by personal financial management. Military families are no different. Both the CMS and military member can experience a decrease in work productivity and job satisfaction when they are burdened with financial strain.
Second, the U.S. government pays the bill to recruit and train new military personnel. The need for recruits and the expense of compensating for failed recruitment and nonre, tention could increase military spending (GAO, 1998). Family life satisfaction has great bearing on whether or not the military member will continue employment with the military or separate from it (GAO, 1998). The GAO (2005) announced that the excessive financial mismanage, ment by military personnel is an expense accrued by the U.S. government. Because the cost to train and recruit the employee is a substantial cost to the government (GAO, 2005), military officials have a vested interest in determin, ing if the CMS's financial help,seeking behavior might impact these financial losses. By surveying CMSs on their financial help,seeking behaviors, more effective informa, tion channels could be introduced to satisfy the financial literacy needs of the CMS, and the expense to the U.S. government could be minimized. Therefore, the purpose of the current study was to address the delivery method of financial literacy programs to accommodate the CMS based on financial help,seeking theory. Military members with access to a computer may search the Internet for personal financial tools. Therefore, CMSs from the four major military branches were surveyed to profile their financial help,seeking behaviors in an effort to simplify the delivery channels for financial information and tools. Financial help,seeking was defined as an action initiated by an individual to seek advice from a secondary source on a personal financial issue (Grable & Joo, 2003). CMSs have numerous resources available to them for seeking information and assistance on personal financial issues. These include the personal financial management counseling offices available on large military installations, Internet sites, civilian personal financial planners and financial counselors, ombudsmen, family, and friends. Yet, with all the resources available, CMSs may not be seeking assistance with personal financial issues. Informa, tion provided by results of this research will allow military and government officials to identify possible steps to improve financial literacy of the CMS, including suggest, ing more effective financial education delivery channels. (taken from :


In the first of two articles, Louise Ross explains the development of an open, collaborative and effective new organisational form: Business 2.0.
Developments in IT have brought about a new mechanism for doing business e-commerce - but they've had even more significant consequences than the introduction of new processes and channels. They have also affected organisational design and the way that enterprises view their customers and competitive landscapes.
The old business model of hierarchies, spans of control and intellectual capital protection is being replaced by a new model of chains, spans of communication and knowledge-sharing. Some organisations are mutating into new forms, often characterised by their lack of boundaries. In the same spirit as we talk about Web 2.0 - the "new" way of using the internet - we might refer to these emerging forms as Business 2.0. CIMA's Innovation and Development team is made up of staff, academics and CIMA members who meet both face to face and virtually to access knowledge from outside the organisation's boundaries practising a number of the approaches that I'm going to describe. The team is interested in how IT developments such as free internet telephony and open-source software are changing organisational practices and structures so as to promote the sharing of information and the formation of relationships with sometimes unexpected parties.
The team has identified three innovative new organisational behaviours, which can be grouped under the following headings: * "Boundaryless" behaviour, which is the focus of this first article.
* New competitive paradigms.
* Acting globally.
Everyone agrees that the business world is becoming Increasingly complicated. In the ubiquity stakes, the "change is the only constant" cliché ranks right up there with "people are our most important asset". There is a school of thought which advocates that companies shouldn't try to predict change; they should simply be as flexible as possible and adapt to whatever comes. In their article "Where value lives in a networked world" (Harvard Business Review on Advances in Strategy, Harvard Business School Press, 2002), Mohanbir Sawney and Deval Parikh write that many of the upheavals taking place seem to have a common cause: the changing nature of intelligence in networks. They argue that, although this sounds abstract, it has immediate effects on how companies organise their workforces, market their products and manage their relationships. Companies that are aware of these influences will be able to exploit change instead of merely reacting to it.
Sawney and Parikh identify two ways in which new trends in network intelligence are reshaping organisations and industries. First, they say that intelligence is "decoupling" - ie, being pushed to either end of a network. second, they argue that it is becoming more fluid and modular. Front-end IT (laptop PCs) has to compromise on processing power and data storage, but when it is networked it can access powerful back-end IT (the servers that store and process huge amounts of data). The front-end IT can thereby be liberated to focus on specialised functions that have been customised to suit particular customer-facing tasks. In this way, back-end intelligence is consolidated into a shared infrastructure at the centre, while front-end intelligence becomes far more variable, taking many forms according to the needs of the field operations. Sawney and Parikh believe that most economic value will be created at the ends of networks.
