Whistle Blowing Exercises In Indian Corporations Finance Essay - Free Essay Example

Sample details Pages: 11 Words: 3164 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Martin Luther King Jr. said, Our lives begin to end the day we become silent about things that matter. For Indians to understand that is not difficult. Don’t waste time! Our writers will create an original "Whistle Blowing Exercises In Indian Corporations Finance Essay" essay for you Create order Just read My experiments with truth by Mahatma Gandhi. Ownership of failure gives you so much price and conviction. Running a company is in fact all experiments of failures. You will learn a lot more by discussing failures. Why dont you discuss failures in quarterly returns? Because today companies that survive they have had many failures. Can you own up your failures like Gandhi and Obama? No doubt, in the world there only a few who own up failure. In the public, business and corporate context this has becoming a serious matter in India. Conceptual Framework on Corporate Governance Corporate governance means best practices of processes, rules, policies etc which affects the way a firm is heading, or being controlled. Corporate governance also says the relationships between the many players interested and the goals for which the corporation is governed. Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large. Corporate governance has emerged as an important both in India and globally. Expectations of stakeholders are extremely high and the scrutiny by regulators and investors incredibly stringent. As a consequence, Ind ian companies are proactively implementing measures for the same. Going forward, one of the most important challenges for Board members is to build a foundation of trust with management, the investment community, regulatory agencies and the public. The stakes are high and the margin for error is low and while new standards are emerging, one thing remains clear: the responsibility to adopt sound governance practices has been placed squarely on corporate Directors and officers. Indispensable Principles of Corporate Governance: o Discipline in operations o Transparency in dealings and disclosures o Accountability to shareholders o Responsibility of companys action o Social Responsibility o Improving group dynamics and harnessing individual talents o Enhancing early-warning mechanisms for critical risks o Mitigating exposure to liability o Building credibility and trust with stakeholders o Embedding sustainability as a corporate value Mis-Governance in Indian Corporations Whatever be the principles embedded in the process of corporate governance, the world can not be free from malaise of mis-governance. The degrees and intensities of mis-governance matter more on perception, position, interpretation, inflections, and situation. However, truth is truth. In case of corporate governance in India we have many records of good governance as well as mis governance. A study called Early Warning Signals of Corporate Frauds, conducted by the Pune-based Indiaforensic Consultancy Services, a forensic accounting and education firm, from January 2008 to August 2008 has come out with shocking revelations about corporate frauds. The study has revealed that at least 1,200 companies out of 4,867 companies listed on the Bombay Stock Exchange and 1,288 companies listed on the National Stock Exchange as on March 31, 2007, including 25-30 companies in the benchmark Sensex and Nifty indices, have massaged their financial statements. The study investigated 11 sectors, v iz. real estate, retail, banking, manufacturing, insurance, public sector undertakings, mutual funds, transport and warehousing, media and communications, oil and gas and information technology. The manufacturing sector, which contributes about 28 per cent of Indias gross domestic product, is the one most ridden with fraud mainly due to the peculiar nature of the business and the procedural complexities inherent in this sector. Real estate and public sector undertakings came second. Corporate Fraud in India is Rising, 45% of the 1,000 respondents from leading Indian businesses declared that fraud had increased within their organization (KPMG- Study, April, 2010). Nearly one in every 13 corporate houses in India had suffered losses between Rs 40 lakh and Rs 4 crore due to corporate frauds while nearly half had faced such frauds in the last three years. About one in two corporate believes that at present corporate fraud is much more prevalent in India than three years ago. New technol ogies, new inventions and expansions into new markets have opened the door to various forms of fraud, while the threat has increased mainly because of high attrition. These were some of the major findings of a report on fraud perception among top corporates around the globe by Economist Intelligence Unit (EIU) for Kroll Inc. Weak internal control systems, eroding ethical values and a reluctance on the part of the line managers to take decisive action against