How to audit your accounts

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Ingenious Ways You Can Do With My Marriage Is On The Rocks; We’re Always Fighting About Money. Help!.

The level of economic situation is scary to say the least. The number of husband that are unable to provide for their family are increasing by the day, and the number of married women who have been pushed to subtle prostituting just to cater for the family is on the rise.

This are difficult situation in many families today and because of lack of money, most marriages are on the brink of collapse.

Couples today fight over money issues all the times and it seems that this single reason alone is leading to many divorce rate.

Now, let’s talk about some ways that couples can work on finding

agreement about money in their marriage:

Start with a broad vision.

Write down your shared vision

Husband and wife should seek to find common ground for a shared financial vision of the future.

The shared vision is futuristic in its entirety and even though there is a relapse or unexpected contingency, believe in the share vision between you and your wife.

Let the shared vision guide the couples.

Big questions like whether or not you’d like to own a home, what retirement might be like, and whether you’ll both work or whether one will be a breadwinner and the other a homemaker or both of you to work to support the share vision. It is important for you both to be honest with each other. 

Remember the primary goal is to build a happy family not a fortune.

 Communicate the share-vision all the time

One major reason why couple always argues is inability to communicate the share vision agreed on a regular basis.

This is very fundamental in a marriage,

Once you have a shared vision and you’re ready to tackle more financial conversation, try to set some specific long term goals.

Note that the shared vision include all source of income from the husband and wife on one hand and all expenses .The income include earnings from trade of the husband and wife(including any money received as gift)

Discuss  everything and try to always communicate all the time.

Mrs. Pamela had issues with his husband and the marriage is on the verge of collapse.

Her brother-in-law who lives in Canada send her $500 for the upkeep of her family and the woman did not tell her husband, though the money was used to pay off many debts owed by the family.

One year later, when the husband knew where the source of money was from, all hell was let loose.

Communication is very key to implementing a set vision for couples.

Review.

Now that you’ve had a chance to create a shared vision and specific long-term goals, review these together.

 Make sure that you are still on the same page. If doubts and concerns have arisen, deal with them. Remember that you value your marriage more than money.

 Build a budget.

Nothing is compared to a good and sound financial management than having a budget as a couple.

Create an action plan.

This is the ‘koko’ of the shared vision. On a daily basis, couples should take time to write down how money was spent and compare it with the shared vision plan.

Have a joint diary.

Write it down.

 Compare it.

Take-away

Ø A workable action plan likely includes something that looks an awful lot like a budget.

Ø If one of you objects to the term, call it something else. Spending guidelines, savings targets, discretionary spending limits all accomplish the same thing.

Ø Find language you can agree upon and then begin living by your budget, to realize your shared vision.

Ø Nothing is more important to the happiness of a family than the happiness of the marriage.

Find your shared vision for the future and work together to bring it about. Once you’re fighting for the same thing you’ll stop fighting over the same old thing.

Sel improvement expertise

https://www.facebook.com/groups/2174781559449556/

The end of the year is fast approaching. As a small business, this is the time to:

a)    Take stock of 2018.

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How can you take stock of 2018?

Ø Examine your financial activities for 2018:  You may have decent skill and knowledge in the areas of accounts, or have people in your small company/business operations who do a good job of taking care of the accounting transactions for you BUT it is important for you to engage an Independent person who will examine and check ALL your financial activities for 2018.

The Independent person will inspect documents, receipts, cashbook, bank statement and invoices. He can uncover certain things about your company that you might not have known. In fact, business owners are sometimes surprised by the outcome of the audit, and this process helps them see that they might have overlooked certain financial situations that were occurring in their company.

Ø Identify poor accounting practices: You may record the transaction wrongly or your employee who are getting lazy about performing the correct financial records. It is hard to see these issues unless you can view the overall picture, which is possible with an audit. Get an Auditor to overhaul your operations so as to understand the true position of your business operation/company in 2018.