As this divergence occurs, organisations recognise that it creates separate businesses of infrastructure and customer relationship management, which require different strategies and capabilities. At the back end, for example, economies of scale and the benefits of interconnections will tend to consolidate generic processing and storage functions. At the front end, the company can create highly customised connections to customers. This polarisation of IT is another example of the shift away from the middle, which is also seen in the "delayering" of middle management in many organisations.
The trend for information to become increasingly modular and fluid allows firms to pool their resources in temporary or permanent alliances - Sawney and Parikh call them "plug-and-play enterprises" - in order to exploit specific market opportunities. Owning the intelligence takes a back seat to orchestrating it. Just as the conductor of an orchestra receives most of the plaudits, more money is made by those who co-ordinate the interactions of a network of partners.
Sawney and Parikh propose four strategies to allow companies to benefit from the trends they have observed:
* Arbitrage: moving intelligence to areas where the cost of maintaining it is lower.
* Aggregation: combining formerly isolated intelligence into a shared pool that networked front-end users can access.
* Rewiring: creating a common information "backbone" to connect intelligence. * Reassembly: reorganising intelligence into customised packages for customers.
They write: "Put simply, the digitisation of information, combined with advances in computing and communications, has fundamentally changed how all networks operate, human as well as technological. That change is having profound consequences for the way work is done and value is created throughout the economy."
The CIMA Innovation and Development team first considered practices in the "boundaryless behaviour" category - where organisations had recognised the need to become more flexible to meet customer needs and had engaged In offshoring, outsourcing, joint ventures, supplier partnerships or other collaborative relationships. They viewed themselves differently from traditional organisations, which define themselves with reference to hierarchies - eg, a group and its subsidiaries - or to legal and employment relationships. They considered themselves part of a network, working (often in an interdependent manner) towards the common goal of satisfying their shared customer.
This is an emerging field that has been largely unresearched so far. Commentators have used a variety of terms to describe such networks. These include virtual teams, strategic sourcing, outsourcing, offshoring, emergent organisations, inter-organisational networks, "co-opetition", knowledge exchanges, business ecosystems, electronic markets and organisations without boundaries. A conventional organisation interacts with parties including its employees (inside the organisation), customers (outside), suppliers (outside) and competitors (definitely outside). These relationships, which obviously influence the organisation, are often illustrated by the value chain model (see Study notes, page 48). Within this analogy, concepts are fairly robust - eg, the status of being either part or not part of the chain, or the idea that a limited number of participants are playing predictable roles as specific links. For the boundaryless organisation, I prefer the image of a cloud or galaxy. This represents a more amorphous population of independent partners whose boundaries are flexible and permeable - if you can spot them at all.
The table on the opposite page is a useful model for describing the range of different strategic alliances, as proposed by leading strategy writers Gerry Johnson and Kevan Scholes (adapted from a 1991 diagram by Anil Gupta and Harbir Singh). CIMA considers issues concerning the management, ownership and protection of assets to be relatively important, which is why it mentions them in its call for research on the subject (see "Further information", page 40).
Much has already been written about supply chains and outsourcing, so arguably the most interesting arrangements among those listed in the table are networks and opportunistic alliances. The organisations that have made the daunting decision to share hitherto protected knowledge assets have learned from the open-source model of Linux and the internet itself. Both of these applications could have earned their creators a fortune, but they were shared in the public interest instead. It was a company from a very traditional industry, mining, that made one of the first brave and successful leaps. (taken from :


Bob Scarlett explains the concept of life-cycle costing and discusses its applications in investment decision-making and financial control.
The idea behind life-cycle costing (LCC) is simple enough. When calculating the cost of some activity - for example, developing a new product or installing a new IT system - it's important to consider not only the initial cost but also the total cost to be incurred over the lifetime of that product or system. The lifetime cost is likely to include equipment maintenance, the replacement of parts, staff training, system upgrades and so on. The cost of doing anything is rarely a one-off, up-front expenditure. More commonly, undertaking some action involves a continuing commitment over the whole life of the action and its outcome. LCC is a financial concept that has applications in strategy, decision-making, performance evaluation and management control. It forces managers to face the full consequences of actions that they have undertaken or are considering. In common with most other modern management techniques, it has been criticised. For example, Jim Seymour wrote in PC Week (September 1989) that LCC was being "used by hardware and software vendors... as a kind of now-you-see-it, now-you-don't sophistry to 'prove' that something that looked outrageously expensive wasn't really so pricey after all". But the wider view is that assessing what something truly costs other than on a life-cycle basis is a fiction.