the perpetrators are cited as the most vital underlying reasons for frauds being on the rise, the report said. Corporate fraud may be on the rise, at the same time, to reduce there are rules and policies to protect from the corporate frauds are also increasing day by day. Whistle blowing policy is also a recent emergence in the spare of corporate governance. Whistle Blowing Policy Framework in India The Securities and Exchange Board of India (SEBI) vide its circular dated August 26, 2003 has amended the Principles of Corporate Governance incorporated in the standard Listing Agreement. The amended principles, inter-alia, require the Company to formulate a policy called Whistle Blower Policy. The object of said policy is to encourage the employees of the organization to bring to the attention of the management any irregularity, corporate misconduct or unethical or improper practices prevailing within the Organization and its redressal. While the government still has to bring out a comprehensive whistle-blower policy, the Securities and Exchange Board of India (Sebi), the market regulator, included guidelines for companies in an amendment to Clause 49 of the listing agreement in August 2003. Under the guidelines: ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ An employee wanting to report a fraud or malpractice in his organization has direct access to his companys audit committee and can ap proach it without seeking the consent of his superiors ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The company will send a circular or other correspondence to all its employees informing them that they enjoy this right; it will also protect them from harassment such as termination of services or otherwise discriminate against them ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The company will confirm that it has adhered to the above practice in its annual report, in the Board report on Corporate Governance. Under the age is of government of India Corporate Governance Voluntary Code 2009 has been Published by Ministry of Corporate Affairs, Government of India, New Delhi. Exercises of Whistle Blowing Report of the Confederation of Indian Industry, Task Force on Corporate Governance made recommendation for voluntary adoption. The Task Force recommends institution of a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the companys code of conduct or ethics policy. It should also provide for adequate safeguards against victimization of employees who avail of the mechanism, and also allows direct access to the Chairperson of the audit committee in exceptional cases. In the Heritage Food (India) Ltd. Whistle blower policy, mentioned that an employee of the Company who discloses in good faith any unethical improper practices or alleged wrongful conduct to the Head of Department or in case it involves Managerial Personnel to the Managing Director and in exceptional cases to the Audit Committee in writing. The Whistle Blowers role is as a reporting party, he/she is not an investigator. Although the Whistle Blower is not expected to prove the truth of an allegation, he needs to demonstrate to the Audit Committee, that there are sufficient grounds for concern. In the preface of Whistle Blower Policy in Maruti Suzuki India Ltd mentioned that Clause 49 of the Listing Agreement between listed companies and the Stock Exchanges, inter-alia, provides, a non-mandatory requirement, for all listed companies to establish a mechanism called Whistle Blower Policy for employees to report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct or ethics policy. HCL has adopted a Whistle Blower Policy to provide appropriate avenues to the employees, contractors, clients, vendors, internal or external auditors, law enforcement / regulatory agencies or other third parties to bring to the attention of the management any issues which are perceived to be in violation or in conflict with the fundamental business principles of the Company. The emplo yees are encouraged to raise any of their concerns by way of whistle blowing. All cases registered under the Whistle Blower Policy of the Company are reported directly to the CEO (HCL, Corporate Governance Report 2009-10). Whether WB Successful in India The evidences of whistle blower policy in Indian companies are not in dearth. However, there are looming questions on implementation, also on the rate of success Whether whistle blowing is successful India must be answered in the context of conflicting cultural norms of corporation, which make it likely that whistleblowers will encounter hostility and alienation. As Terance Miethe explains in his book, Whistle blowing at Work, many people see the whistleblower as a snitch, or a a lowlife who betrays a sacred trust largely for personal gain. This attitude was illustrated by an arbitrator in a 1972 case, who told the employee that you cannot bite the hand that feeds you and insist on staying on for the banquet. Among others, Peter Drucker, the famed management guru and anti-whistleblower, viewed