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BEC CPA Business Environment and Concepts learner | http://babelouedstory.com/
BEC learner - CPA Business Environment and Concepts Updated: 2023
Business Environment and concept section is treated as one of the most challenging exams because of its extensive material and it deals with business and economic concepts. The CPA BEC section will help you to move one step further in business knowledge and help them apply the knowledge in real-world scenarios.
Business Environment and concepts covers:
Business environment in general, and its core concepts.
Foundational grounding in accounting and are exposed to underlying reasons for accounting implications
Financial management information technology, and business strategies in addition to accounting concepts.
Economic concepts, financial management, information systems and communications, strategic planning and operations management.
Testing to determine different business strategies with their knowledge in strategic planning and market risks.
Making financial decisions, forecasting trends in the market, and understanding internets implication in business.
Topic Percentage
Corporate Governance 16% – 20%
Economic Concepts and Analysis 16% – 20%
Financial Management 19% – 23%
Information Systems and Communications 15% – 19%
Strategic Planning 10% – 14%
Operations Management 12% – 16%
BEC1 Business Environment and Concepts (BEC)
BEC2 Section introduction
BEC6 Summary blueprint
BEC7 Area I — Corporate Governance
BEC9 Area II — Economic Concepts and Analysis
BEC11 Area III — Financial Management
BEC13 Area IV — Information Technology
BEC16 Area V — Operations Management
The Business Environment and Concepts (BEC) section of the Uniform CPA
Examination (the Exam) tests knowledge and skills that a newly licensed CPA
must demonstrate when performing:
• Audit, attest, accounting and review services
• Financial reporting
• Tax preparation
• Other professional responsibilities in their role as certified public accountants
The content areas tested under the BEC section of the exam encompass five
diverse subject areas. These content areas are corporate governance, economic
concepts and analysis, financial management, information technology and
operations management. Reference materials relevant to the BEC section of the
Exam are included under References at the conclusion of this introduction.
Content organization and tasks
The BEC section blueprint is organized by content AREA, content GROUP and
content TOPIC. Each group or subject includes one or more representative TASKS
that a newly licensed CPA may be expected to complete when performing audit,
attest, accounting and review services, financial reporting, tax preparation or
other professional responsibilities.
The tasks in the blueprint are representative. They are not intended to be (nor
should they be viewed as) an all-inclusive list of tasks that may be tested in the
BEC section of the Exam. Additionally, it should be noted that the number of
tasks associated with a particular content group or subject is not indicative of
the extent such content group, subject or related skill level will be assessed
on the Exam. Similarly, examples provided within the task statements should
not be viewed as all-inclusive.
Area II of the BEC section blueprint covers several Topics related to Economic
Concepts and Analysis, including the following:
• Knowledge of economic concepts and analysis that would demonstrate an
understanding of the impact of business cycles on an entitys industry or
business operation
• Determining market influences on the business environment, such as
globalization
• Determining the business reasons for, and the underlying economic substance
of, transactions and their accounting implications
• Understanding financial risks and the methods for mitigating the impact of
these risks
Area III of the BEC section blueprint covers several Topics related to Financial
Management, including the following:
• Assessing the factors influencing a companys capital structure, such
as risk, leverage, cost of capital, growth rate, profitability, asset structure and
loan covenants
• Calculating metrics associated with the components of working capital, such
as current ratio, quick ratio, cash conversion cycle, turnover ratios
• Determining the impact of business decisions on working capital
• Understanding commonly used financial valuation and decision models and
applying that knowledge to assess assumptions, calculate the value
of assets and compare investment alternatives
Area IV of the BEC section blueprint covers several Topics related to
Information Technology (IT), including the following:
• Understanding the role of IT and systems, including the use of data in
supporting business decisions.
• Identifying IT-related risks associated with an entitys information systems
and processes, such as processing integrity, protection of information and
system availability, including those risks introduced by the relationships with
third-parties.
• Identifying application and IT general control activities, whether manual,
IT dependent or automated, that are responsive to IT-related risks, such
as access and authorization controls, system implementation testing and
incident response plans.
Area V of the BEC section blueprint covers several Topics related to Operations
Management, including the following:
• Understanding business operations and use of quality control initiatives and
performance measures to Excellerate operations
• Application of cost accounting concepts and use of variance analysis
techniques
• Utilizing budgeting and forecasting techniques to monitor progress and
enhance accountability
The exam focuses on testing higher order skills. Based on the nature of the task,
each representative task in the BEC section blueprint is assigned a skill level.
BEC section considerations related to the skill levels are discussed below.
