Two main categories in the balance of payments are the balance account and the capital account.

The balance account summarizes a country’s real transactions involving currently produced goods and services. These transactions are grouped in the following categories:

- Merchandise trade account

-Services account

- Income receipts and payments on asset accounts

- Unilateral transfers account

The merchandise trade account measures the trade deficit or surplus. Its balance is derived by subtracting merchandise imports from merchandise exports. A negative result indicates a balance of trade deficit; a positive result – a balance of trade surplus.

The services account measures the following transactions: travel and transportation, tourism, fees and royalties.

Income receipts and payments on asset accounts measure foreign investment in the country and foreign investment abroad.

Unilateral transfers are payments made to a country for which no goods or services are received. An example is a foreign aid to a country devastated by an earthquake or flood.

On the whole, the current account of balance is the sum of the exports and the imports of goods, income and net unilateral transfers.

The capital account measures transactions that involve existing rather than currently produced assets. There are two major categories in the capital account: the country’s assets and foreign official reserved assets and the country’s other assets and other foreign assets. Official reserve assets are transactions involving central banks, that is, the official government institutions that establish monetary policy. The country’s other assets and foreign assets refer to direct investments as well as investments in government treasury bills and stocks of private companies.

ØComprehension:

1. What does a balance account show?

2. What categories are the country’s transactions grouped in?

3. In what account is the trade deficit or surplus shown?

4. What does the services account measure?

5. What is an example of unilateral transfers?

6. Give the difference between the capital account and the balance account.

7. How many categories are there in the capital account?

Summarizing.

Complete the following sentences to summarize the text above:

1. The two main categories in the balance of payments are…

2. The transactions of produced goods and services are grouped in the following way…

3. The merchandise trade account shows…

4. Travel and transportation, tourism, fees and royalties are grouped in …

5. Unilateral transfers are made…

6. The capital account measures transactions…

True-false questions:

1. Two main categories in the balance of payments are the balance account and the capital account.	
2. The balance account summarizes a country’s real transactions involving currently produced goods and services.	
3. The services account measures foreign investment in the country and foreign investment abroad.	
4. The current account of balance is the sum of the exports and the imports of goods, income and net unilateral transfers.	

AUDITING

Lead-in: What is the main purpose of auditing? Key words and phrases 1. auditing–ревізія, аудит 2. company’s accounts –рахунки компанії 3. instigators of malpractice –підбурювачи службового злочину 4. internal audit –внутрішній аудит 5. independent audit–незалежний аудит 6. reliable and exact data –надійні та точні дані 7. current transactions –поточні операції 8. accounting system –облікова система 9. personnel –персонал, штат 10. fiscal affairs –фінансова діяльність, справи 11. to find fraud –виявляти обман, шахрайство 12. share capital –акціонерний капітал

Auditing is an official inspection of a company’s accounts by a qualified accountant as required by law to ensure that the company balance sheet reflects the true state of its affairs. There are three main roles of auditors: they are responsible for overseeing a company’s finances, responsible for informing authorities of malpractice and they must track down the instigators of malpractice.

There are two types of audit, an internal audit and an independent audit.

An internal audit is usually carried out by a company’s own accountants. Some large companies maintain a continuous internal audit by their own accounting departments. They check for complete, reliable and exact data, that current transactions of the company are recorded promptly and completely.

An independent audit is a review of financial statements and records by an independent auditor, i.e. an accountant not belonging to the company. The major steps of the independent auditing process are as follows:

¾ to become acquainted with the firm’s accounting, personnel, production, marketing and other systems;

¾ to evaluate the management and the accounting control system in operation;

¾ to analyse and review the accounting data of the company;

¾ to formulate a judgment on the basis of the inspection.

Not so many years ago the presence of an auditor suggested that a company was having financial difficulties or that irregularities had been discovered in the records. Nowadays independent audits are a normal and a regular part of business practice.

At the final stage of the inspection auditors write reports to the management on the current state of the company’s fiscal affairs in the form of Auditor’s Report or Auditor’s Opinion, where they may underline some weak points and recommend how to improve operating procedures. If the auditor finds any fraud he must take further investigations.

Who appoints auditors? Senior executives and advisors of the company do it. Then the candidates are to be approved by the owners of the share capital at the company’s meeting.

As we have already said, nowadays it is generally accepted that every business should be audited.

ØComprehension:

1. What is auditing?

2. Name three main roles of auditors.

3. Who is an internal audit carried out by?

4. What are the major steps of an independent auditing process?

Summarizing.

Complete the following sentences to summarize the text above:

1. Auditing is an official inspection of…

2. There are three main roles of auditors: …

3.There are two types of audit, an internal audit and…

4. An independent audit is a review of…

5. Not so many years ago the presence of an auditor suggested that…

6. At the final stage of the inspection auditors write…

Дата добавления: 2015-11-14