whistle blowing as informing, illustrating yet another instance of the animus whistleblowers have to expect from advocates of loyalty to the organization first. On the flip side, whistlebl owers such as Frank Serpico and Karen Silkwood are seen as saviors who ultimately helped create important changes in organizations. This approach to whistleblowers as guardians of public accountability is often taken by consumer advocates such as Ralph Nader. Given this dichotomy, whistleblowers may well encounter difficulties when they appeal internally or go public with information that may damage their companies. To review the success of the whistle blowing exercise in Indian corporation is a contestable question. What opinion do the experts hold need to serious scan to contest? The following are the comments and opinions hold by the various experts on whistle blowers- The rule of the vigilance is not to take any cognizance of or action on anonymous or pseudonymous complaint, as nobody comes forward to prove the allegation and the allegation must be proved beyond any doubt. So, nobody can blame any authority if no action is taken on any anonymous complaint. Of course, some people make anonymous complaints just to have fun. But, the question arises, why people do resort to the use of anonymous route of whistle blowing, rather than coming openly? In fact, whistle blowing system proves to be a system of reporting the police, whose members themselves are involved, and the reporter would gets exposed if he tries to report the flaw openly and would get the target of their ire and harassment through alternative routes. However, it is but natural that the corporate directors wont take any note to the whistle blowing system seriously, as no serious accounting breach is usually made without being in their own knowledge. In fact, whistle blowing system proves to be a handy tool for them to gauge the system as to what extent any employee has become aware of their own malpractices or unethical practices, normally made through others. On the other hand if the matter comes through the audit committee, there is a good reason for them to deploy significant resources, i.e., misuse of resources in a justifiable way and still be able to make an eye wash. In fact, the resources are lavishly deployed to make people feel, as if the corporate directors are very serious about the matter, while their efforts are to hush up the matter some how or the other and the manpower deployed for investigation are normally their own tutored henchmen to twist the things to make a very easy and safe escape. Evidently, corporate organizations do not take care of the whistle blowers allegations seriously, rather, if you try to watch seriously, they try the system smartly to their advantage to make their safe escape out of the allegations by side tracking the issues. (PS Dhingra, CEO Vigilance Transformation Management Consultant, Dhingra Group of Management Educational Consultant). I doubt that there are too many whistle blowers in industry! Nor do companies encourage whistle blowing. Most private organizations become big through quite a bit of manipulation, most of it unethical; very early on, newcomers to the company learn that honesty is not valued; the more honest among them will leave rather than try and fight the system; others will learn that silence is golden! A few may fight, but once their life is at stake, how many will want to become martyrs? Whistle blowing should be encouraged, but more important is that the media plays its role well enough to report wrongdoings. (K. Narayanan, Sr. GM). This whistle blowing mechanism is, just a systemic element, to reduce or to alleviate corruption run the Company profitably. Bottom-line increase means an incentive to its employees in the form of Bonus etc. Whistleblower mechanism can work out provided the informer should be assured that his information should be confidential not be spread to any other persons for his security reason. More over there should be minimum criterion for whistle blowing that all silly matters should not be entertained but only serious critical matters. (Arun Ku mar K. Security/ Equity Research Analyst, Thomson Reuters). As far as India is concerned unless  Corruption  exists  in the system this type of step will not only be Unsuccessful but will be Misused.!! (Urvish Pankajkumar Subodh). In India, the corporates speak about integrity, which exists in name only.HR departments are just showcases that bring a few pretty faces to the company, without any power to take good decisions (neither will , perhaps). We worship the corrupt persons, provided they have been able to build big business empires. (Shyam S, Project Leader/Managing Consultant, A leading EDA firm) An HR department of a company is something similar to whistleblower section only. But does it really work? It cannot. After all everybody is dependent upon the company for his salary, and career prospects. And bigger companies almost always run through various groups