• Remembering and Understanding is tested in all five areas of the BEC section.
Remembering and understanding tasks focus on the knowledge necessary
to demonstrate an understanding of the general business environment and
business concepts, such as those involving enterprise risk management.
• Application is also tested in all five areas of the BEC section. Application
tasks focus on general Topics such as those found in the subjects of
economics and information technology, and the day-to-day financial
management tasks that newly licensed CPAs perform, such as those
involving calculations involving ratios, valuation and budgeting.
• Analysis skills, tested in Areas II, III and V involve tasks that require a
higher level of analysis and interpretation. These tasks, such as comparing
investment alternatives using calculations of financial metrics, financial
modeling, forecasting and projection, frequently require newly licensed CPAs
to gather evidence to support inferences.
The representative tasks combine both the applicable content knowledge
and the skills required in the context of the work that a newly licensed CPA
would reasonably be expected to perform. The BEC section does not test any
content at the Evaluation skill level as newly licensed CPAs are not expected to
demonstrate that level of skill in regards to the BEC content.
References — Business Environment and Concepts
• The Committee of Sponsoring Organizations of the Treadway Commission (COSO):
– Internal Control – Integrated Framework
– Enterprise Risk Management – Integrating with Strategy and Performance
– COSO-issued application material, thought papers and guides related to the above frameworks
• Sarbanes-Oxley Act of 2002:
– Title III, Corporate Responsibility
– Title IV, Enhanced Financial Disclosures
– Title VIII, Corporate and Criminal Fraud Accountability
– Title IX, White-Collar Crime Penalty Enhancements
– Title XI, Corporate Fraud Accountability
• Current business periodicals
• Current textbooks on:
– Accounting Information Systems
– Budgeting and Measurement
– Corporate Governance
– Economics
– Enterprise Risk Management
– Finance
– Management
– Management Information Systems
– Managerial Accounting
– Production Operations
CPA Business Environment and Concepts AICPA Environment learner
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AICPA
BEC
CPA Business Environment and Concepts
https://killexams.com/pass4sure/exam-detail/BEC Question: 245
The imputed interest rate used in the residual income approach to performance
evaluation can best be described as the:
A. Historical weighted average cost of capital for the company.
B. Target return on investment set by the company's management.
C. Average return on investments for the company over the last several years.
D. Marginal after-tax cost of capital on new equity capital. Answer: B
Explanation:
Choice "b" is correct. The imputed interest rate used in the residual income approach can
best be described as the target return on investment set by the company's management.
Choice "a" is incorrect, but it is a close second. The historical weighted average cost of
capital may be how management sets the target return on investment.
Choice "c" is incorrect. The average return on investments for past years may not be a
good indication of management's future intentions.
Choice "d" is incorrect. Marginal after-tax cost of capital on new equity may be how
management sets its targets, but it may not be, too. Question: 246
One approach to measuring divisional performance is return on investment. Return on
investment is expressed as operating income:
A. Divided by the current year's capital expenditures plus cost of capital.
B. Divided by fixed assets.
C. Divided by current assets.
D. Divided by total assets. Answer: D
Explanation:
Choice "d" is correct. Return on investment is operating income divided by total assets.
Choice "a" is incorrect. Current year's capital expenditures plus cost of capital would be
a meaningless denominator.
Choice "b" is incorrect. This omits the current assets employed by the division. Choice
"c" is incorrect. This omits fixed assets. Question: 247
The following selected data pertain to the Darwin Division of Beagle Co. for 1994:
What was Darwin's 1994 residual income?
A. $0
B. $4,000
C. $10,000
D. $30,000 Answer: D
Explanation:
Choice "d" is correct. Residual income is income less the imputed interest rate times
average invested capital. Capital turnover is equal to sales / average invested capital.
Choice "a" is incorrect. Residual income is greater than zero. The imputed interest rate
times average invested capital needs to be compared with operating income.
Choice "b" is incorrect. Residual income is not simply the imputed interest rate times
operating income. The imputed interest rate times average invested capital needs to be
compared with operating income. Choice "c" is incorrect. Residual income is not
simply imputed interest rate times average invested capital. The operating income must
be considered. Question: 248
Select Co. had the following 1994 financial statement relationships: Asset turnover 5
Profit margin on sales 0.02 What was Select's 1994 percentage return on assets?
