Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

Figure 2

Sweet Dreams Ice Cream, Inc.

Income Statement

For the Year Ended December 31, 200…

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2. Answer the following questions on the text and figures.

1. Whose duty is it to prepare financial statements? 2. What statements are the most important? 3. Why is the balance sheet referred to as “a snapshot” of a company’s financial position? 4. Why is this statement called ‘a balance’? 5. How often is the balance sheet commonly prepared? 6. Study Figure 1 and say: 6.1. What are the main sections on a balance sheet? 6.2. What do current assets include? 6.3. What entries are listed under “intangible assets”? 6.4. What belongs to “current liabilities”? 7. Why is the income statement known as “a movie”? 8. What indicators are summarized in the income statement? 9. Examine Figure 2 and say: 9.1.What do operating expenses include? 9.2. What did total selling expenses amount to? 9.3. What does the bottom line on this statement show?

Text 4

1.Before you read the text discuss with your partner what you know about auditing and try to guess why this activity is named “auditing”.

2.Read the text and check if your guess was correct.

Auditing

Auditing is a very ancient activity. “Audit” is a Latin word that meant “he hears”. In ancient times auditing was the process whereby the owner heard the account given by his steward of the use of the owner’s resources. The origin of stewardship goes far back into the Middle Ages. It was the original purpose of accounting and was also called ‘accountability’. Kings or lords who were away at war or for other purposes usually left their estates in the hands of a steward. The steward kept record of payments and receipts and rendered an account to the owner, who might be illiterate and had to hear it.

In the early days of auditing the prime qualifications for the position of an auditor was reputation. A man known for his integrity and independence of mind took this honoured position, the matter of technical ability being entirely secondary. In those days, the function of auditor was never confused with that of accountant. However, as accounting gradually became more complex, auditors became increasingly dependent on the expertise provided by accountants. Eventually, the audit function itself became totally dominated by the accountancy profession. By the 19th century, many owners of businesses appointed one of their members to be an auditor of the financial statements prepared by the directors of a company. This was partly because the process of auditing had become more complicated as business itself became more complicated.

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In its modern sense, an audit is a process (carried out by suitable qualified auditors) whereby the accounts of business entities including limited companies, trusts, etc., are subjected to scrutiny in such detail as will enable the auditors to form an opinion to their truth and fairness. To put it differently, its main aim is to give an opinion on whether the financial statements drawn up by the directors of a company give a fair presentation. This opinion is then embodied in an “audit report”. In order to do this, an auditor needs to check the physical existence of internal control to ensure that transactions are likely to have been recorded correctly. If internal control is poor, he will ask for it to be improved and he will increase the amount of checking done on sample transactions. If the control systems look good, relatively small samples of various types of transactions may be checked.

Auditors would generally be expected to circularize a sample of the debtors to confirm that they exist. He would normally attend the count of the inventory. The rules for auditing are usually set out in auditing standards.

The qualifications that auditors must have are set down: membership of a CPA body in the US, or in the UK membership of one of four of the bodies of the consultative committee of the accountancy bodies. Auditing is carried out by individuals or forms which vary greatly in size. Some firms have hundreds of partners and thousands of stuff.

3.Read the text again and draw up an outline of it by identifying key sentences in each paragraph.

4.Describe the main aim of auditing.

5.Give a list of the main functions of auditors.

6.What qualifications are auditors required to have in the USA?

7.What do you know about auditing profession in the Republic of Belarus?

Text 5

1. Before you read the text, brainstorm the following issues in small groups:

–Why do the issues of business ethics draw so much attention nowa-

days?

–What can organizations do to enhance ethical behaviour?

Then read the text and compare your ideas with those of the author.

Ethics in Business and Accounting

Business and accounting exist in an environment in which many issues and events cannot be interpreted as absolutely right or wrong. Every decision or choice has pros and cons, costs and benefits, and people or

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institutions who will be affected positively or negatively by the decision. In a setting where many issues and events fall between the extremes of right and wrong, it is very important that accountants and businesspeople maintain high ethical standards. Several groups have established codes of ethics that address ethical behavior to help accountants and their business associates work their way through the complicated ethical issues associated with business issues and events. These groups include the American Institute of Certified Public Accountants (AICPA), the Institute of Management Accountants (IMA), the International Federation of Accountants (IFAS), and most large companies.

