Coso and Basel Essay Example

Coso and Basel Essay Financial Collapses and Regulations New England College of Business In an era of risky investments and failed financial institutions, additional importance is being placed on businesses implementing Enterprise Risk Management (ERM) plans. ERM is defined by the Institute of Internal Auditors (2012) as an approach designed to identify, quantify, respond to, and monitor the consequences of potential events implemented by management. Without an ERM plan, transparency to shareholders and internal accountability are nearly impossible to achieve. COSO and Basel are both reactive frameworks to increased regulatory changes that forced institutions to show more transparency to their financial reporting, in order to manage operational risks, mitigate the likelihood of a collapse, and ensure stability in volatile market conditions (Farnan 2004; Balin 2008); these measures increase confidence in investors. This comparative analysis of COSO and Basel seeks to indentify common measures that are necessary to form a functional ERM plan, the most important being the accountability of management and its communication with the Board (The New Basel Accord 2003). A Comparative Analysis of ERM Guidelines: COSO I/II and Basel I/II Introduction Due to the epidemic of failed financial systems seen over the past decade, agencies and private organizations (e. g. , Securities and Exchange Commission, NICE, etc. ) have set in place guidelines for the standardization of reporting and evaluating risk in an effort to eliminate surprise collapses in the future (NICE Systems Ltd. 2012). Alexander Campbell, Editor, Operational Risk Regulation, states that regulatory approaches are changing and requiring companies to streamline processes for monitoring internal risks at a company, such as fraud (NICE Systems Ltd. 2012). Common goals of organizing committees trying to tackle regulatory challenges are to improve communication between the board and management, increase shareholders confidence, and most importantly, for entities to thoroughly evaluate their liquidity so that in the event of a crisis, investors assets are secured (Bressac 2005; Decamps, We will write a custom essay sample on Coso and Basel specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Coso and Basel specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Coso and Basel specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Rochet, Roger 2003). This comparative analysis of COSO and Basel identifies the standards these documents set for institutions to maintain an Enterprise Risk Management (ERM) plan, as well as the affects these documents shortcomings and constraints have on entities which apply either COSO or Basel. Enterprise Risk Management (ERM) is defined by the Institute of Internal Auditors (IIA) (2012) as an approach designed to identify, quantify, respond to, and monitor the consequences of potential events implemented by management. It is important for all parties affiliated with an institutions ERM plan to clearly identify and understand the events that impact a companys value in order for the entity to achieve its objectives (IIA 2012). The frameworks COSO and Basel both attempt to be reactive solutions to public events in which lack of an adequate ERM plan has contributed to a collapse of a major institution or market which had a detrimental affect on the public (Farnan 2004; Lall 2009). Both documents have been explored by many key opinion leaders in the financial industry, and while each provides a set of guidelines for developing successful ERM protocols, each also fails to be foolproof. Shaw (2006) provides the argument that while the COSO standard was groundbreaking at the time, it was not meant to be a marking guide for controls. Moreover, in regards to Pillar 3 of the Basel Accord which depicts methods of Value-At-Risk (VAR) calculations, Standard and Poors noted that although these VAR methods appear to offer mathematical precision†¦they are not a magic bullet (Lall 2009). COSO and Basel can be seen as a significant step forward for the times (Saurina and Persaud 2008). Basel In 1974, the Basel Committee of Banking Supervision (BCBS) was created (consisting of the G10 plus Luxembourg and Spain) in light of the challenges from an increasingly internationalized banking system (Lall 2009). In the 1980s, it became clear (post-Latin America Debt Crisis, 1982) that a process was needed regulate the international banking system to mitigate risk and manage losses (Lall 2009). The first Basel Accord and Basel II, referred to as Basel, is a method of risk management, specifically for financial institutions operating on a multi-national level, that sets minimum capital requirements (8% of adjusted assets (Decamps, Rochet, Roger 2003)) that