7. Make up your own sentences using the words and word combinations given below.

To ride high, buoyant employment market, to be in short supply, to demand expertise, to have the appropriate qualifications, to be in hot demand, in a massive upswing, to post on the internet, to be back in favour.

8. As human resource manager for Technocrat, Inc., it is your job to recruit the best employees. You completed a human resource inventory that indicated that Technocrat currently has an abundance of qualified designers and that several lower-level workers will soon be eligible for promotions to designer positions as well. In spite of the surplus of qualified designers, you are considering offering a similar position to a designer who is now with a major competitor. Your thinking is that the new employee will be a source of information about competition’s new products. What are your ethical considerations in this case? Will you lure the employee away from the competition even though you have no need for a designer? What will be the consequences of your decision?

9. Match the following kinds of compensating employees with their explanations.

Payment method	Description
Straight salary	Annual increases in wages based on consumer price increases
Hourly wages	Additional payments based on company profits
Commission system	Varies by company; basically, extra pay for meeting or exceeding objectives
Salary plus commission	Number of hours worked beyond standard (for example, 40 hours) times hourly wages for weekdays and double time for weekends and holidays
Bonuses	Base salary (weekly, monthly, or annual) plus sales revenue times some fixed percentage
Profit sharing	Number of items produced times some agreed-on rate per unit
Piecework	Number of hours worked times agreed-on hourly wage
Cost-of-living allowances	Weekly, monthly, or annual payment
Overtime	Sales revenue times some fixed percentage

Economic issue: taxation

FINANCIAL TIMES NOVEMBER 4 2004

Business 'more wary about tax affairs'

By Vanessa Houlder in London

Companies are becoming more cautious about their tax affairs as they grapple with the heightened focus on corporate governance in the post-Enron era, according to a worldwide survey of tax directors.

The survey found that 44 per cent of companies had become more risk-averse on tax issues during the past two years.

Companies’ attitudes towards tax have undergone a significant shift since the 1990s, when the focus on creating value for shareholders put pressure on tax departments to reduce tax rates, according to Ernst & Young, the accounting firm, which conducted the survey of 350 tax directors.

While companies have continued to view cost-management and shareholder value as imperatives, “there is now a new factor to be taken into account – considerably higher sensitivity towards the risks involved.”

Many companies view managing tax risks – which range from tax rate volatility to failure to comply with regulations – as more important than managing the tax rate or cash flow, the survey found.

The changing climate for corporate tax planning has been particularly marked in the US, where companies face new disclosure requirements and the risk of increased penalties.

“Companies still want to provide the reatest value for their shareholders, but not if they take a tax position that will cause havoc to their reputation,” said Mark Weinberger, director of E&Y’s US tax practice. “There is more conservatism and more risk aversion.”

But indications that companies are adopting a cautious approach to tax affairs do not necessarily mean their tax payments will increase. In some cases, reduced corporate profitability has reduced the demand for sheltering profits from tax, said Mr Weinberger.

Enhanced risk aversion could prove temporary, while companies ensure that controls are in place to communicate the risks attached to tax planning, according to Aidan O’Carroll, E&Y’s UK head of tax. “Effective tax risk management and effective tax rate management are not mutually exclusive.”

Companies believe poor management of tax risk could hurt their reputation. “There is simply no room for a wrong step that may lead to inaccurate financial statement tax provisions, a restatement of earnings, or publicity that damages a company’s public perception and stock value,” said E&Y.

Regulatory changes, together with changes in tax laws or their interpretation, are seen as the main external contributors to tax risk. Internally, tax risks arise from a failure to align the tax strategy with other aspects of the business.

Boardrooms are taking increasing interest in tax decisions. Only one-third of tax directors say they are responsible for the final approval of tax risk policies, while almost two-thirds of tax directors said they received more direction on tax risk matters than they did two years ago.

Many tax directors said their increased compliance obligations had limited their time for tax planning. “Without doubt, this is one of the most challenging times to be a tax director,” said E&Y.