A. 0.1 percent.
B. 0.4 percent.
C. 2.5 percent.
D. 10.0 percent. Answer: D
Explanation:
Choice "d" is correct. Return on assets equals income divided by average assets. This
formula can be further divided into the components of profit margin times asset turnover
(referred to as the Dupont formula):
Choices "a", "b", and "c" are incorrect, per the above calculation. Question: 249
The following information pertains to Quest Co.'s Gold Division for 1993:
Quest's return on investment was:
A. 10.00 percent.
B. 13.33 percent.
C. 27.50 percent.
D. 30.00 percent. Answer: C
Explanation:
Choice "c" is correct. Return on investment equals net income divided by average
invested capital: Choices "a", "b", and "d" are incorrect, per the above calculation. Question: 250
Williams, Inc. is interested in measuring its overall cost of capital and has gathered the
following data. Under the terms described below, the company can sell unlimited
amounts of all instruments.
. Williams can raise cash by selling $1,000, 8 percent, 20-year bonds with annual
interest payments.
In selling the issue, an average premium of $30 per bond would be received, and the
firm must pay floatation costs of $30 per bond. The after-tax cost of funds is estimated
to be 4.8 percent.
. Williams can sell 8 percent preferred stock at par value, $105 per share. The cost of
issuing and selling the preferred stock is expected to be $5 per share.
. Williams' common stock is currently selling for $100 per share. The firm expects to
pay cash dividends of
$7 per share next year, and the dividends are expected to remain constant. The stock will
have to be underpriced by $3 per share, and floatation costs are expected to amount to
$5 per share.
. Williams expects to have available $100,000 of retained earnings in the coming year;
once these retained earnings are exhausted, the firm will use new common stock as the
form of common stock equity financing.
. Williams' preferred capital structure is: Long-term debt 30%
Preferred stock 20 Common stock 50
The cost of funds from retained earnings for Williams, Inc. is:
A. 7.0 percent.
B. 7.4 percent.
C. 8.1 percent.
D. 7.8 percent. Answer: A
Explanation:
Choice "a" is correct. 7.0 percent cost of funds from retained earnings.
The cost of retained earnings is equal to the rate of return required by the firm's common
shareholders (or, in effect, the return "lost" by them when the firm chooses to fund with
retained earnings). While oftentimes this rate is somewhat subjective, we are given the
facts to exactly answer the question in this case. The stock is currently selling for
$100/share, and the dividend is given at $7/share.
$7 / $100 = 7%
Choices "b", "c", and "d" are incorrect, per the above Explanation:/calculation.
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AICPA members should be aware that the AICPA has adopted revised Statements on Standards for Tax Services (SSTSs). The new standards are effective Jan. 1, 2024. The AICPA SSTSs serve as the ethical framework for tax professionals and are enforceable tax standards for AICPA members.
The revised SSTSs introduce a new structure to organize the standards by type of work performed. They also include three new standards on data protection (Section 1.3 of SSTS No. 1), reliance on tools (Section 1.4 of SSTS No. 1), and representation of clients before tax authorities (SSTS No. 4).
The existing interpretations and FAQs have also been updated to reflect the reorganization of the revised tax standards with updated citations.
Thu, 16 Nov 2023 08:31:00 -0600text/htmlhttps://www.journalofaccountancy.com/news/2023/nov/aicpa-adopts-revised-tax-standards.htmlCPA exam Guide: Everything You Need To Know About the New exam In 2024
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
We don’t blame you. After all, the pass rates for each exam section range from about 40% to 60%, according to the American Institute of Certified Public Accountants (AICPA®)—not the best prognosis. The CPA exam is difficult and time-consuming, but passing it is the most important step of CPA licensure. And at the end of the day, becoming a CPA is worth it to many professionals.
Earning the CPA credential opens doors to high-paying, advanced accounting careers in numerous industries. The 2024 CPA exam comes with a few changes compared to previous years, so make sure to stay in the know if you plan to sit for the exam in or after 2024. We’ve outlined the new exam here to help you research and prepare.
What Is the CPA Exam?
The Uniform Certified Public Accountant Examination, also known as the Uniform CPA exam or CPA Exam, is for accountants pursuing CPA licensure. Many employers seeking highly trained accountants require a CPA license, which involves rigorous coursework and skill testing to earn.
AICPA develops the CPA exam, and the National Association of State Boards of Accountancy (NASBA) and its included state boards of accountancy assist with reviewing applications, administering the exam and reporting scores.
The CPA exam consists of four sections, testing candidates on Topics like taxation, financial planning, auditing and accounting technology.
What’s New About the CPA exam in 2024?