these institutions must uphold to minimize the risk of a collapse in the international banking system (Lamy 2006). Basel I, the first international accord on bank capital was established in 1988, by the BCBS (Finance Development 2008), with the goal to arrive at significantly more risk-sensitive capital requirements with the primary objective in line with ensuring stability in the international banking system (Lamy 2006). In 2004, Basel II was introduced, with amendments in response to the Quantitative Impact Study, QIS 3, (published in May 2003), an increase in the amount of capital banks must set aside for high-risk exposures, and changes from feedback from banks on Basel I (Finance Development 2008; Lamy 2006). The Basel framework is focused on three pillars: a minimum capital adequacy requirement, supervisory review, and market discipline (Decamps, Rochet, Roger 2003). Basel I was highly criticized for having a one size fits all approach to formulating institutions risk-weighted assets (with insensitivity to emerging countries), in addition to unrealistic capital requirements that discouraged even reasonable risk taking (Kaufman 2003). In response to these critiques, BCSB began to draft Basel II, in which the amendments to Pillar I (310 out of ~350 pages of the document (Balin 2008)) were most notable. Balin (2008) describes the menu of various options that Basel II encompasses for Pillar I, which allow institutions to choose the most suitable options dependent on a series of factors (i. e. , size, rating, etc. ). The minimum capital requirement pillar focuses on the least amount of capital a bank must maintain to be protected from credit, operational, and market risks (Ahmed and Khalidi 2007). In Basel II, the highly critiqued credit risk requirements were modified to decrease the one size fits all stigma of Basel I (Kaufman 2003). Additionally, Basel II takes into account loopholes found in Basel I that enabled banks to maintain their desired level of risk while cosmetically assuaging to minimum capital adequacy requirements, which was done mainly through a transfer of assets to holding companies and subsidiaries (Balin 2008). Similar to COSO framework, the first pillar of Basel seeks to unite various types of risks into an overall evaluation of capital requirements to safeguard shareholders and investors. Pillar 2, the Supervisory Review, is meant to insure that banks have adequate capital to support all the risks in their business including, but not limited to, the calculations in Pillar 1 (Kaufman 2003). This Pillar clearly defines of obligations of supervisory oversight against extreme risk taking; of note in this Pillar is line 680, which states: Supervisors are expected to evaluate how well banks are assessing their capital needs relative to their risks and to intervene, where appropriate. This interaction is intended to foster an active dialogue between banks and supervisors such that when deficiencies are identified, prompt and decisive action can be taken to reduce risk or restore capital (The New Basel Capital Accord 2003). The four principles of Pillar 2 seek to hold the supervisors responsible for implicating processes, reviewing, setting expectations, and intervening when warranted in regard to management of capital risks (The New Basel Capital Accord 2003). Pillar 3 seeks to protect against changes in asset prices (market risk) (Balin 2008), which is an addition to the credit risk factors of Basel I. Using the Value-At-Risk (VAR) model, banks were able to determine the probability of a portfolios value decreasing by more than a set amount over a given time period (Lall 2009). Critics of the VAR model, such as the International Monetary Fund (IMF), claim that it fails to account for extreme market events and assumes that the processes generating market events were stable (Lall 2009). COSO In July 2002, the Sarbanes-Oxley Act (SOX) was passed with the goals of increasing investor and public confidence in the post-Enron era and increasing management accountability, among others (Farnan 2004). Section 404 of SOX states that effective for some large companies, beginning December 31, 2004, a separate management report on internal control effectiveness and audit by the organizations external financial statement auditor is required (Farnan 2004). COSOs framework lays out a path for developing efficient operations and regulatory compliance methods, and has been established as the framework recommended by agencies such as the SEC for public companies to base their financial reporting on (Farnan 2004). The Committee of Sponsoring Organization of the Treadway Commissions (COSO) is comprised of five private organizations in the financial industry (COSO Web site 2012). The COSO organization was established in 1995 with the