Ø How much profit did you make in 2018? Most small business owners do not understand the bottom line of their business. Ask them questions like, what is your turnover in 2018? What is your Cost of sales in 2018? What is your profit in 2018? What is the worth of your business or company in case you want to sell in 2018? The Independent person will help to provide answers to all these questions.

Ø Uncover fraud: Some of the employees may be committing fraud without your knowledge. This is very possible with small scale operations. An auditor will identify discrepancies, fraud committed so that you can eliminate the problem.

Ø Using External Auditors Improves Your Credibility

You are probably doing all you can to ensure your business is well organised, but you can’t expect anyone to take your word. Imagine if your business suppliers and customers knows that you audit your accounts every year, the credibility and the trust accorded to you and your business will soar.

As you might expect, this does a lot for the credibility of the company, particularly in the eyes of potential investors and partners. By bringing in an auditor, you are showing your business network that you aren’t afraid of scrutiny and that you value financial and regulatory compliance.

Ø Business Improvements will reduce your cost: The auditor advice and recommendations on your business and how financial activities should be carried out effectively will help to reduce cost, thereby saving cash flow needed for your operations.

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Ø Clear Understanding of your business in 2018: One of the biggest benefits of an audit is that you can get a clear understanding of the financial situation of your company. By identifying cash flow, Sales, cost, and other financial information, you will have all of the information and details that you need to ensure that you are making the best financial decisions. You cannot get a precise snapshot of everything that is occurring within your business until you employ an auditor.

Hiring an auditor used to be something only big companies need to          Are you still not convinced? Talk to us.

Call 08038520767 or mail us at admin@baasinat.com

THE DEMISE OF SKYE BANK( FINAL PART)

Suffice to say, that there are many factors that led to the demise of Skye bank, but I want you to know that SkyeBank as a Company WAS NOT LIQUIDATED. The CBN issues a license to a bank to operate.

The CBN revoked the license of Skye bank to operate as a bank. The CBN did not dismantle the bank and nail the bank to the coffin or else that would have been disastrous to our fragile economy because Skye bank has over 260 branches in Nigeria with thousands of workers.

Skye bank also owns subsidiaries banks in West African countries such as Gambia, Guinea, Equatorial Guinea, Liberia, Angola and Sierraleon and imagine the impact of liquidating the bank on these ‘small’ economies.

The spillover effect of the bank liquidation would have a multiplier effect on all banks and financial institutions.

This might lead to panic withdrawals and erodes investor confidence in the banking sector and more importantly will lead to massive unemployment and loss of deposits by customers. CBN was incisive and immediately with AMCON appointed a bridge institution-Polaris to take over the management of Skye bank.

 Having said that, it doesn’t mean that investor confidence in Skye bank has not been dented. Let us look at two reasons for the demise of Skye bank. The first one is low liquidity ration and financial health/unethical practices by the company.

The bank has low liquidity ratios. Calm down! I will explain it to you.

Bank liquidity ratio: Any time you deposit to the bank, the bank collect your money and keep it safe for you. Who owns the money? It is you, but to the bank, that your money is a liability and anytime you come to the bank to withdraw your money, the bank is obligated to hand over your money to you. All the deposits in the bank are liabilities to the bank.

Liquidity ratio is the ratio of a banks liquid assets (cash or assets that can be turned to cash) to its liabilities (Mostly your deposits in the bank). In Nigeria's banks are supposed to have a liquidity ratio of 30%( The bank totals liquid assets is expected to exceed all the liabilities by 30%)

Skye bank liquidity ratio was very bad and it was a worrying sign because customers could want to withdraw their money and the branch WILL NOT BE able to hand over the customer money to him/her. So they resort to borrowing from the CBN to mitigate the embarrassment. The CBN governor said ‘’ The result of our examinations and forensic audit of the bank has, however, have revealed that the Skye bank requires urgent recapitalisation as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. The shareholders of the bank have been unable to recapitalize it.’’

