Fair Value Accounting Essay Example for Free

Fair Value Accounting Essay Topic: To what extent is â€Å"Fair Value Accounting† an effective method in measuring the values of financial instruments in financial statement? In recent years, the breakout of global financial crisis has raised controversial debates about whether or not fair value accounting (FVA) is an effective method in measuring the values of financial instruments (Laux Leuz, 2009). As two main accounting standards around the world, both International Financial Reporting Standards (IFRS) and US Financial Accounting Standards (FAS) have adopted FVA as an accounting method to judge the values of some financial instruments (Mala and Chand, 2011). This essay will argue that although FVA can provide timely and transparent price information to the users of accounting information in some cases, there are potential problems of FVA in measuring the values of financial instruments on account of unreliable evaluation models, biased prices in inefficient markets and a negative price contagion effect. There are three main parts in this essay. Firstly, it will give the definition of FVA and then it will analyze why the effectiveness of FVA may be limited from three aspects, namely unreliable evaluation models, biased prices in inefficient markets and a negative price contagion effect. At last, it will consider the pros of FVA regarding the timely and transparent information it provides in some cases and analyze the pros. According to Financial Accounting Standards 157, fair value accounting can be defined as â€Å"an accounting method to measure the values of assets and liabilities based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date†. That is to say, FVA relies on the actual market prices of the financial instruments and records the exact market prices on the financial statements. In fact, FVA replaces historical cost accounting (HCA) with the development of accounting standards (Boyer, 2007). Compared with FVA, historical cost accounting can be described as an accounting measurement of values based on the original or historical cost when the company got the assets or liabilities. For example, a company bought a stock for 50 pounds last year. In this year, the price of the stock increases to 100 pounds. Under FVA, the company should record the value of  the stock at 100 pounds this year while 50 pounds will be recognized under HCA. As the replaced FVA has been regarding as accelerating the global financial crisis, it draws a lot of attention in respect of its potential weaknesses in the accounting field. Firstly, the model to estimate fair values of financial instruments in illiquid markets seems to have insufficient reliability (Laux Leuz 2009 and Mala Chand 2011). If the markets for the identical or similar financial instruments whose values need to be evaluated are active, the available prices can be used to evaluate the fair values of them (Laux Leuz 2009). However, if the markets do not exist, which means the the markets are inactive or illiquid, the fair evaluation model is needed to estimate the fair value of the financial instruments (Ball 2006). Specifically speaking, the model to evaluate fair values of financial instruments rely on the future cash flow of the financial instruments and borrowing rate of the company. The future cash flow can be described as the future cash inflow (income) and outflow (expense) brought by the financial instruments whilst the borrowing rate of a company can be considered as the cost of capital which can be invested in other investments rather than the financial instruments. The users of the evaluation model should firstly predict the future cash flow of the financial instruments and then use the borrowing rate of the company to calculate the present fair values. Ljiri (2005) states that using model to estimate the values of financial instruments provides significant discretionary power to the users and gives uncertainty, which may influence the objectivity of the valuation of financial instruments. Indeed, the same financial instrument could be evaluated differently on account of different estimation of future cash flows and distinct borrowing rate. Because the users of the evaluation model have the power to forecast the future cash flow, different users may have distinct estimations of the same financial instrument based on their perspectives of its future profitability. In addition, different companies may have different borrowing rates due to distinct industries involved. Thus, the above two uncertain factors affects the objectivity of the fair evaluation of the financial instruments, which limits the reliability of the evaluation model. Secondly, the inefficient markets could distort prices, which has a negative effect on the basis of FVA (Laux Leuz 2009). An inefficient market can be defined as a market in which the prices of financial instruments can not be measured accurately due to the inefficient information it provides (Aboody et. al 2002). Additionally, Lim and Brooks (2010) review the empirical literature about the evolution of market efficiency over time and find that the market cannot be always efficient and market inefficiency can be easily caused by investor irrationality and liquidity problems. That is to say, the market prices of financial instruments could be distorted by biased behaviors of investors, such as overconfidence or overreaction to a stock, and liquidity problems, such as illiquid market for a long-term bond. What’s more, the distorted prices can not reflect the real values of financial instruments, which makes FVA lose the reliable basis to measure the fair value of financial instruments. Therefore, the biased prices in the inefficient markets tend to the appropriateness of fair evaluation of financial instruments. Thirdly, Laux and Leuz (2009) argues that FVA could enforce negative price contagion in the financial markets, which has been considered as the main cause of rapid spread of global financial crisis. It is argued that FVA has stimulated the financial crisis in a vicious spiral and leading to the spread and depth of the financial crisis (Begtsoon 2011, Allen and Carletti 2007, Appelbaum 2009 and Jones 2009). To be specific, after financial crisis broke out, the liquidity of financial instruments’ markets dried up, which means very few trades of the financial instruments existed in the markets (Begtsoon 2011). As a result, the market pricing mechanism became dysfunctional because the prices should be evaluated from very few trades, which resulted in low prices of financial instruments (ibid). In turn, the low prices put pressure on the financial statements of some financial institutions in terms of assets depreciation under FVA (Allen Carletti 2008). In order to keep capital requirements, the financial institutions had no choice but to sell assets at low prices, which led to lower prices of financial instruments in the markets and stimulated further assets depreciation on other financial instruments’ financial statements under FVA  (Plantin et al. 2008a). To sum up, the prices in the market could negatively influence the evaluation of financial instruments under FVA and at the same time, the evaluation of financial instruments under FVA could have a further negative effect on the market prices, which forms a vicious circle that can speed up the price contagion and fluctuations. Nevertheless, supporters of FVA believe that FVA can provide transparent and timely information for the users of accounting information (Brown 2008). As Hughes (2009) says, the function of FVA is â€Å"like that of the thermometer-it mirrors reality, it does not create it†. Since FVA can reflect what is happening in the market on the financial statements immediately, it allows the information users to get easy access to the most timely and transparent market information. In addition, Hinks (2009) argues that the useful information provided by FVA allows the investors and regulators to approach to the up-to-date position of financial institutions and encourage them to make corrective decisions. Indeed, it cannot be denied that FVA can provide prompt and transparent price information in some cases. However, it is not always the case which contributes FVA to an effective measurement to value financial instruments. First of all, in an illiquid or inefficient market for some financial instruments, even if FVA could provide timely price information of the financial instruments, the timely information provided is unreliable, which leads to the uselessness of the timely and transparent information provided by FVA. Secondly, even though the financial instruments have an active or efficient market, FVA cannot result in increased transparency of information in financial statements as expected (Krumwiede 2008). Thirdly, under FVA, timely price information would lead to volatility of financial statements (Barth 2004). The continuous volatility of financial statements causes confusion for the users of accounting information and raises the company’s cost to keep accounts. Hence, although FVA could offer some timely and transparent information to the users, these information limits to some extent because of unreliable information, limited transparency and volatility of financial statements. In conclusion, this essay has discussed three aspects limiting the effectiveness of FVA to measure the values of financial instruments, including evaluation model, inefficient markets and price contagion effect. In addition, it also considers the pros of FVA in terms of timely and transparent information provided in some cases. It can be concluded that even though up-to-date and transparent information could be provided by FVA occasionally, the effectiveness of FVA to measure the values of financial instruments has been limited due to the unreliable evaluation model, distorted prices in inefficient markets and a negative price contagion effect. Because of word limit, this essay cannot cover the detailed application of FVA to specific kind of financial instrument. However, the above discussion can clearly show that FVA has some general problems in measuring the values of financial instruments. Based on above analysis, it can be suggested that the problematic aspects of FVA could be improved or revised by providing more clear explanation and more specific regulations by the constitutors of accounting standards and for some specific financial instruments with illiquid or inefficient markets, it is better to use some other methods to measure their values.