mission to provide thought leadership through the development of comprehensive frameworks and guidance on enterprise risk management, internal control and fraud deterrence, and attempts to enhance success and leadership, and minimize fraud in company reporting (COSO Web site 2012). Since its establishment, COSO has published frameworks aimed at helping publicly traded companies cope with tough new monitoring requirements mandated by the Sarbanes-Oxley Act (Shaw 2006), and to help businesses manage risk, by looking at business units as an entire entity, designed to improve organizational performance and governance and to reduce the extent of fraud in organization (COSO Web site 2012). The COSO framework is a cube comprised of four (three in COSO I) company objectives perpendicular to eight (five in COSO I) factors that together form a risk assessment program for which companies can reduce risks by realizing the amount of capital needed for consequences (Bressac 2005). Similar to Basel, COSO dictates that the board is responsible for overseeing managements design and operation of ERM (Bressac 2005). One factor that COSO framework includes is the measurement of a companys risk appetite, the amount of risk, on a broad level, an entity is willing to accept in pursuit of value (Rittenberg and Martens 2012). Many objectives that management sets for their company (i. e. , increase market share, win competitive tenders) include a substantial amount of risk, and COSOs strategic decision-making framework allows managers to present the objectives in relation to appetite to the Board for approval (Rittenberg and Martens 2012). Conclusions Both COSO and Basel were drawn to effectively respond to new implications (Sarbanes-Oxley Act (Shaw 2006) and new laws capital requirements for banks (Lamy 2006), respectively), and each have principles that can help institutions manage ERM more effectively. For example, The New Basel Capital Accord (2003) clearly articulates that setting a minimum amount of available capital resources is a vital element of the strategic planning process, and the three pillars devise a plan to do this. Bressec (2005) claims that COSO II framework articulates a way for managers to effectively deal with the events that create uncertainty for entities and create responses to minimize potential losses. COSO and Basel were both released in the infancy stage and flawed. Samad-Khan (2005) observed that COSOs creditability is diminished because consequences are predicted to occur much more frequently than had been historically recorded in the past. Supporters acknowledge that Basel II has arcane ideas, but defend that its still a step in the right direction because it increases financial oversight and makes sure banks wont be doomed by crises of confidence (Coy 2008). It is important to note that while COSO and Basel offer much protection against quantitative risk assessments, they must be coupled with the knowledge and insight of senior risk managements to be most efficient (Lall 2009; Samad-Khan 2005). Moreover, both COSO and Basel also provide constraints that limit the amount of risks institutions can endure, sometimes excessively. Pall (2009) discusses one failure in Basel II as the ability for developed-nation banks to skew their reports to their desired results, at the expense of their smaller and emerging market competitors and, above all, systemic financial stability. Samad-Khan (2005) emphasizes that historical data is still the most reliable way for companies to determine the probability for risk to occur. Start-ups will not have this historical data, therefore may overestimate their probability of risk using the likelihood x impact = risk calculation (Samad-Khan 2005) and miss out on potentially positive opportunities. Others against the provisions claim that both documents (e. g. , Basel in the Emerging markets) implement concessions that constrain potential growth by overcompensating for potential consequences and depleting lending capital for banks, which in the 1930s contributed to the Great Depression (Coy 2008). Historical events depict the need for more stringent regulatory guidelines in this era of financial market uncertainty. The most important common factor of Basel and COSO are that each clearly states that it is managements responsibility to have a functional ERM plan in place, and be in communication with the Board about potential risks that the company faces (Bressec 2005; The New Basel Capital Accord 2003). Holding management accountable for the risks the business takes, while making sure that the Board is in agreement with managements plan creates a necessary harmony of a checks and balances system, in turn creating a safer landscape for shareholders and the public to place faith in. When properly executed,