The following simple example shows how LCC analysis can be applied to decisionmaking. Consider the purchase of a new truck, which will be required to travel 50,000km a year. Two suitable models are available: the Trubrit and the Kamikaze. The Trubrit is priced at £36,000 and has a life of six years. Its running costs are 15p per km in the first year, rising by 3p per km in each successive year. The Kamikaze is priced at £20,000 and will last four years. It requires a new engine costing £5,000 to be fitted at the end of the second year and has running costs of 20p per km in year one, rising by 5p per km in each successive year. The "cost of money" is 12 per cent. Which truck should we buy?
This is an LCC analysis problem. Our decision may be guided by calculation of an annualised equivalent cost (AEC) for both options (see table, left). The AEC is an equal annual amount paid at the end of each year that gives the same net present value (NPV) as the cost profile for the option over its whole life-cycle. In the Trubrit's case, the option AEC is the NPV (£80,231) divided by the six-year cumulative discount factor taken from annuity tables (4.111). In the Kamikaze's case, the relevant NPV (£64,678) is divided by the four-year cumulative discount factor.
The key point to note here is that, although buying the Trubrit involves the greatest initial expenditure, it turns out to be the best option when the whole life-cycle costs of the two alternatives are considered.
This example illustrates the proposition that the initial cost of doing something is usually far less than the future costs that you must commit yourself to paying. With the Trubrit, you pay £36,000 initially, but are then committed to paying a further £67,500 over the next six years.
In the case of product design it is usual for 80 per cent of a new product's lifetime costs to be committed at the moment it leaves the drawing board - and that's before any actual production costs have been incurred. This gives rise to the saying that good design is cheap and the cost of bad design only becomes apparent late in a product's life cycle.
The truck example can also be used to illustrate the control dimension of LCC. In buying capital equipment and making other business decisions, the full cost of doing something is often properly controlled only at the point of the decision. After that point, control over costs rarely amounts to more than monitoring expenditure. For example, the running costs of a Trubrit may be submerged into the category of general overheads. The effective cost control of activities such as IT operations, premises maintenance or transport services can be impossible using conventional management accounting systems.
Under an activity-based costing system, such activities are identified separately and associated costs are collected and reported. Furthermore, it may be possible to split individual activities into life-cycle phases. In this way, activity costs can be reported under life-cycle phase categories and compared with relevant benchmarks to assess performance.
In the Trubrit's case, the performance cost benchmark would be higher for the later stages of its life-cycle. Note that the forecast running costs for year six are double those for year one. If you are told that the actual running costs incurred for the activity of operating a Trubrit in one particular year are £10,000, then you cannot judge whether this is a good or bad performance unless you know where in the life-cycle it falls. If performance benchmarks don't distinguish between different phases in the life-cycle, meaningful cost control is impossible.
LCC is often described as an activitybased technique. Academic accountants have recently popularised the use of the term activity-based life-cycle costing. The wider concept of LCC has influenced policy in many areas of management in both the public and private sectors. For example, the term "whole-life costing" is often used in the design of public-private partnership (PPP) projects. A 2002 government publication on the subject offered the following advice: "Take the long-term view - remember the whole-life cost of the project and specify the outcome you want to achieve."
Procurement practice in the public sector traditionally separated the construction of a facility from its operation. If the government wanted a new prison, school or hospital, it would prepare a specification for its construction and invite contractors to tender, usually accepting the cheapest bid. Once built, the facility would be handed over to the government, which would make separate arrangements for Its operation. This approach had one main problem: the successful contractor was incentivised to build the facility at the lowest possible initial cost, but It might not be too worried about the long-term operating costs. The design of a school entails detailed decisions that affect its future heating, lighting, furnishing and maintenance costs. The contractor may compromise on these in order to minimise its construction costs. The PPP approach requires the contractor's long-term involvement. Typically, the specification is for service delivery over the life of the facility (ie, output), rather than for its initial cost (input). The contractor will build the facility and continue to own and maintain it while charging the government rent. In its extreme form, such an arrangement might involve a contractor building a prison and then operating it on behalf of the government.
The long-term, integrated nature of PPP service contracts encourages contractors to consider the relationship between the design of a facility and its whole-life operating costs. LCC analysis is an essential element in a variety of modern management practices, of which PPP is only one example.