The 2024 CPA exam introduces a new “discipline” section, including three options:
Business analysis and reporting (BAR)
Information systems and controls (ISC)
Tax compliance and planning (TCP)
Candidates choose one of the three disciplines to test on. Candidates must also test within the three required Core sections:
Auditing and attestation (AUD)
Financial accounting and reporting (FAR)
Taxation and regulation (REG)
The 2024 version of the CPA exam eliminates the business environment and concepts (BEC) section and transitions some portions of FAR and REG into the new disciplines. Since the BEC section was the only one to include a written essay, the essay portion is eliminated from the 2024 CPA exam.
Additional changes include replacing an Excel spreadsheet with a JavaScript-based spreadsheet, implementing new task-based research simulations and eliminating multistage adaptive testing.
CPA exam Requirements
Each state board of accountancy within NASBA sets its own requirements to sit for the CPA exam, so criteria may vary among states. However, many state boards require at least the following from candidates before they’re eligible to take the CPA exam:
Be at least 18 years old
Have a 120-credit bachelor’s degree in accounting or a bachelor’s degree with a certain number of credits in non-introductory accounting courses and business courses
Submit official school transcripts, a credit evaluation application and proof of residency
Education requirements vary the most among state boards of accountancy. For instance, Georgia only requires exam candidates to have a bachelor’s degree with 20 semester hours in non-introductory accounting courses. However, Rhode Island sets more specific stipulations for CPA exam applicants who don’t have a graduate degree in accounting, including at least 24 accounting semester hours covering distinct subjects like auditing and tax accounting.
CPA exam Structure
The three cores and three disciplines of the CPA exam each include both multiple-choice questions and task-based simulations. The exam lasts 16 hours in total—four hours per section—and candidates can take different sections of the exam on different days rather than in one sitting.
Still, test takers must complete and pass all four sections within 18 months—usually beginning on the day a candidate takes their first passed section—to pass the exam. We explore the four sections in detail below.
Auditing and Attestation
The AUD section tests a candidate’s understanding of the technical and ethical aspects of auditing for public and private entities. AUD also covers reporting requirements, risk assessment strategies, obtaining evidence and ethical responsibilities for CPAs.
AUD is divided into four content areas:
Area I: Ethics, professional responsibilities and general principles
Area II: Assessing risk and developing a planned response
Area III: Performing further procedures and obtaining evidence
Area IV: Forming conclusions and reporting
Financial Accounting and Reporting
The questions and tasks in the FAR section target three content areas:
Area I: Financial reporting
Area II: Select balance sheet accounts
Area III: Select transactions
Within these sections, candidates prove their ability to prepare and analyze financial statements, balance sheets with various types of income and expenses, correct accounting errors, and navigate the differences in financial accounting and reporting for for-profit and nonprofit companies.
Taxation and Regulation
The REG section explores tax laws for businesses and individuals within the United States, ensuring that CPA candidates understand the significance of and procedures for compliance. Candidates work with taxation technology and resources to analyze data and determine the correct processes for accuracy and completeness.
This section includes five content areas:
Area I: Ethics, professional responsibilities, and federal tax procedures
Area II: Business law
Area III: Federal taxation of property transactions
Area III: Federal taxation of individuals
Area III: Federal taxation of entities
Discipline
CPA candidates must choose one of three disciplines as the fourth section of the CPA exam.
Previous versions of the CPA exam included the BEC section, which explored corporate governance, information technology, financial and operations management, and economic concepts. The discipline section replaces BEC, allowing candidates to test in an area of interest or advanced skill.
This section offers the following testing areas:
Business analysis and reporting: BAR expands on several concepts in FAR, including data collection sourcing, financial analysis and reporting, while closely examining business analysis and local and state governmental accounting.
Information systems and controls: ISC focuses on secure and accurate data collection, storage and analysis procedures used in accounting. Candidates must demonstrate knowledge of information technology audits, security threats and mitigation, and security regulations.
Tax Compliance and Planning: TCP digs deep into taxation for individuals and entities beyond what’s included in REG. TCP Topics and tasks include calculating estimated tax payments, reviewing shareholder debts and investments, and distinguishing types of business entities for tax purposes.
How Is the CPA exam Scored?
CPA exam scoring weighs the scaled scores of multiple-choice questions and task-based simulations of each section equally at 50% of the total score. The only exception is the ISC discipline, in which multiple-choice questions make up 60% of the score and task-based simulations account for 40%.
Each exam goes through a multi-step review process to ensure scoring accuracy.
How Hard Is the CPA Exam?
If AICPA’s pass rate data is any indication, this is a hard test. During the first two quarters of 2023, these were the pass rates for each section of the CPA exam:
REG: 59.22%
AUD: 47.68%
FAR: 42.30%
BEC (eliminated from the 2024 exam): 58.25%
How To Study for the CPA Exam
The CPA exam process is long and rigorous, so planning can be the key to passing each section. Before you begin studying, plan your timeline carefully.