involved in various forms of complex politics. Its always risky, for an individual no mat ter dependent (for salary, designation, career) or acting as an independent body (but lesser in earning power as compared to the company) to tip off a company about its real situation. But yes, an independent body of individuals, who earn according to the number of complaints got by employees, may help a companys owner, to understand where really the structure of company laid down by him, is standing. (Vishwas Gagrani, Game Development, Freelance). I dont think so, and in the wake of a big satyam fraud,  corporate organizations should take care of these things even more carefully. Corporate organizations are required to provide anonymous whistle-blowing channels to their employees. Anonymous reporting channels are intended to protect organization from financial fraud and also any other malicious activity that is happening in the organizations, even in the case of workplace harassment one can use these channels, and how these whistle-blowing channels allow employees at majo r corporations to report fraudulent accounting and auditing matters without fear of retaliation from management.   But, without any action taken against them, whistle blowers are scared to report any fraudulent activities, as they will become the target in future from those people (Darshana Sawant, HR Manager, Leading IT services company). In most cases the hunter becomes hunted, hence most people want to play safe to safeguard their post and position. Those who come forward should be encouraged and should be given required protection. But, in most cases the value of malpractices at the top level is higher and is being shielded, since in most cases it is not by a single person. (S.Baalu , Consultant, Daspan Industries Ltd.) Whistle Blowers are Corporate Conscience Keeper, but still in the vulnerable state. Report of the CII Task Force on Corporate Governance 2009-10 reads at the point number -16, that Clause 49 has recommended that companies establish a mechanism for em ployees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the companys code of conduct or ethics. Even though companies have adopted and communicated the existence of a whistle-blowing policy, we have not seen any success on this front in corporate India. The Task Force pondered over what organizations can do to create an environment which helps employees to prevent undesirable practices. It was felt that adoption and encouragement of the policy should be made mandatory for all listed companies. This is bound to send a positive signal to employees that the management is willing and able to prevent any illegal activity and also ensure that there is a process by which the individuals can expose the problem to the appropriate authority who can take action. The employees would need to be oriented towards the companys ethics policy. HR Department can play an effective role in the process by assigning ombudsmen, providing special tel ephone numbers and email IDs. Since whistleblowers need to be provided high degrees of protection, the Listing Agreement should consider providing statutory protection from dismissal or wrongful termination for acting as a whistle blower. There are adequate precedents in other jurisdictions for such laws and these could be examined. Fostering a culture which promotes and supports institutionalization of whistle blowing policy shall deter corrupt practices and help in preventing corporate disgrace and debacles. All quotes incorporated above speak about the actions and curative measures those need to be taken into account for making whistle blowing scheme success. Hence, ministry, and professional bodies as well as practitioners need to address these issues. Conclusion Let the governors, stakeholders live by not remain silent about things that matter. Let Indians to understand the spirit of My experiments with truth by Mahatma Gandhi, on ownership of failure so that management can reap the price and conviction. Let directors do learn from the running a company through its all experiments of failures publicly. Let the self governance through learning from failure and discussion failures become the moral compass which would indicate about the aligned transparency. Why dont the board members of any company discuss failures in quarterly returns? National foundation for corporate governance should work on it seriously to achieve its inherent missions to make significant difference to Indian Corporate Sector by raising the standard of corporate governance in India towards achieving stability, growth, self disclosure, transparency building in corporate practice. Because today companies that survive they have had many failures. Would the corporate manage rs own up their failures like Gandhi and Obama? If we would not blow our whistle through the ownership of failure than the any whistle blowing mechanism wouldnt work? To increase intensity of whistle blowing for good governance education and HRD can play a vital role.