Members of the AICPA adopted a code of professional conduct that guides them in their professional work. It addresses such issues as self-discipline, honorable behavior, moral judgments, the pubic interest, professionalism, integrity, and technical and ethical standards. The IMA has a code of conduct that is similar to the AICPA’s code. It addresses competence, confidentiality, integrity, and resolution of ethical conflict.

The IFAS is an independent, worldwide organization. Its stated purpose is to “develop and enhance a coordinated worldwide accountancy profession with harmonized standards.” As part of its efforts, it has developed a code of ethics for accountants in each country to use as the basis for founding their own codes of ethics. Because of the wide cultural, language, legal, and social diversity of the nations of the world, the IFAS expects professional accountants in each country to add their own national ethical standards in the code to reflect their national differences or even to delete some items of the code at their national level. The code addresses objectivity, resolution of ethical conflicts, professional competence, confidentiality, tax practice, cross-border activities, and publicity. It also addresses independence, fees and commissions, activities incompatible with the practice of accountancy, clients’ money, relations with other professional accountants, and advertising and solicitation.

2. Read the text again and answer the following questions:

–What professional accounting organizations are mentioned in the

text?

–What have these organizations done in terms of professional ethics?

–What major issues do accountants’ codes of ethics address?

3.In each paragraph of the text find the key topic sentences that carry the main load of logic and a few of those that are closely related to them. On this basis prepare a summary of the text consisting of 5–7 sentences.

4.Find in Supplementary Reading the excerpts from AICPA Code of Professional Conduct and render their main idea in Russian.

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Text 6

1.Before you read the article below, exchange information with your

partners on the following question:

• Have you heard anything about the scandal associated with the American energy giant Enron or any other business scandals in the United States or Europe involving accounting?

2.Read the text and learn about recent developments in the accounting profession in the USA.

Accounting Scandals

Corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities. In public companies, this type of “creative accounting” can amount to fraud and investigations are typically launched by government oversight agencies, such as the Securities and Exchange Commission (SEC) in the United States.

In 2002, a wave of separate but often related accounting scandals became known to the public in the U.S. Several leading public accounting firms − Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG, PricewaterhouseCoopers, and others − have admitted to or have been charged with negligence in the execution of their duty as auditors to identify and prevent the publication of falsified financial reports by their corporate clients which had the effect of giving a misleading impression of their client companies' financial status. In several cases, the monetary amounts of the fraud involved are in the billions of dollars.

3.Scan the text again and find the English equivalents of the following Russian collocations.

Разоблачение преступлений; злоупотребление денежными фондами; завышать доходы; занижать расходы; занижение сведений об обязательствах; манипуляции с бухгалтерской отчетностью; мошенничество; начать расследование; надзорный орган; предъявлять обвинение в халатности; давать искаженное представление; финансовое положение.

4.Work with a partner. Put the events in Enron’s history into the correct order. Start with D.

The Rise and Fall of Enron

A. Ken Lay, boss of Houston Natural Gas, was immediately appointed CEO of the newly-formed company.

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В. When it didn’t receive answers, the regulator launched a formal investigation into Enron’s investments. As a result, Enron’s Chief Financial Officer resigned.

С. During the 1990’s Enron continued to expand and diversify at an incredible rate, it invested $2 billion in a power plant in India, bought a water company in the UK and acquired an electricity company in Portland, Oregon.

D.Enron was founded in 1985 when two gas companies, Houston Natural Gas and InterNorth, merged to create the first national natural gas pipe network.

E.Finally, the company was declared bankrupt, but the directors had already sold their shares and walked away with the profits.

F.Three years after its creation, Enron opened its first offices abroad as part of a strategy to take advantage of newly-privatized markets.

G.By the end of 2000, annual revenues had reached $100 billion, making Enron the sixth-largest energy company in the world. Most of this was from trading activities.

H.However, Enron was not satisfied with revenue just from gas trading, so it also moved into electricity trading, establishing a trading centre in London. This became the company’s most profitable activity.

I.The first evidence of false accounting came in the first few months of 2001 when Enron admitted it had lost $570 million. Its share price fell, causing a cash and credit crisis.

J.In July, the regulator started asking Enron to give more details about its financial performance.

