Most of us work hard for the money we have. It can be difficult picking investments for your financial portfolio since it’s hard to distinguish between a sales pitch and an investment consultant selecting a stock. Those of us who don’t have the requisite financial literacy will struggle to differentiate between the two. It has been said that you never get a second chance to make a good first impression. For the top financial advisors and consultants, it’s all about looking the part to convince investors to part with their money and invest in funds, ETFs, individual stocks, and the like. If you choose not to go with a traditional broker, there is always the default option of banks and their investment consultants.
Don’t Waste Money on High-Fees and Commissions
All of the aforementioned options are disingenuous, expensive and inefficient. For starters, there’s no point entrusting important work like investing to others who don’t necessarily have your best interests at heart. Traders and investors pondered long and hard about finding an alternative to brokerages and banks. Fortunately, it is possible to develop a basic understanding of the investment landscape and applying that knowledge for investment purposes. There are several terms given to personal investing, such as couch potato investments or passive investments. The best advice for anyone looking to build a retirement nest egg at low cost is this: educate yourself and take control of the reigns.
Depending on which investment consultant you use, you may find yourself subject to company bias. In other words, consultants may be promoting company-selected funds for their own ends. One way to avoid this sales bias is to use Robo advisors, non-bank brokerages such as Questrade and Wealthsimple to name but a few. The goal in all cases is to reduce your investment fees. Believe it or not, the costs of maintaining an account with a traditional broker can become exorbitant over time. The investment juggernauts of the world have billions of dollars’ worth of assets under their control, and they got that way by charging their clients through the roof. If you minimize your investment fees, you can use those cost savings towards your investments.
Making Financial Sense of Your Portfolio
In Canada, investors are subject to some of the highest fees in the world. Many brokers charge a variety of fees such as account maintenance fees, commissions on trades, minimum account balance fees, annual fees, trade fees and the like. Taken together, these can sum to a hefty figure – and it is certainly not beneficial to the client. Becoming a do-it-yourself investor does not require as much work, time and effort as the investment gurus want us to believe. A rudimentary understanding of mathematics is needed – ratios and probability – to make the right decisions for your stocks. Unfortunately, investing is not typically taught to us during our formative years in middle school and high school. Safe investments abound, and it’s not necessary to line the pockets of consultants and advisors when you can do all of this activity for yourself.
This topic is largely off-limits for many educators and even tertiary educators. We learn about the theory, but not the practical applications thereof. Fortunately, there are brave people among us, and YoungAndThrifty’s investing tips have saved the day for many Canadian investors and others around the world. Information like portfolio management, high interest savings accounts, portfolio makeovers, avoiding fees, bank versus non-bank brokerages, modern investing practices, dividend investing, self-empowerment and more are discussed at depth. These topics were taboo in society, but they are absolutely vital components of our well-being in a modern-day society. Financial stability is a core component of everything that functions in society. And it all begins at the individual level.
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Revenue Recognition Audit
Revenue Recognition is a process that depicts how sales transactions are recorded by a company in financial statements. While recording revenue, companies are mandated to comply with Generally Accepted Accounting Principles (GAAP). As per GAAP, in order to book a sale as revenue, the revenue should be recognized initially. Consequently, for a revenue to get recognized, it should be Earned and Realizable Revenue.
Revenue Recognition Audit reviews the accounting techniques of revenue recognition that are adopted in a company. This audit thus assures that the recorded information is compliant to National Accounting Standards which stand mandatory for a firm.
Processes involved in Revenue Recognition Audit:
For a successful Revenue Recognition Auditing process, Planning is a key element. This process thus initiates with analyses of revenue recognition policies and techniques of a company. Thus ensuring the company’s compliance to the desired accounting procedures. After satisfying their doubts, the auditing comes to the secondary level that involves the analyses of contracts of that year. Material Contracts are then separated from the lot. The Auditors invest their time to test whether those contracts are recognized aptly. Along with this they ensure that the financial statement contains receivable and deferred accounts. Besides reviewing the Material Contracts, Auditors also pay heed to the one which are not material to ensure that even they recognize the revenue aptly.
Important Aspects of Revenue Recognition Audit:
Reviewing the General Ledger:
When an Auditor analyzes a General Ledger it provides them with lot of substantive evidences and thus initiates lesser procedural tests. General Ledger is reviewed to have knowledge as to how the sales are recorded in that particular firm. The information that concerns Revenue Recognition Audit includes the sold goods, the date when it was delivered and the mode of payment used to do so. Revenue Recognition Audit ensures that the General Ledger is in accordance with the actual sale transactions of the firm. While auditing, even the Revenue Recognition Policies of a company can also be considered.
Analysing the Financial Statements:
For a detailed overview of the company’s finances auditors look out for financial statement of an organization. Then a comparison follows between General Ledger and the statement deduced, to look out for dissimilarity that exists. Auditors are well acknowledged about the importance of financial statement; as the stakeholders evaluate a firm by the information provided by that.
Combating Risks in Receivable Accounts:
Accounts of high profit sales of a firm can be studied by an auditor in Receivable Accounts. The information mentioned by them is cross checked by the auditors with the original sale invoices. Primary risk that exists is that the net receivables might be overstated, because either receivable have been overstated, or the allowance for uncollectible accounts has been understated. Revenue Recognition Audit ensures that the company’s account balance mentioned is legitimate.
While recording revenue, firms may incorporate accrual or deferrals. Auditors stay sceptical regarding accruals and deferrals to ensure that the real transactions are mentioned and do not contain wrong invoices.
What are the Pre requisites for an auditor?
An Auditor is required to have complete knowledge of complications prevailing in revenue recognition’s auditing and accounting. Active participation of employees should be fostered by the auditors for smooth auditing.
Internal control in an organization is a continuous process to collect, analyze and update information during an audit. Thus mandating internal control; as the responsibility of an auditor. An Auditor then evaluates the appropriateness of finances.
Before initiating Auditing, Auditors should meet with management and the accounting staff to have an idea of the timing of the auditing process.