In what order do you want to take each section? How will you space out the various sections to provide yourself ample study time? Keep track of exam application deadlines, and think about when you should schedule study sessions. Also, consider whether you’ll need to take some time off work.
AICPA’s exam Blueprints offer an excellent starting point for your test prep. The blueprints walk you through each section of the CPA exam, filling you in on what to expect and what to study.
CPA exam Study Resources
AICPA offers official resources for continuing education for practicing accountants. Though you aren’t yet a CPA, you might find these materials helpful while studying for your CPA exam. They are categorized into many of the same Topics you’ll work with on the exam, like auditing and financial reporting, and many are free or discounted for AICPA members.
You can also practice with a shortened sample test from AICPA, which familiarizes you with the CPA exam software.
Several other online resources are available to help you study for the CPA exam, although it’s important to ensure courses and materials are up to date and designed or taught by credentialed instructors. AICPA hosts a database of CPA exam preparation resources, including costs and user ratings for each to help you narrow your options.
CPA exam Study Methods
Preparing for the CPA exam takes significant motivation and focus, and studying with other CPA exam candidates could help you stay on track. Consider looking for study group participants at work, through your local professional organization or from your graduating class. You might also find nearby candidates through social media groups.
Collaborate with your study group members to decide which materials you’ll use, whether you’ll host meetings in person or online, and how often you’ll study so everyone can stay on track.
If you’d like to study solo, find a quiet, dedicated space for sessions and make room in your schedule for several hours of exam preparation each week. Consider getting support from a trusted colleague or mentor when necessary.
Frequently Asked Questions (FAQs) About the CPA Exam
Is the CPA harder than the bar?
The CPA exam and bar exam are both known for their challenging content. However, based on the passing rates for each, the CPA exam generally appears more difficult to pass than the bar. Depending on the jurisdiction, the July 2023 bar exam saw pass rates ranging from 58% to 92%, according to the National Conference of Bar Examiners. The highest cumulative passing rate for any section of the CPA exam during the first two quarters of 2023 was 59.22%.
How many questions are in the CPA exam?
The CPA exam comprises between 250 and 282 multiple-choice questions, plus 28 or 29 task-based simulations, depending on the discipline section you choose. ISC has the most questions and simulations in total, followed by TCP and BAR.
Tue, 31 Oct 2023 02:14:00 -0500Amy Boyingtonen-UStext/htmlhttps://www.forbes.com/advisor/education/cpa-exam-guide/Creating a safe, inclusive and supportive learning environment
A guide to supporting your students as they discuss sensitive or challenging content.
This guidance and activity document will help you create a safe, inclusive and supportive learning environment. Use it when exploring the Topics and concepts in our teaching resources with children and young people.
This guidance introduces essential advice on:
how to manage sensitive or challenging content
answering questions safely and appropriately
creating opportunities for open discussion
using distancing and constructive feedback techniques
creating a group agreement with pupils.
Resource overview
Guidance: Managing sensitive or challenging content How to consider learners’ backgrounds and experience and provide signposting for support or guidance.
Guidance: Answering questions safely and appropriately; creating opportunities for open discussion Tips on how to manage complex or challenging questions.
Guidance: Using distancing techniques as part of some learning activities Support pupils to consciously distance themselves from the learning before and after stepping into character for role-plays.
Activity: Feedback technique – two stars and a wish A suggested structure for learners to provide feedback on each other’s role-plays and presentations.
Activity: Creating a group agreement A class activity to develop ground rules that create the basis of a safe learning environment to support more open discussion.
This guidance was written by the British Red Cross with the support of the PSHE association. Updated in February 2022.
Wed, 09 May 2018 02:18:00 -0500entext/htmlhttps://www.redcross.org.uk/get-involved/teaching-resources/creating-a-safe-inclusive-and-supportive-learning-environmentAICPA & CIMA and NC State: Global executives sense an increased risk environmentNo result found, try new keyword!"AICPA & CIMA and NC State: Global executives sense an increased risk environment" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site ...Wed, 01 Nov 2023 09:29:00 -0500en-ustext/htmlhttps://www.msn.com/The Learning NetworkNo result found, try new keyword!What can we learn from their remarkable friendship? By The Learning Network We invite students to play critic and submit an original review about a exact creative work. Contest runs from Nov. 1 ...Tue, 14 Nov 2023 17:58:00 -0600entext/htmlhttps://www.nytimes.com/section/learningMachine learning helps air pollution researchers trace sources contributing to ozoneNo result found, try new keyword!Vehicles exit the Lynchburg Ferry along Independence Parkway on Thursday, April 14, 2022, in Baytown. Researchers used a nearby air monitor to collect data for a recently-published study that used ...Tue, 14 Nov 2023 06:00:00 -0600entext/htmlhttps://www.houstonchronicle.com/business/energy/article/houston-ozone-pollution-machine-learning-study-18488021.phpClimate and Environment
Unchecked overuse is draining and damaging aquifers nationwide, a data investigation by the New York Times revealed, threatening millions of people and America’s status as a food superpower.