Oaths of Office For Federal Officials

Oaths of Office For Federal Officials An oath of office is a promise required of most  federal officials to carry out the duties set forth in the U.S. Constitution. The president and vice president, members of the U.S. House of Representatives and Senate, and justices joining the U.S. Supreme Court all publicly take oaths before assuming office. But what do those oaths of office say? And what do they mean? Heres a look at the oaths taken by top officials in federal governments executive, legislative and judicial branches. The Presidents Oath of Office The president is required by  Article II, Section I of the U.S. Constitution to take the following oath of office: I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect, and defend the Constitution of the United States. Most presidents choose to take that oath while placing a hand on a Bible, which is often open to a specific verse that is important to the times or to the incoming commander-in-chief. The Vice Presidents Oath of Office The vice president takes the oath of office at the same ceremony as the president. Until 1933, the vice president took the oath in the U.S. Senate chambers. The vice presidents oath  dates from 1884  and is the same as that taken by members of Congress: I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God. Beginning with the swearing in of John Adams in 1797, the oath has been administered by the chief justice of the Supreme Court. For most of the nations history, inauguration day was March 4. Since President Franklin D. Roosevelts second term in 1937, that ceremony occurs on Jan. 20, according to the 20th Amendment, which specifies that a presidents term should begin at noon on that date of the year following a presidential election.Not all oaths of office have occurred on inauguration day. Eight vice presidents have taken the oath of office upon the death of a president, while another was sworn in following a presidential resignation, according to U.S. Senate records. Vice President John Tyler  was sworn in on April 6, 1841, following the death of President William Henry Harrison.Vice President Millard Fillmore was sworn in on  July 10, 1850, following the death of President Zachary Taylor.Vice President Andrew Johnson was sworn in on April  15, 1865, following the assassination of President Abraham Lincoln.Vice President Chester Alan Arthur was sworn in on  Sept. 20, 1881, following the assassination of President James Garfield.Vice President Theodore Roosevelt  was sworn in on Sept. 14,  1901, following the assassination of President William McKinley.Vice President Calvin Coolidge was sworn in on Aug. 3,  1923, following the death of President Warren Harding.Vice President Harry Truman was sworn in on  April 12, 1945, following the death of President Franklin Roosevelt.Vice President Lyndon Johnson was sworn in on Nov. 22, 1963, following the assassination of President John F. Kennedy.Vice President Gerald R. Ford was sworn in on Aug. 9, 1974, following the resignation of President Richard Nixon. The U.S. Supreme Courts Oath of Office Each Supreme Court Justice takes the following oath: I do solemnly swear (or affirm) that I will administer justice without respect to persons, and do equal right to the poor and to the rich, and that I will faithfully and impartially discharge and perform all the duties incumbent upon me as under the Constitution and laws of the United States. So help me God. Oaths of Office for Members of Congress At the start of each new Congress, the entire House of Representatives and one-third of the Senate are sworn into office. This oath-taking dates to 1789, the first Congress; however, the current oath was fashioned in the 1860s, by Civil War-era members of Congress. The first members of Congress developed this simple 14-word oath: I do solemnly swear (or affirm) that I will support the Constitution of the United States. The Civil War led  Lincoln to develop an expanded oath for all federal civilian employees in April 1861. When Congress reconvened later that year, its members enacted legislation requiring employees to take the expanded oath in support of the Union. This oath is the earliest direct predecessor of the modern oath.The current oath was enacted in 1884. It reads: I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God. The public swearing-in ceremony consists of members of Congress  raising their right hands and repeating the oath of office. This ceremony is led by the Speaker of the House, and no religious texts are used. Some members of Congress later hold separate private ceremonies for photo ops. [This article has been amended by Tom Murse.]

Developing an Evaluation Plan Assignment Example | Topics and Well Written Essays - 1000 words - 1

Developing an Evaluation Plan - Assignment Example The aim of the program evaluation is to help the government determine components and project aspects that are working and why. It also aims at identifying project aspects that are not doing well and why. The results of the evaluation will enable project managers make modifications and mid-course corrections, if necessary, to assist the CAUTI prevention project make modifications over its second phase. The evaluation examines the adaptability and flexibility of the project in the fight against the spread of CAUTI in nursing settings. Project managers will use the outcome of this evaluation to expand the existing program so as to ensure that the program handles the new challenges of CAUTI (Dunn, Kathuria & Klotman, 2013). Catheter-Associated Urinary Tract Infections (CAUTI) is harmful, therefore demanding procedural approaches for its elimination. Measurement is key in providing useful data that is useful in coming up with methods of curing and preventing infections among individuals. The measurement aspect focuses on process, culture, and outcome measures. The three concepts all aim at providing the relevant data for the elimination of CAUTI. Therefore, measurement aims at determining the efficiency of each stage of the overall process of the elimination of CAUTI. Data collection is a key stage and helps in providing views to the team, thus promoting efficiency and sustainability of the process. Collection of data aims at ensuring that it alters the culture and reduces the CAUTI rates among individuals. The process is, therefore, crucial for the improvement of the process through offering criticism to the process and ensuring that it is efficient in achieving the set objectives (Wright, 2013). The operation Stop CAUTI incorporates (HSOPS) Hospital Survey on Patient Safety Culture to help follow on changes in the safety of the patient over a given period. It also helps appraise the