The financial health and position of a Company are very important. How much profit is the Company making? How much cash does the Company have? How much debt is outside and who owes them? Does the owner of the Company withdraw money from the company at will? What is the level of drawings of the company investment and assets? Is their growth?

The Fiscal health of the bank was really worse. The Company loss in 2015 of N40.726 billion.was really bad and the downtrend continues unabated.If you are in a business like an ‘ajo’(credit thrift) business and you made a persistent loss in 4/5 years, something is wrong somewhere?

 Interestingly the bank did not deem it fit to institute cost-cutting measures to buck the trend. The bank employee benefits and emoluments increase by 95 per cent in 2015 and the general and administrative expense increased by 17%.  That year, bad loans jumped up by 47 per cent to N27.53 billion from N18.99 billion in 2014. Just imagine that?

 The lifestyles of the directors and key men leave more saliva to swallow.  The then chairman of the bank, Tunde Ayeni was indebted to the bank in excess of N70 billion. He used his position as the chairman of the bank to obtain loans well above the regulatory limits. (You see why I wrote my book ‘PREVENT YOUR EMPLOYEES FROM DEFRAUDING YOU’’)

The massive unethical and fraudulent practices in the bank leave much to be desired.

Blatant, Unethical, Criminal Mismanagement.

In 2017, despite Nigeria’s ailing recession and Skye bank woes and despite the debt and corruption scandals supposed to be hovering over his head, Tunde Ayeni threw a lavish 50th birthday party for his wife Biola Ayeni, filled with many who’s who, lots to drink, lots to eat and lots of lavish gifts..

There are other reasons why the bank license was revoked but the aforementioned issues outlined above shows that the CBN acted drastically to save depositors money but the CBN retain the old management and directors to continue to manage the company under the Polaris brand.

 I am of the view that as CBN has taken over the bank, it ought to have sacked both Board and Management and reconstitute a new Board and Management. The Directors and management of the bank were responsible for the collapse of the financial institution and so The Directors of Skye Bank must be held accountable; their properties should be sold to offset the debts and not the ordinary shareholders that entrusted the companies to them.”

LESSONS TO BE LEARNT

-Do not live beyond your means. Skye bank as an entity tried to grow beyond their means and it backfired.

-Workplace fraud is critical to the management of any company whether big or small. Keep your eagle eye on your company and ensure that you conduct an audit exercise on your financial operations on a regular basis.

-Spread your money. Do not deposit all your savings in one bank. Spread the risk by banking with 2/3 banks.

-Be interested in the financial health of your bank. Don't display don’t care attitude’.It will not help you. Contact me on my FB page(fb.me/baasinat) on how to go about it.

-Shareholders will definitely bear the brunt of the demise of Skye bank. Meet a professional stockbroker before making any decision to invest in shares of any company.

-Do a thorough feasibility/business plan before embarking on any project and ensure that the plan is followed systematically and any deviation must be properly analysed.

-Do not steal from your business. Most entrepreneurs are found wanting on this. They steal from their company. Remember the entity concept. Your Company is a corporate person and you are different from your company... Contact me on my FB page(fb.me/baasinat) on how to go about it.

Thanks for reading.

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Why do we audit

An appointed auditor defines Auditing as an independent examination and expression of opinion on the financial information of an enterprise in pursuance of that appointment and in compliance with any relevant statutory obligation and ethical requirement.

 An auditor is not an officer of the organization. He is an independent person who is appointed by owners of the Company to examine the account and determine whether the account is true and fair(The Financial activities is free of fraud, error, irregularities that can distort the view of stakeholders)

 Auditing is conducted in Nigeria only by qualified chartered accountants who must be members of the Institute of Chartered Accountants of Nigeria (ICAN).

It is statutorily(A must) required that all public companies'(Companies quoted on the Nigeria stock exchange) financial statements are audited at the end of the company's accounting year.