Gattaca and Sociology - 2286 Words

SOC 101/110 Gattaca â€Å"Gattaca† is a movie about a man named Vincent who is born into a â€Å"new† society that uses genetics as the make-up for what social class you are given and will remain in, no matter what you do. Vincent is a â€Å"godchild†. He is born the â€Å"natural way†, without any genetic altering and his future is set for him as soon as he is conceived. His place in society is at the bottom of the social class and with all his â€Å"birth defects†, he seems to be placed even lower. He has poor eyesight and heart problems among many other things and is only given a life expectancy of around thirty years of age. He is denied the basics of life such as medical care and education. When his brother, Aton, is born through genetic†¦show more content†¦This is what Vincent does. He finds a man named Jerome who has been injured in an accident and is now paralyzed. He takes over Jerome’s life. By using hair, skin, blood, urine and other DNA, V incent becomes Jerome and secures a job at Gattaca. His desire to go into space can now be a reality but only if he can keep up the facade. Micro socialization is more of the relationship that Jerome and Vincent have. At first, Jerome treats Vincent with a mere indifference. He does not take his new â€Å"job† seriously and his constantly drinking or doing drugs in order to take his own pain away at having lost out of his own life. After a while, Jerome and Vincent become brotherly types who take care of each other. In the final parts of the movie, Jerome shows Vincent that he has stored enough DNA for â€Å"two lifetimes† and that when Vincent returns from space it will all be waiting for him. Jerome then commits suicide by burning himself in the furnace to avoid any traces of â€Å"Jerome’s † DNA being found while Jerome is gone in outer space. The social structure within Gattaca is simple. You are either a Valid or an Invalid. There is no in between. Invalids do no associate with Valids and so on. If you are a Valid, you have power, prestige and property. You can obtain a good job, secure a future with a perfect mate, have perfect children and do all the â€Å"right† things. If you are an Invalid you are destined to poverty and no power along withShow MoreRelatedSociology: Gattaca Movie Paper1638 Words   |  7 PagesRuben Arrieta Professor McGinnis Sociology 101 11 November 2010 Gattaca Gattaca is a movie that contains a very interesting society. As in all societies, discrimination exists and it is primarily between two groups. The valids, as they are called here, are the dominant group who oppress the group known as the invalids, which is the group consisting of the less privileged individuals. However, in this society, privileged and less privileged does not refer to the individuals in terms of wealthRead MoreWhats Eating Gilbert Grape- Review and Critique2227 Words   |  9 PagesThe representation of disability in Gattaca. Australian Screen Education, 31, 111-114. Harnett, A. (2000). Escaping evil avenger and the supercrip; Images of disability in popular television. Irish Communications Review, 8, 21-29. Hayes Black (2003). Troubling Signs: Disability, Hollywood Movies and the Construction of a Discourse of Pity Livingston, K. (2004). Viewing Popular Films about Mental Illness through a Sociological Lens. Teaching Sociology, 32(1), 119-128. Malony, S. (2002).

Leonardo Da Vinci And The World Of Engineering - 1578 Words

Engineering Drawings Military vehicles and weapons, flying objects, like planes and drones, robots, the study and understanding of kinesiology, and our knowledge of how water flows†¦ This may seem like a random list of things that have no significance to each other at all, but they all in fact have something in common. The common thread that links these things is Leonardo Da Vinci. Leonardo has impacted the world of engineering in so many different ways, it is almost impossible to count them all. He is considered to be the father of numerous innovations and designs and some of his original works are still being referenced today. This essay will discuss Leonardo and how his inventions were not only masterpieces in his time, but also how they provided a foundation for future engineers to build from. It all started in the little town of Vinci, just twenty two miles outside of Florence, Italy (DaVinci Tech). Leonardo da Vinci was born on April fifteenth, 1452, to a family that was n ot very wealthy; so he could not afford any form of education (Leonardo da Vinci). Despite this, Leonardo’s designs were still way beyond his time. Leonardo lived in Vinci for some time, but eventually moved to Milan, a military based city at the time, where he drew some of his first designs. Milan’s environment stimulated his military inventions. Today, military vehicles and items are very commonly seen around the world, and a lot of them originated from Da Vinci’s designs. For example, Leonardo’sShow MoreRelatedLeonardo Da Vinci1629 Words   |  7 PagesHistory 101 | Leonardo Da