Influence Of Transformational Leadership Styles In Developing Small Essay

Influence Of Transformational Leadership Styles In Developing Small Businesses - Essay Example The successes of prosperous businesses- Successful business that developed through TLS 10 Other importance of transformational leadership compared to other styles of leadership 13 Recommendations 16 Conclusion 17 Reference 19 Introduction- Transformational Leadership Style Leadership style has been classified into many different ways in the research field. In the recent years two forms of leadership style have been coalesced which are the transformational leadership and transactional leadership. It has been proved that transformational and transactional leadership are not mutually exclusive. Therefore leadership is defined as a process where an individual tends to influences individuals in order to achieve the set common goal (Northouse, 2009, p.3). The transformational leadership style mainly focuses on the future and is developmental. This form of leadership is most valued when task involves breaking deadlocks, creating order mainly out of order, initiating a change in the organisation and on the way of developing future leaders. This form of leadership has also been termed as relationship oriented, inspirational leadership and also charismatic leaders. The main motive of the transformational leader is to inspire the employees to go beyond or above their self interest (Krause, 2005, p.39). The transformational leader is known to be charismatic and their style usually revolves around the empowerment of the subordinates. Thus these leaders are often characterised as people who mainly articulates the realistic vision of the future, understand the difference that exists among the subordinates and stimulates them through intellectual manner. In countries such as Canada, Japan, United States, Austria and Taiwan the transformational leadership is viewed as the most positive form of leadership than any other form of leadership. Thus transformational leadership is often associated with the characteristic of being charisma which is often viewed as a desirable form of attitude and positive (Waite, 2007, p. 5). Like charismatic leadership, an effective transformational leadership also requires the ability to bring about a change and also challenge the status quo, is able to recognise the opportunities for the organisation and also for the employees, risk taker and should also encourage others to take risk. The transformational leadership often requires the ability to inspire a shared vision. They rally others for a common dream and are adept in envisioning the future of the employees and the organisation and also enlisting them to move towards the vision. A transformational leader should be able to set an example of commitment towards shared vision and values (Lussier & Achua, 2009, p.350). Importance of Transformat ional Leadership Styles and Advantages Transformational leadership style or the transformational leaders has proved to gain a high importance in business particularly when it comes to small business. A transformational leader is strongly related with the unit focused which measures the effectiveness if leadership. In a small business it is necessary that the leader needs to be effective and charismatic so that he is able to lead from the front and initiate the followers to adopt the same technique and take risk. Every business needs to take risk and it’s the leaders who initiate the members of the organisation. Since transformational leadership style is the most accepted and possess unique qualities suitable to run a business or organisation thus this form of leadership is very important. Employees who have the transformational leadership style tend to have a higher level of job performance than other members of the business. They usually have high level of