Auditing is borne out of the fact that incorporated limited liability companies are managed by persons separated and different from the owners.

The managers are expected to render their account of stewardship to the owners. An account of how the owner's money was utilized is usually prepared annually and rendered in the performance of the business enterprise to the owners.

The account called financial statement prepared by managers may be deliberately or inadvertently misleading or it may contain errors or fail to disclose fraud or it may fail to disclose relevant information.

Therefore to lend credence to the account, owners appoint an independent person to look through and consider the account technical so as to determine how true and fair they are in relation to the underlying transaction, books and records.

 

The Demise of sky bank(Part 1)

THE DEMISE OF SKYE BANK

Skye bank collapse sends shock waves to all of us especially for those ‘related' with Skye bank. Some of us are customers, shareholders, employees; know someone who works with them.

It's a panic period for customers who are seen in droves trying to withdraw their money from Skyebank. Some life savings and investment savings are shored up with Skye bank. However, if you deposit money with Skyebank, do you need to worry?

The Banking industry is one of the most regulated industries in Nigeria. We will discuss in another piece why you should not press the ‘panic button' yet.

 This is Lagos state bank. That is the bank used by Lagos state.

Let us take a close look at one of the problems that affected Skye bank.

Skye bank acquired Mainstreet Bank(Formerly Afribank) in 2014. Skye bank used short-term funds for the acquisition. Mainstreet banks was a long-term investment and indebted and its executives engaged in sharp practices, no wonder, former Mainstreet bank MD is alleged to have embezzled N1b naira.

Skye bank bided N126 billion to acquire the entire issued and fully paid-up ordinary shares of Mainstreet bank with short-term funds.

Let me break it down for us. You work with a company and earn N50,000 per month. You saw an advert to buy land somewhere for N600,000. You approach your MD for a loan but he approves the loan under a condition you will pay back in 12 months. You know what that means? Your N50,000 salary will be used to pay for the loan every month. If you agree, how will you take care of yourself? How will you feed? How will you meet up with other obligations?

If you take the loan, it is obvious, you need supporting activities that will earn money or help from somewhere to take care of yourself for the next 12 months or else you will break down.

Do you get the point? You cannot invest your short-term funds for a long-term investment that might likely start generating profit in the next three years.

Skye bank put the cart before the horse. They acquired Mainstreet bank with short-term funds and was illiquid(No cash) and started making efforts to raise the fund locally from investors but it proved abortive because its capital base had been decimated by inside credit, which is non-performing.

Having tried to raise the money locally and failed, the bank's management tried to convince a Moroccan bank and a South African bank to invest in it but after due diligence on the bank and its chairman, the Banks pulled out.

 An expert on Merger and acquisitions posited that  IPO(Initial public offerings)  are a good way for a company to raise money in any M&A especially when assuming the debts of the investee company.

The prospect of an upcoming M&A transaction can make investors more excited about the company's future, as it signals an ambition to expand and a long-term strategy. IPOs always attract market buzz, so by timing the IPO with an M&A transaction, companies can maximize investor interest and drive up early share prices.

Lessons:

Instead of acquiring Mainstreet bank with short-term funds, Skye bank should have issued IPO from its shareholders and the public so as to raise N126 Naira to acquire Mainstreet bank. Skyebank.

Apply matching concept that always guides accountants in their dealings. Do not use short-term funds to invest into Long-term funds. They do not match, rather invest short-term fund to short-term investment while you invest long-term funds/savings into long-term investing.

We all use one bank or the other. Always be interested in the financial decision and activity of your bank. Always read news online about your bank, request for the half-year financial statement and read. If you do not understand anything, post it to my blog (yourfreelanceaccountant.blogspot.com or go to my FB page---fb.me/baasinat. I will answer the questions about your bank.

There are other reasons why the bank is now extinct. This is just the beginning. I will unfold the other reasons for you on Friday.

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