Conflict avoidance / accounting Flashcards
(38 cards)
What is a balance sheet?
A statement of the business’s financial position showing its assets and liability at a given date, usually at the end of a financial year
Also called a statement of financial position
What assets can be included on a balance sheet?
Cash, property, debtors and other investments
What liabilities can be included on a balance sheet?
Borrowings, overdrafts, loans and creditors
What is a profit and loss account?
A summary of the business’s income and expenditure transactions, prepared usually on an annual basis
Also called an income statement
What are ‘management accounts’ prepared for?
Internal use by a business and are not audited
Who prepares ‘audited accounts’?
A Chartered Accountant
What does a cashflow statement show?
All the actual receipts and expenditure to include VAT
What is IFRS 16?
The lease accounting standard with which all companies have to comply when using the International Financial Reporting Standards in respect of reporting property liabilities
The full cost of leases has to be accounted for on the balance sheet
In relation to rent payments, what counts as a liability?
An occupier’s obligation to pay rent has to be recognised as a liability, though service charge payments would be accounted for separately
In relation to leases, do they have to be accounted for on a balance sheet?
Yes.
The full cost of leases has to be accounted for on the balance sheet.
Why do leases need to be included in financial reporting?
Because an occupier’s obligation to pay rent has to be recognised as a liability, though SC payments would be accounted for separately
Leases 12 months or shorter are exempt
What is auditing?
Term used to describe the examination and verification of a company’s financial accounts.
Why do leases need to be included in financial reporting?
Because an occupier’s obligation to pay rent has to be recognised as a liability, though SC payments would be accounted for separately
Leases 12 months or shorter are exempt
What methods should you consider as part of conflict avoidance?
- Clear, concise drafting of the contract, lease or associated documentation
- Risk analysis: understand what could go wrong or how misinterpretation might arise
- Manage expectations and understand client objectives
- Negotiate contractual obligations carefully
- Keep good records with sufficient detail
What is conflict management?
Involves the use of processes, tools and skills to find ways to manage disagreements and disputes
What is dispute resolution?
The resolution of a dispute between two or more parties
What factors might you consider when choosing a form of dispute resolution?
- Cost
- Access
- Confidentiality
- Speed
What is the most basic form of dispute resolution?
Negotiation
Where the parties themselves negotiate a resolution.
What is arbitration?
The formal legal process that uses the civil legal system to resolve a dispute that adopts a set of rules
What is ADR?
Alternative Dispute Resolution
Dispute resolution processes that fall outside the scope of court litigation
Contracts might have a dispute resolution clause
What are the benefits of ADR?
- Speed: taking less time that court proceedings
- Informality: Outside a court
- Cost: less money on prof fees for litigation
- Greater opportunity for negotiation
- Quality of decision making, as the outcome can be decided by a surveyor rather than a judge
- Confidentiality
What happens in Arbitration?
An arbitrator decides a dispute acting in accordance with statute (e.g. Arbitration Act 1996)
An awards is produced that binds both parties
Arbitrator will have specialist knowledge of the subject area
How are proceedings dealt with in Arbitration?
Via written representations, but the arbitrator has the power to order a hearing
Arbitrators have the power to award costs
Arbitrators cannot be sued for negligence but there are ground for appeal
What are the benefits of Arbitration?
Fast, cost effective and confidential