By Mira Rojanasakul, Christopher Flavelle, Blacki Migliozzi and
Mon, 13 Nov 2023 20:32:00 -0600entext/htmlhttps://www.nytimes.com/section/climateTop Environment News
Nov. 16, 2023 — Many songbirds are nesting earlier in spring because of warmer temperatures brought about by climate change. But the shift brings another danger that is especially deadly for nestlings: greater ...
Nov. 16, 2023 — Natural carbon reservoirs will play a major role at the COP28 world climate conference in the United Arab Emirates. In a exact study, a team of more than two hundred researchers worldwide presents ...
Nov. 16, 2023 — Common oral infections, periodontal diseases and caries, are associated with inflammatory metabolic profiles related to an increased risk of cardiometabolic diseases, a new study by an international ...
Nov. 16, 2023 — Researchers have discovered previously unknown changes in a specific type of liver cells, potentially opening avenues for a new treatment for liver fibrosis, a potentially life-threatening condition. ...
Nov. 16, 2023 — Ancient cycad lineages that survived the extinction of the dinosaurs may have done so by relying on symbiotic bacteria in their roots to fix atmospheric nitrogen. The finding came from an effort to ...
Nov. 16, 2023 — The discovery of 27 avian footprints on the southern Australia coast -- dating back to the Early Cretaceous when Australia was still connected to Antarctica -- opens another window onto early avian ...
Nov. 16, 2023 — Many mammals, from domestic cats and dogs to giant pandas, use scent to communicate with each other. A new study shows how domestic cats send signals to each other using odors derived from families ...
Nov. 16, 2023 — As power generation from sources like solar and wind increases, along with the introduction of devices such as heat pumps and batteries, a new optimization tool will help the UK plan for a greener ...
Nov. 15, 2023 — A new study examines ice cores from the summit of the highest tropical mountain in the world, and finds unique insight into the climate record of the Amazon Basin over the last six ...
Nov. 15, 2023 — Bacteria have an array of strategies to counter viral invasion, but how they first spot a stranger in their midst has long been a ...
Nov. 15, 2023 — A study found people who have a healthy weight use more energy during the day, when most people are active and eat, while those who have obesity spend more energy during the night, when most people ...
Nov. 15, 2023 — From invisible wafts of diesel exhaust to sun-choking plumes of orange smoke, air pollution is known to damage respiratory well-being. Now, research suggests another reason to hold our breath: ...
Nov. 15, 2023 — A new metal-organic coating protects bacterial cells from damage without impeding their growth or function. The coated bacteria, which produce ammonia, could make it much easier for farmers to deploy ...
Nov. 15, 2023 — Researchers are working to help more shelter dogs experience this kind of love, safety, and happiness in an adoptive home. The research team found that implementing shorter-term fostering programs at ...
Nov. 15, 2023 — Researchers have found in a new systematic review that there is a strong association between insecticide exposure and lower sperm concentration in adult men ...
Nov. 15, 2023 — In the geological past, several groups of crocodiles evolved towards a morphology adapted to marine life. However, the extent of these adaptations and their evolutionary trajectories remained ...
Nov. 15, 2023 — Clearing mangroves to stop estuaries getting clogged with mud actually makes the problem worse, new research ...
Nov. 15, 2023 — Electrochemical catalysts used in water splitting often show poor performance due to low electrical conductance of (oxy)hydroxide species produced in situ. To overcome this challenge, researchers ...
Nov. 15, 2023 — Recently, morning omelets and holiday dinners have gotten more expensive. One likely cause is bird flu, outbreaks of which led to the deaths of millions of chickens and turkeys from infection or ...
Wed, 15 Nov 2023 10:00:00 -0600entext/htmlhttps://www.sciencedaily.com/news/top/environment/Majority of global boards and executives sense an increased risk environment
Paul Stevens, CEO of Just Property, shares his thoughts on some of the challenges and opportunities that lay ahead for the local housing market and industry during 2023.