Vinci | Renaissance Pioneer | | Luis Quelhas | 11/13/2012 | | Leonardo Da Vinci was born on April 15, 1452. His father was a wealthy notary, named  Piero Fruosino di Antonio da Vinci. His mother Caterina was a sixteen year old peasant girl. Leonardo had no surname when born and took the name Da Vinci meaning from Vinci, the small town in Florence where he was born. Throughout his life Leonardo faced many hardships. From 1457 he lived in the household ofRead MoreAudrey Claire Henderson Ms. Mcpeak Art1113 3 April 2017899 Words   |  4 PagesApril 2017 Leonardo da Vinci Leonardo da Vinci was born April 15, 1452 in a little farmhouse along the rolling hills of Tuscany. Leonardo was the illegitimate child of a young peasant woman, Caterina, and a respected Florentine notary, Ser Piero. His father was also a wealthy businessman and landowner. He lived with his mother until the age of five and then moved in with his father where he welcomed as a member of the family and received elementary education. At the age of 15, Leonardo began an apprentice shipRead MoreLeonardo Da Vinci : The Greatest Thinkers1201 Words   |  5 PagesLeonardo da Vinci is one of the greatest thinkers in all of history. He has many skills and he has mastered everything from art, to science and engineering. He lived during a time filled with other brilliant people. The achievements that he has made in his lifetime were unimaginable and so advanced for his time period, that many of his ideas were not taken seriously until modern times. Leonardo da Vinci was born in April 15, 1452 in the Republic of Florence. He was the illegitimate son of a FlorentineRead MoreLeonardo da Vinci: An Introduction708 Words   |  3 Pagesï » ¿ Leonardo da Vinci Introduction Leonardo da Vinci is among the most well known artists, designers, engineers and innovators in the history of the world. He may in fact be the most revered and studied artist / inventor of all time, due to his creative genius and his knack for originality in thinking and design. This paper reviews the impact that Leonardo has had on civilization since his remarkable career ended upon his death in 1519. Leonardos Legacy Leonardos birth (1452) came just twoRead MoreAnalysis of Da Vincis Work as Being Reflective and Definitive of the Renaissance Period948 Words   |  4 PagesLeonardo Da Vinci and the Renaissance Period Objective The objective of this work examines the how Leonardo Da Vincis work is reflective and definitive of the Renaissance period and as well, describes some of Da Vincis art. This work will discuss the use of line, form, color, texture, and materials as found within one of his works and will state reasons this time period was chosen to examine in this work and why it is found to be appealing. Introduction Leonardo Da Vince was born April 15,Read MoreLeonardo Da Vinci: A Man of Many Things Essay1093 Words   |  5 PagesLeonardo Da Vinci was one of the greatest minds of his time. Most will remember him for his many masterpieces including The Mona Lisa, The Last Supper, and The Vitruvian Man. 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A fun fact about Leonardo Da Vinci is that he was self-taught. He also had dozens ofRead MoreLeonardo Da Vinci And His Contributions To Western Civilization1200 Words   |  5 PagesAnalysis of Leonardo da Vinci and His Contributions to Western Civilization Leonardo da Vinci is one of the most famous artists to have ever lived, and his contributions to the development of western civilization are irrefutable. Born on April 15, 1452, near Florence, Italy, one would not have guessed that he was destined for a life of greatness. He was the illegitimate child of an up-and-coming notary and a peasant girl, and he spent most of his childhood with his doting father (â€Å"Da Vinci - The Renaissance

Financial Reporting of Tiger Resources Limited

Question: Discuss about theFinancial Reporting of Tiger Resources Limited. Answer: Introduction According to Hennes (2014), contingent liabilities and assets refer to the future potential assets and liabilities; on the other hand, provision refers to the saved amount that is kept aside to cover the future liabilities. The financial report of every company includes these two above mentioned components of accounting. The Australian Company, Tiger Resources Limited has been taken to evaluate several aspects of contingency and provisions. The main operation of the company is to discover, develop and explore copper or cobalt deposits. The various stages of this reports helps to show various relation between contingency and provision with proper example from the 2015 Annual Report of the company (www.tigerresources.com.au 2016). Recognition Criteria As per the guidelines of Australian Accounting Standard Board (AASB), there are some specific criteria to recognize the provisions and contingent liabilities or assets of a company. The criterion which is followed by Tiger Resources Limited is discussed below: Provisions As per the 2015 Annual Report of Tiger Resources