Teenage Pregnancy Essay Example for Free

Teenage Pregnancy Essay In years past teen pregnancy created problems in several countries. However in the United States among teenagers, teen pregnancy rose, but there was no help from programs like the National Geographic’s channel, and Teen Mom that aired on MTV. Individuals saw a version of what might have been with cameras rolling, however if the cameras are not rolling then life takes on a different meaning. When someone is not paying for your chance at fame out in the world and your problems are exposed on television all you would have to turn to are yourself and your newborn baby. Anonymous. Issues in science and Technology, Jan 1, 2005, Vol .21, No 3 (Spring 2005), P 65-70 Retrieved April 7, 2013, from ProQuest database. This article represented the work of Sarah S. Brown and what she has done with the campaign for preventing teen Pregnancy the article was well done and depicted lots of information about Sarah work. Sarah represents the director of National Campaign for Teenage Pregnancy. The article gives an explanation of why teenagers should refrain from having sex, and it’s the best way of preventing pregnancy between teenagers. This article shows that it was peered reviewed. Malcolm, D Targeting teenage single mothers. The Lancet, Vol. 342, No. 8877 (October 16, 1993), p. 978. Retrieved April 7, 2013, from the ProQuest Database. The article was very interesting, and described that there was 45,000 single teenaged mothers in the United Kingdom in 1993, which is a growing concern for teenagers around the world and not just the United Kingdom. In th e United States the article stated that President Clinton will face challenges pertaining to women’s Health. The article also presented lots of information pertaining to the United States and the United Kingdom. This article was also peered reviewed.

Definitions of Words Relating to the Sea :: Ocean Marine Life Aquatics Essays

Definitions of Words Relating to the Sea The Wave Machine The wave machine is a simulator that will allow you to create an ocean wave and determine its height. Most ocean waves are formed when the wind blows across the water's surface. The wave height is determined by three factors: wind speed, fetch, and duration. Wind Speed In 1805, Sir Francis Beaufort, observing the effects of wind speed upon the sea, devised the Beaufort Wind Scale. Though wind speed is not the only factor in determining wave size, the Beaufort scale remains a tool for seafarers to this day. Wind speed is measured in KNOTS. (1 knot is equal to 1.151 mph, or 1.852 kilometers per hour). Fetch Fetch measures the area of open water over which wind blows. Like wind duration, the distance waves travel has a significant impact upon their size. Fetch is measured in NAUTICAL MILES. (1 nautical mile is equal to 1.151 miles, or 1.852 kilometers). Wind Duration Wind duration reflects how long the wind has blown in the same direction. Even at slower speeds, stead winds can create higher and more powerful waves than those resulting from brief, strong gusts. Wave Types Capillary waves The smallest waves created when the wind blows acroos a smooth water surface. Friction between the air and water molecules results in the creation of these small ripples, which are less than .7 inches long. Shallow-Water Waves Wind generated waves that travel in water shallower than one-twentieth of their wavelength. Deep-Water Waves Wind generated waves that travel in water deeper than one half of their wavelength. Swell A swell is formed when waves move away from the storm or generating area and become more regular. Waves exhibit longer periods and rounded crests, creating a uniform pattern on the ocean surface. Rogue wave A rogue wave is an unusually large wave caused by combining the heights of waves that meet simultaneously.

Tent and Board Games

My camping trip My camping trip was a very bad experience. A friend's brother was planning to go to camping for a weekend, and they invited me. We were excited because we thought would be fun. First, we made a list of everything we would need, packed our suitcases and started our way. The weather was bad, but my friend's brother decided to go no matter what. First, the road was in a poor condition. It was so bad that I threw up twice! Second, the location where we were going to stay for 2 nights was terrible.I lready felt bad enough due to the road, and when I saw the place, I realized that I wanted to go back home. Nevertheless, we decided to stay in front of a big tree and made a bonfire between the camping tents. My camping tent was on the left and the other one was next to us. After a while, everyone went to sleep. Third, I was attacked by a snake at midnight. I felt something crawling on me; I Jumped up and started to scream. Everyone woke up and went to my camping tent to see w hat was happening. There was a snake inside my tent and creeping on me! I was so scared and no one knew what to do.My friend's brother killed the snake with a sharp stick. After that, I could not sleep anymore. The next day, we played board games, listened to music and walked across the forest. While we were walking, I saw an iguana at the top of a tree. Soon we came back to our place because it started to get dark. We talked for a few hours and went to sleep. Finally, to make things worse, it rained so badly that the camping tents came down. We spent the rest of the night under the tree. When the sun rose, we left the place to go back home. In conclusion, my camping trip was a disaster.