P1 further reading
R Booth, "Life-cycle costing - activity-based costing examined", Management Accounting, June 1994.
Life Cycle Costing, The Office of Government Commerce (
Green Public Private Partnerships, The Office of the Deputy Prime Minister (
Bob Scarlett is an accountant and consultant.
Copyright Chartered Institute of Management Accountants Dec 2007/Jan 2008Provided by ProQuest Information and Learning Company. All rights Reserved (


Candidates have tended to struggle with questions on US Gaap versus IFRS. The examiner for paper P8 offers her guidance on the topic.
The P8 learning outcome "identify major differences between IFRS and US Gaap" has been tested twice so far. The November 2005 paper asked candidates to cite examples of the two systems' differences and similarities, while a question in May 2007 asked for a brief paper describing the progress of the convergence project. These questions were answered badly in most cases - many candidates didn't even attempt an answer. The biggest weakness was a sheer lack of knowledge. Some candidates were unaware that convergence was occurring at all. In May 2007 they were asked to describe how it was progressing, giving examples. Many did the opposite by listing the continuing differences between IFRS and US Gaap. Others repeated the few relevant points that they did know in different guises - also a waste of valuable exam time.
The use of the verb "identify" in the learning outcome means that the outcome is pitched at the level of "comprehension" in CIMA's hierarchy of learning objectives. This is a relatively low level, which means that advanced analytic and evaluative skills are not required to tackle questions in this area. So, although the differences between the sets of regulations are often extremely complex, for the purposes of P8 it's necessary only to know the key issues. At a meeting in Norwalk, Connecticut, in 2002 the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) agreed to start the convergence project. The Norwalk agreement set out their plan to reduce the differences between IFRS and US Gaap. Today, a list of standards, exposure drafts and discussion papers bears witness to their progress. Some May 2007 P8 candidates could name a few of their joint projects, but many could not.
Despite all this work, there are still many differences that are likely to last. The one that everyone seems to know is that the use of LIFO as an inventory valuation method is permitted under US Gaap but not under IFRS. Some others were described in a Study notes article in the June 2007 issue of FM*.
Currently, foreign issuers listed on the US markets must submit a reconciliation of their financia statements with US Gaap to the US Securities and Exchange Commission (SEC). But the SEC recently proposed dropping this rule, so it's likely that filing a reconciliation will no longer be required by 2009. Even more striking is an SEC proposal, now out for comment in the form of a "concept release", to allow US companies to file statements using IFRS rather than US Gaap. It's unlikely that many of them would take advantage of this change, but the fact that it's being discussed at all indicates how much more acceptable IFRS has become in the US.
Chapter 21.3 of the Financial Analysis CIMA Learning System covers the background to convergence, the Norwalk agreement, current developments and the key remaining differences. For the 2008 exams, any changes made up to and including December 1, 2007 are examinable. So, as long as you use the latest edition of the learning system, you shouldn't have a problem. For those students who wish to impress the examiner with the depth of their knowledge - and the examiner will be impressed - several other information sources can be consulted.
The following web sites are useful:
* The International Accounting Standards Board:
* The Financial Accounting Standards Board:
* The US Securities and Exchange Commission:
* Deloitte, which produces comprehensive updates:
* PricewaterhouseCoopers, which has published a booklet entitled "Similarities and differences - a comparison of IFRS and US Gaap":
Once they have gained an outline knowledge of the key issues, candidates should aim to improve this by keeping their eyes open for news of developments and consulting some of the above sources.
The May 2007 post-exam guide included the following observation: "Candidates should be aware (but, on the evidence of this paper, are mostly not aware) that this is not a trivial or marginal topic. On the contrary, it could be argued that the issue of US Gaap/IFRS convergence is the most important contemporary issue in financial reporting."
The question of whether or not the learning outcome is likely to be examined again in the foreseeable future should, therefore, be relatively easy to answer.
* One of the differences identified in that article is no longer valid: changes in accounting policy under US Gaap are now handled in the same way as they are under IAS8 - that is, there is a requirement to make a full prior period restatement. (Thanks to Malcolm Greenbaum of BPP Professional Education for highlighting this development.)
P8 further reading
C Gowthorpe, Financial Analysis CIMA Learning System (2007 edition), CIMA Publishing, 2006.
Copyright Chartered Institute of Management Accountants Dec 2007/Jan 2008Provided by ProQuest Information and Learning Company. All rights Reserved.