K.At the same time as opening offices overseas, Enron began trading natural gas in North America.

L.By the turn of the century, a highly competitive work culture had developed. Each year 15% of Enron’s employees were sacked and replaced with younger, ambitious graduates.

M.The investigation found that the company and its accountants had lied to its shareholders and employees about $2 billion of debt.

5.Give a brief account of the rise and fall of Enron: explain the reasons for its fall.

;Language

1.Practise reading the following international words, give their Russian equivalents.

standard, privatized, audit, auditor, scandal, ambitious, client, balance, total, transaction, certified, licensed, potential, execute, execution, control, controller, record v, keep records.

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2. Practise saying the numbers from Figure 1 and 2.

3. Read the following numbers and expressions in English.

Assets = Liabilities + Owner’s Equity

4. Complete the sentences by forming adjectives from the verbs on the right according to the given pattern, work out the Russian equivalents of the derivatives obtained.

v + -able → a 'that can be v-ed', e.g.

manage + -able → manageable 'that can be managed' – 1) поддающийся управлению, легко управляемый; 2) выполнимый, осуществимый

market-able securities = 'that can be easily marketed (sold)' – рыночные (легкореализуемые) ценные бумаги

10.A cheque that is not …… cannot be exchanged for cash negotiate and must be paid into a bank account.

11.The price of the car is …… in 12 monthly installments. pay

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5. Add an appropriate negative prefix to italicized words, choose from the list given.

irun- indis- abundermis- de-

1. Low demand for their products has made production very …profitable. 2. You must make everything clear now in order to avoid any …understandings later. 3. Four Seasons Ltd have been ... successful in marketing the new product. 4. The report showed that moving the production to a new site was …desirable. 5. We don’t have a detailed cost analysis yet, so the management are …decided about future investment.

6.The management think that the policy of expanding sales is …correct.

7.Since …regulation, telephone companies have been able to set their own prices. 8. They …estimated the effect of the competitor’s products on sale in this market sector. 9. Lots of the documentation which was lost in the fire is …replaceable. 10. Prices for raw materials are …normally high at the moment. 11. They have decided to …continue the production of Product P because sales have fallen. 12. They were accused of …using their power to keep prices artificially high. 13. He was accused of …appropriating $30,000.

6. Make word partnerships and use them in the sentences of your own.

7. Identify which term of those on the right describes each mathematical

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8. Match the words on the left to the right definitions, then use them to complete the sentences that follow.

1. He’s at university studying ______. 2. A bookkeeper writes details of financial transaction in the ______. 3. A business manager needs some ______ knowledge in order to understand what he reads in the company’s ______. 4. Most people in the profession read ______

magazines and journals to stay informed. 5. The chief ______ has completed the draft ______ for the year. 6. Can you check that the figures have been entered correctly in the bank ______? 7. The directors of the company approve the ______ at the end of the ______ year. 8. Each branch maintains its own full _____ system. 9. The management of the company have not yet decided on their _____ policies. 10. He’s been working as an ______ with this firm for several years now.

9. Identify the meanings of the ‘account’ phrases in bold in the sentences below and give their Russian equivalents. Choose the correct definition from

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7.On no account should these figures be released before the board meeting.

8.When making decision for the future the managers have to take this year’s poor performance into account.

9.By all accounts, they will benefit greatly if the deal goes through.

10.The advertising company has won two new accounts in South Africa

10.* Translate the following sentences into English using ‘account’ phrases from Activity 9.

1.Эти товары были приобретены в кредит. 2. Вы должны представить нам детальный отчет о Ваших расходах за данный период.

3.По общему мнению, к концу года произойдет слияние этих двух компаний. 4. Ни в коем случае нельзя прекращать работу предприятия. 5. При принятии решений менеджеры должны учитывать информацию, предоставляемую бухгалтерами. 6. Оплата за отопление составила 30% накладных расходов. 7. Мы должны скорректировать бюджет из-за происшедших изменений на рынке. 8. Моя функция – искать новых заказчиков. 9. Ему приходится покупать канцелярские принадлежности за свой счет. 10. Как можно объяснить рост дефицита федерального бюджета в США в начале 90-х годов?

11.Identify accounting terms defined on the left, some prompts are given.

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