Bradstreets The Author to Her Book :: Bradstreet Author to Her Book Essays

In Anne Bradstreet's poem "The Author to Her Book," the controlling metaphor is the image of a baby being born and cared for. This birth imagery expresses the complex attitude of the speaker by demonstrating that the speaker's low regard for her own work and her actions are contradictory. The first effect of the birth imagery is to present the speaker's book as a reflection of what she sees in herself. Unfortunately, the "child" displays blemishes and crippling handicaps, which represent what the speaker sees as deep faults and imperfections in herself. She is not only embarrassed but ashamed of these flaws, even considering them "unfit for light". Although she is repulsed by its flaws, the speaker understands that her book is the offspring of her own "feeble brain", and the lamentable errors it displays are therefore her own. When the speaker's book is returned by the publisher, the speaker's attempt to "wash (the) face" of her child only worsens the image of herself that she sees in it. Washing the child, rubbing off a blemish, and stretching its joints but failing to improve his imperfections all contribute to an image of the speaker rewriting her book, desperately trying to raise its quality up to her high standards, but discovering in the process that its imperfections and errors run too deep to be corrected, as do her own. In the second half of the poem, a new facet of the speaker's attitude is displayed. In line 17, she wants to improve the ugliness of her "child" by giving him new clothes; however, she is too poor to do so, having "nought save homespun cloth" with which to dress her child. In the final stanza, the speaker reveals poverty as her motive for allowing her book to be sent to a publisher (sending her "child" out into the world) in the first place. This makes her attitude seem to contradict her actions.