Consolidation and shrinkage in the real estate workforce
With increasing pressure on the real estate market from several sides, I anticipate that there will be consolidation and shrinkage in the real estate workforce and the agencies that employ them.
Paul Stevens, CEO of Just Property
Despite efficiency efforts, the Property Practitioners Regulatory Authority (PPRA) continues to show inadequacies. It has failed to provide workable examinations or issue Fidelity Fund Certificates (FFCs) efficiently and accurately to enable property practitioners to comply with the Property Practitioners Act (PPA).
This looks set to continue into 2023 and beyond. The result will be that fewer property practitioners will be able to operate within the law and will be forced to take chances or find other work.
A depressed property market
When the property sales market slows, we usually see that the rental market improves. That’s not what’s happening now and not what I expect in 2023. Both are under pressure from the impact of rising interest rates, the rising cost of living and high levels of poor creditworthiness.
The South African economy needs a boost, and the Sarb's Monetary Policy Committee (MPC) is acting responsibly in this regard. We saw aggressive increases in interest rates last year - 3.25% in total - taking our current prime lending rate to 10.5%. It is expected to be raised again by between 0.5 and 0.75% at the next monetary policy meeting in January 2023 as they make efforts to curb inflation.
Recovery will take time and I expect property inflation to continue to be slow for both property prices and rental rates.
Rising interest rates make buyers nervous and I expect the market to slow further next year. Buyers will need to ensure that they take into account potential future increases in interest rates – hopefully, the worst-case scenario is 1% over the next year. This impact will be felt more at the lower end of the market than at the top. We will not see a property crash but we are heading into a tougher trading environment.
Lack of good-quality tenants
From a rental perspective, one of the biggest issues we face is the lack of good-quality tenants as, in general, 50% of our tenants across the country are in some way credit impaired and we are not able to place them as strict tenant vetting is designed to protect the rental income of our landlords.
This trend will continue through 2023, putting extended pressure on the rental market as the economy and consumers continue to be under pressure. Landlords will need to be realistic about the rentals they can charge, as rental inflation is expected to be under pressure in the coming year.
On a good note, rental collections and vacancies have certainly improved vastly over this past year. Property practitioners must work hard to continue adding value to landlords through their property and tenant management.
With an increased focus on management reporting and data analysis, our franchise owners and property professionals have a better handle on potential problems and early indicators that busy landlords may miss. For example, when tenant payment behaviours become risky (late payments or part payments), an astute property manager can take swift action. Understanding that being a rental agent/ portfolio manager is about risk management will become increasingly important.
Opportunities remain
Despite interest-rate hikes, the lending environment is still good, with interest rates not being excessively high and banks still aggressively loaning up to 110% of the value of the property to the right buyers.
Properties in new developments can be purchased with no transfer costs, offering buyers the lowest cost of acquisition. There is a great opportunity to save thousands of rands when buying into high-quality developments.
Whether the market will swing in favour of buyers or sellers depends very much on local conditions – there is no “one-size-fits-all” answer. Looking at inland municipalities, Ekurhuleni has the highest property inflation rate and Nelson Mandela Bay tops the coastal metros.
Freehold properties have consistently outperformed sectional title properties (in terms of property inflation) for the past four years but the gap has narrowed significantly since June 2022 so this is something for investors to watch. We may be seeing the tail end of the Covid-related buying patterns where larger properties offering work-from-home spaces were in high demand.
A good crisis should not be wasted
I anticipate that movements in the property market will be driven more by life events, e.g., work- and school-related transfers, stage-of-life, than by short-term financial opportunities. Areas that have seen surges from a semigration perspective have been in the Western Cape particularly, followed by the South and Eastern Cape. Coastal towns like Mossel Bay have seen unprecedented growth. I expect to see this trend continue if these area municipalities can provide the municipal services required to accommodate this growth.
South Africa is in crisis (it appears to be our “normal”), and a good crisis should not be wasted. The municipalities that operate well, collect taxes and invest in infrastructure, and those that rally local businesses and communities to help provide manpower and advisory services will be the places to invest in.
Thu, 02 Nov 2023 12:00:00 -0500entext/htmlhttps://www.bizcommunity.com/Article/196/511/243484.htmlMajority of Global Boards and Executives Sense an Increased Risk Environment, Finds AICPA & CIMA and NC State University Report
Enterprise Risk Management processes undervalued by boards and executives
NEW YORK, Oct. 31, 2023 /PRNewswire/ -- The latest report by AICPA & CIMA and NC State's Enterprise Risk Management (ERM) Initiative has identified a worrying immaturity of ERM processes and a lack of understanding by executives and boards of the strategic value of an effective risk oversight process. At the same time the research showed a significant increase in the level and complexity of risks their organizations are facing.