Limited, the company follows certain rules while recognizing the provisions. There are three kinds of provisions in the company that is legal claims, good obligations and service warranties. These provisions are recognized when the company has a recent obligation due to the occurrence of some past events (Elder et al. 2016). Naturally, these events will cause the outflow of cash from the company as these obligations needs to be settled. For the settlement of obligation, Tiger Resources Limited uses to make the provision out of the profit of the company. There are no rules for provision for the future losses of the company. The amount of money of the provision is based on the nature of the obligation. There are both small and big amount of provisions in the company (www.tigerresources.com.au 2016). Contingent Liabilities or Assets Tiger Resources Limited has been following the guidelines of AASB to recognize the contingent liabilities and contingent assets. The company will consider an event as contingent liability when there is a potential of cash outflow in the near future due to some pat events. Unlike the provisions, it is not always necessary that there will an outflow of cash in contingent liabilities. There is a possibility of reimbursement (Barker and McGeachin 2013). On the other hand, if there is a possibility of cash outflow in the near future due to some past events, the event will be considered as contingent assets. Contingent assets and liabilities do not appear in the balance sheet of the company (www.tigerresources.com.au 2016). Difference Between Contingent Liability Provisions There are certain differences exist between the provisions and the contingent liabilities. The difference starts from the definition. Provision is the guaranteed cash outflow due to some incidents. On the other hand, contingent liabilities indicate the potential outflow of cash due to some past events. In case of provisions, the obligation is present that demands the outflow of resources in the near future. Thus, here the liability is recognized. However, there is an obligation present in the contingent liabilities, but the liability is not recognized. Hence, there may be a future cash outflow. The possibility of outflow of resources is remote here (Lagrange, Viger and Anandarajan 2015). The amount of future cash flow in case of contingent liabilities can be estimated in provisions; but in most of the cases, the amount of cash outflow cannot be estimated in contingent liabilities. The provisions are considered as expenses and they are shown in the Profit and Loss A/c of the company. On the other hand, the contingent liabilities are not considered as the proper liabilities of the company. Thus, they are shown as footnotes under the balance sheet of the company. These are the basic differences between provision and contingent liabilities (www.aasb.gov.au 2016). Examples of Provisions and Contingent Liabilities There are certain cases in the Annual Report of Tiger Resources Limited which can be considered as the contingent liability and provisions. One example from each aspect of Tiger Resources Limited is discussed below: Contingent Liability The example of Tiger Resource Limiteds contingent liability is the amount of income tax return for the year ended 31st December, 2014. The tax amount in that period is under review by the rules of standard annual tax audit procedure. The company has received notice from the tax department after paying the tax for the financial year 2012 and 2013. As per the company, there is no legal obligation that the company has to pay the tax. However, there is still a chance that the company may need to pay the tax amount in the near future. This tax case of Tiger Resources Limited has a future uncertainty whether the company has to pay the amount or not. This situation is the perfect example of a contingent liability. The amount is not fixed. On the other hand, there is an uncertainty over the payment of the taxes. This is a perfect example of contingent liability in the books of Tiger Resources Limited. This amount will not appear in any financial statement of the company, but will be shown un der the balance sheet as footnote (www.asx.com.au 2016). Provisions Provision refers to the saving of money or resources for the future events of the companies. As per the 2015 Annual Report of Tiger Resources Limited, there are non-current provisions in the company. According to the 2015 Annual Report of the company, the amount of non-current provision for the year 2014 is $ 5,609,000 and for the year 2015 is $ 3,598,000. Among the amount of 2015, there are three slabs. They are employee benefits long leave provisions, rehabilitation provision and other provisions. From the above stats, it can be seen that the provision amount of 2015 is less that the amount of 2014. That means the company has a well defined provision management plan. It is not desirable to have a big amount of provision as provisions always make the net profit