Reflective Review of Youth Work Practice

My decision to study E131 Introduction to Working with Young people was based on my desire to cement my experiential learning by developing my knowledge of theoretical concepts through academic study. I have worked with young people for seven years, and the majority of my training thus far has been practice based. My current role is as a group worker in a therapeutic community for children and young people. The therapeutic community is a residential provision with a specialist education and therapy centre for children and young people with attachment disruption and trauma leading to social and behavioural difficulties.We also work with children displaying sexualised and self-harming behaviours. The therapeutic milieu which exists within the community is underpinned by an attachment focussed approach and provides stability for chaotic behaviour and a disregulated emotional state. The therapeutic provision is underpinned by an integrated team approach which includes Child Psychotherapy , Clinical and Forensic Psychology, Educational Psychology, Child and Adolescent Psychiatry, Social Work and Counselling.Prior to beginning Open University’s E131 Introduction to Working with Young People, and due to the highly specialised nature of the work I do, I held the belief that I had little to learn relating to youth work. The most significant, and surprising, realisation I experienced whist working through the module was that I will never and can never know everything there is to know about youth work. In fact, the very nature of my role within the Therapeutic Community may have narrowed my view of young people to only the most damaged individuals, which in turn has narrowed my outlook on the issues that young people are faced with today.A young person commented ‘†¦you can’t talk about â€Å"understanding young people† – all young people are different, so you would have to know different things to understand them all’ (The Open University, 2005, Study Topic 3, pg 5). This statement impacted me in a way that I didn’t expect. Not only in my working life, but also in my view of young people in general. When working with the most damaged children in society the danger is that all young people become viewed as potentially violent, harmful and not to be trusted.This view is contradictory to the very nature of youth work as set out in the National Youth agency’s Ethical Principles, which states ‘youth workers have a commitment to treat young people with respect, valuing each individual and avoiding negative discrimination’ (Harrison and Wise, 2005, pg 20). Although I do not feel my practice is discriminatory, my somewhat insular views on young people, and preoccupation with high risk behaviour in my working life, may have negatively influenced my ability to ‘value the individual’.This is an area that, due to my learning throughout the module, I have made a concerted effort to address. I have renewed my efforts to look past the negative behaviour and the diagnoses to view the young people I work with as individuals who are not defined by their circumstances. This has had a positive impact on my working practice as I continue to reflect on ways in which I can be more open to the individual needs of the young people with whom I work. The learning throughout the module has also given me the opportunity to come to terms with and challenge another view I was unaware I held.I had given little consideration to the view I held on youth work in general other than my belief that the work I do is not technically ‘youth work’ but rather more specialised and important. This is a view I now consider to be arrogant and unhelpful. Howard Williamson states that the ‘public perception of youth work is still largely locked into ideas about youth clubs and table tennis and pool’ (Williamson, 2005, pg 70), and prior to beginning this module I mus t admit that I held a similar misconception.However, Williamson’s account of his own experiences of youth work and the positive impact it has on the lives of young people has altered my perception. Although this has not directly impacted on my working practice, it has enabled me to view my role as a group and individual worker within the wider context of youth work, and realise the importance of broadening the experiences of the young people with whom I work, through valuing the opportunities on offer within the wider community.The shift in my view of youth work has also enabled me to consider the challenges that exist in my own work setting. One of the fundamental principles of youth work is the ‘voluntary principal’ (Jeffs, cited in The Open University, 2005, Study Topic 12, pg 5). This is described as ‘the kind of work where young people can choose not to take part†¦Ã¢â‚¬â„¢ (The Open University, 2005, Study Topic 1, pg 5). Within the setting of a t herapeutic community, and specifically within the context of my role as group worker, I find it difficult to describe the opportunities on offer for the young people as voluntary.For example, the therapeutic, social and educational workshop programme, which young people who are resident in the therapeutic community have access to during the school holidays, is considered to be voluntary, although it is incentivised through access to days out and rewards for attendance. However, some of the young people resident within the community may consider that their placements are not voluntary, making it difficult to consider any of the interventions on offer as such.Although I accept that youth work in its truest form should be voluntary, it has been difficult for me to accept that the work that takes place with the young people within the Therapeutic Community is any less valuable. The young people with whom I work are the most damaged in the country and would not be able to access the type of support they need without what Mark Smith calls coercive forms of participation (Smith, cited in The Open University, 2005, Study Topic 2, pg 31). Should we let them choose to avoid forming relationships and realising their potential forever simply to retain a puritanical view of what youth work is supposed to be?Or should we, as adults, do everything in our power to prevent these young people, who society has already failed, become casualties of that failure? Mark Smith also introduced the idea that targeting ‘at risk’ young people for focussed work as a negative progression in terms of youth work in its purest form. Smith feels that ‘the identification of specific target groups has the potential to lead to a narrowing of the diversity of young people worked with’ (2003, cited in The Open University, 2005, Study Topic 2, pg 30).Although I agree with Smiths statement, I am also aware of the funding limitations which exist, and am a strong believer that the most vulnerable or ‘at risk’ young people in society are a priority in terms of accessing the support they need. Despite my desire to defend the work I do, and its less than voluntary nature, my practice has been positively impacted by reflecting on the reason why the ‘voluntary principal’ is so highly regarded in relation to youth work.Within the process of planning the therapeutic, social and education groups within our group work programme, I have realised the important of extensive consultation with the young people to ensure the topics covered are relevant to them; something they are interested in and value, rather than what I feel they need or want. In this regard, I have been able to ensure that group participation is due to values that are closer to the concept outlined by the ‘voluntary principal’ than the idea of coercive participation.The impact of my shift in perspective on the young people within the therapeutic community is ye t to be evidenced, but the planning process for the groups has been much more focussed. Bruce Tuckman (cited in the Open University, 2005, Study Topic 6) has identified the five stages in a group’s life, his concept names the stages as Forming, Storming, Norming, Performing and Morning. As a group worker this concept underpins my practice in that my observations of the group and its progress are linked to identifying the stage in which the group is functioning and adapting my role as facilitator accordingly.Due to the chaotic nature of the client group within the therapeutic community the group regularly revisits the Storming stage of group development. In Study Topic 6, (The Open University, 2005, pg 27) this stage has been identified as a time when ‘there may be overt or covert antagonism towards the group worker’. When reflecting on my role as group facilitator, the reaffirmation of the pressures placed on me during this stage has been helpful. I have been rem inded about the importance of regular reflection in relation to the emotive aspect of group work in order to ensure the experience is safe and effective for the young people involved.In addition, the reflections of Guy Butler-Madden a Youth Support Worker at Lowbridge Youth Centre (Audio theme 6), in relation to the ‘storming’ stage of the DofE groups, impacted my learning through developing a shared understanding of some of the more challenging aspects of group work with others who work in a similar field. The final area of the module which has impacted on my learning is the importance of reflection. Study Topic 10 introduced the work of Donald Schon (1996) who advocated the ‘reflective practitioner approach to professional decision making’ (cited in the Open University, 2005, Study Topic 10, pg 6).Schon emphasises the importance of reflection for professional development and problem solving, rather than relying on ‘off the peg solutions’. Thi s concept has significantly impacted my approach to the work I do, in as much as I have introduced a weekly reflective space with my colleagues in order to consider decision making and problem solving in a formal setting. The act of practicing the art of reflection in a formal setting should impact my learning in that reflection will become second nature, thus improving my practice.In conclusion, the most significant impact my learning from the module has had on what I have already learned in my work with young people, has been identifying and challenging some of my preconceptions. In particular I feel that studying E131 has helped me gain a better understanding youth work in its purest form, its purpose and its values; and has allowed me to view youth work as a valuable tool in aiding young people through their transition into adulthood. My understanding of group process has been cemented and I have developed an insight into the challenges faced by other organisations in relation t o group dynamics.Finally, I have learned the value of effective reflection, and how professional development through using my knowledge as a fluid tool to enable effective decision making, rather than having a ridged view of the way an issue should be approached, can lead to more positive outcomes. All of these areas have impacted on what I have already learned from working with young people by allowing me to view my role within the wider context of youth work. My outlook has shifted insomuch as I now feel part of a wider agenda which seeks to enable young people to transition successfully and positively into adulthood.