The report found that 68 percent of respondents sense volume and complexities of risk increasing. However, only 31 percent describe their organization's risk oversight practices as "mature" or "robust." Additionally, 18 percent indicate that executives do not see the benefits of ERM exceeding the costs or there are too many other pressing needs.
Key findings from the report include:
The lack of embrace of the importance of risk oversight in organizations may be attributed to only 20 percent of organizations having embedded risk management incentives in their compensation plans.
The volume and complexity of risks is increasing across the four geographic regions: Europe & U.K. (66 percent), Asia & Australasia (81 percent), Africa & Middle East (78 percent), U.S. (65 percent).
In all regions of the world, respondents who claimed their organizations had "mature" or "robust" risk oversight are in the minority: Europe (38 percent), Asia & Australasia (19 percent), Africa & Middle East (29 percent), U.S. (29 percent).
Only 44 percent of organizations describe their ERM process as a "mostly" to "extensively" systematic, robust, and repeatable process with regular reporting of top risk exposures to the board: Europe (51 percent), Asia & Australasia (46 percent), Africa & Middle East (43 percent), U.S. (37 percent).
Most executives do not believe their organization's risk management processes provide competitive advantage - Europe (15 percent), Asia & Australasia (23 percent), Africa & Middle East (40 percent), U.S. (11 percent).
The 2023 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape includes insights from a survey of 983 global senior finance and business leaders conducted in 2023. The survey measured finance-related executives' assessments of the level of maturity in their organization's proactive management of these risks through adoption of enterprise risk management (ERM) processes (a methodology that looks at risk management strategically from the perspective of the entire firm or organization, and aims to identify, assess, and prepare for potential losses, dangers, hazards, and other potentials for harm that may interfere with an organization's operations and objectives and/or lead to losses).
"Globally, the business environment is loaded with uncertainties that can generate risks at any point and in a variety of forms. Organizations face the realities of an increasingly complex risk environment while realizing their current approach to risk oversight may be insufficient in a rapidly changing risk environment," according to Mark Beasley, Alan T. Dickson Distinguished Professor of Accounting and Director of the ERM Initiative at NC State. "Failure to rethink and redesign how the organization is managing risks means risk management practices embraced decades ago are the ones still being used in today's incredibly complex, fast-changing environment. And that's a recipe for disaster."
In addition to their perceptions of the changing nature of the overall risk environment, our respondents also reveal that their organization has faced a significant operational surprise in the past five years with 55 percent indicating that their organization has experienced a major, unexpected risk event impacting the organization. The occurrence of an real significant risk event suggests a potential breakdown in the organizations' risk management processes.
"An ERM program is not only a value preservation mechanism but a potential strategic value generating asset that drives decision making around opportunity identification and creates a competitive advantage while addressing the under-investment in risk oversight," said Ash Noah CPA, CGMA, Vice President & Managing Director of Management Accounting at the Association of International Certified Professional Accountants. "Business leaders that embrace the reality that risk and return are related are likely to increase their investment in enterprise risk oversight to strengthen their organization's resiliency and agility when navigating the increasingly complex and uncertain risk landscape."
Methodology: The 2023 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape includes data collected during 2023 through an online survey of global business leaders across four core regions (Europe & the U.K., Asia & Australasia, Africa & the Middle East, United States). In total, 983 fully completed surveys were submitted. Of those about half serve in senior accounting and finance roles, with the remaining representing a variety of management positions within a range of industries.
About AICPA & CIMA, together as the Association of International Certified Professional Accountants AICPA® & CIMA®, together as the Association of International Certified Professional Accountants (the Association), advance the global accounting and finance profession through our work on behalf of 698,000 AICPA and CIMA members, candidates and engaged professionals in 188 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license, the CGMA designation and specialized credentials, professional and thought leadership. We build trust by empowering our members and engaged professionals with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.
About North Carolina State University'sEnterprise Risk Management (ERM) InitiativeThe Enterprise Risk Management (ERM) Initiative in the Poole College of Management at North Carolina State University provides thought leadership about ERM practices and their integration with strategy and corporate governance. Faculty in the ERM Initiative frequently work with boards of directors and senior management teams helping them link ERM to strategy and governance, host executive workshops and educational training sessions, and issue research and thought papers on practical approaches to implementing more effective risk oversight techniques (www.erm.ncsu.edu).
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