small. There is a gap of $ 2,011,000 ($ 5,609,000 - $ 3,598,000) between 2015 and 2014. This is a huge improvement for Tiger Resources Limited (www.tigerresources.com.au 2016). Measurement Valuation There are certain measures of valuation of the provisions and contingent liabilities or assets. These measures have been developed by the Australian Accounting Standard Board (AASB). Based on the kind of operation, the companies choose their own measures of valuation of provisions and contingents (Walker 2012). The measurement processes are discussed below: Provisions Tiger Resources Limited measures the provisions on the basis of present value. The management first predicts the best value of the provision which is required to settle down the obligations and the uses the discount rate to assess the present value of the provisions. This measure includes various aspects. To assess the present value, the time value of the money is calculated. On the other hand, the risk involved in the process needs to be analyzed. After using the discount rate, the pre tax value of the provisions can be obtained. In the case of rehabilitation provision, the same method is applied that is the present value method. The obligations of provision must be settled on the balance date (Barth 2013). Contingent Liabilities or Assets The rise of contingent assets and liabilities depends on the occurrence of some future incidents. There is not any rule of showing the contingent assets and liabilities in any financial statements. However, they are shown as the footnotes under the balance sheet. Thus, there are not any specific criteria to measure the contingent liabilities and assets. Tiger Resources Limited has adopted the fair value method to calculate the amount of contingent assets and liabilities. In his method, Tiger Resources Limited uses to calculate the value of contingent liabilities at the time of settlement by using the discounting factor and obtain the value of the liabilities (Jin, Shan and Taylor 2015). These are the applied criteria used by Tiger Resources Limited to ascertain the value of provisions and contingent liabilities or assets. From the above discussion, it can be concluded that Tiger Resources Limited use fair value as well as present value method for the calculations. Implications As per the above discussion, it can be concluded that provisions and contingents are the two very important aspect of the business. The accountants must take into consideration these aspects while preparing the annual report of a company. It is quite obvious that when a business is operating, it will some unresolved cases. On the other hand, these cases must be resolved in near future and for that reason there should be precautions in the form of provisions and contingents. Both provisions and contingents have the same meaning to some extent. However there is a huge gap between provision and contingents. In other words, provision is certain where contingents are not certain. There are two examples given from the 2015 Annual Report of Tiger Resources Limited. The first example is about the contingent liability of the company and the second example is about the accounting provisions of the company (Hausman 2012). In the first example it has been shown that there is an unresolved case exists in the 2015 Annual Report of Tiger Resources Limited. The case is about the return of income tax for the financial year 2014. The matter is under the review of the tax and audit authority. Tiger Resources Limited has considered the total amount as contingent liability. That means there is a probability that the company either has to pay the money in future or not. In case of contingent liabilities, cash outflow is uncertain. Thus, the company will show the amount of money in the footnotes under the balance sheet. This amount will not create any impact on the current financial position of the company. However, it can create an impact in near future if the money has to be paid (Richardson, Taylor and Lanis 2013). In the second example, the provision amount of Tiger Resources Limited for the years 2014 and 2015 has been shown and analyzed. It has been seen that the company has provisions for various purposes like employee benefits, rehabilitation and others. As per the 2015 Annual Report of the company, the amount of provision has become less in the year 2015 compared to the year 2014. It indicates a prospects future of the company in provision management. As the provisions are made out of the net profit, it is desirable that there is less amount of Provision. Hence, in near future the company should take more corrective measures so that there is little amount of provision for the company (Arslanalp and Liao 2014). References aasb.gov.au.(2016).admin/file/content105/c9/AASB137_07-04_COMPoct10_01-11.pdf. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB137_07-04_COMPoct10_01-11.pdf [Accessed 28 Sep. 2016]. Arslanalp, S. and Liao, Y., 2014. 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