The Revolutionary Era During The 1760 S - 1651 Words

Jacquelyn Cox During the 1760’s, slavery was a normal and well-structured part of American society despite the tremendous amount of problems with the institution. Slaveholders often treated their slaves like disposable property, which rightfully angered blacks, and many whites questioned the act of owning another human being. As time moved forward, the country fell into a state of despair over many issues, including slavery, and these problems caused the North and South to go to war with each other. Though the war was not started to declare the fate of slavery, blacks mostly fought on the side of the North in hopes that they would prove to whites that they deserved to be treated as equals. Slavery went from being codified in the Revolutionary era to being abolished in the Reconstruction era due to the rise of multiracial rebellion and organization. During the Revolutionary era, slavery had a stronghold in the U.S. Despite this, the Revolution had influenced many to define what they thought freedom was. Slavery existed in every colony and some people claimed that the enslavement of blacks allowed for whites to live better lives. Slaves argued that they were just as human as their masters, and fought during the Revolution in order to be free from servitude. Their fighting appeared to have changed some of the existing attitudes towards slavery. Some states allowed any black that participated in the Revolution to be set free, and some plantation owners released theirShow MoreRelatedAmerican Revolution : The Great United States Of America1565 Words   |  7 Pagesway to the top. Yet before all that occurred there were other events that circulated George Washington s leading. During the 1760 s a lot of events occurred that changed and developed the world . 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