Macro economics Research Paper Example | Topics and Well Written Essays - 1000 words

Macro economics - Research Paper Example To understand the European Debt Crisis, the events leading up to 2009 must be thoroughly analyzed. On February 7th, 1992 the 13 member nations of the European Council gathered together to sign the Maastricht Treaty The purpose of the treaty was to lay out key financial rules for each member state to adhere to, with the long term goal being that of creating a union between the member states promoting economical growth and free trade. The treaty primarily encompassed four points: Firstly, a close monitor on inflation rates, ensuring that no member state was 1.5 percent higher than the average of the three best countries' rates. Secondly, tight regulation on the annual government deficit. Thirdly, member states would adhere to the currency exchange rates set by the European Monetary System (EMS). Finally, the nominal long-term interest rate should not be more than two percentage points higher than in the three lowest inflation member states. While all 13 members signed, at the end of 20 10 only four countries were able to abide by the policy for Government Debt. In essence, the members of the European Council were spending far more than they were bringing in. The inability for the European countries to manage their debt was the leading cause for the European Debt Crisis. (Arghyrou & Tsoukalas, 2011). ... The creation of the Euro in 1999 was a vehicle to ease trading between its member countries and therefore benefit their economies. The countries that were joined through the Euro were Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. After these countries were united, countries such as Greece were able to take advantage of the lending rates of 1-3% compared to previous rates of 6% or more. Banks lowered their rates as a result of their connection with countries like Germany. The banks reduced their rates on the basis of â€Å"tacit promise†, if Greece could not repay the loan, Germany would. The same rates were additionally offered to Portugal, Italy, Ireland, and Spain. Between 1999 and 2009 Portugal, Italy, Ireland, Greece and Spain, (PIIGS) with their new access to low interest rate loans, took on huge amounts of debt to fund the activities of their countries. This inflow of cash from the loans generated a f alse sense of prosperity in the countries created a 'bubble'. The loans to the countries were issued in exchange for Sovereign Bonds. When Greece announced it had financial difficulties it had a drastic impact on the sovereign bonds that were owned by the banks. The news led to an increase in the bond yields to above 7% indicating that the bond was distressed. As a result of Greece relying on deficit spending to cover their debt, issuing bonds was the only way they could manage, however, with the huge decline in their bond value they are currently not able to raise enough funds to stay solvent. In April of 2010, the Troika—the International Monetary Fund (IMF), the European Central Bank (ECB), and the European Commission (EC, the executive arm of the European Union)—structured a bailout

The workmanship of risk CRAFTS, skill and the quality of materials Essay

The workmanship of risk CRAFTS, skill and the quality of materials - Essay Example Obviously when he does not and relies on manual tools he subscribes to the workmanship of risk theory. The discussion that follows demonstrates how. According to Edward Luci-Smith, craft has endured three stages throughout history. In the first stage, craft endured a period where all objects were created purely by hand. The emphasis was on craft and it mattered not whether the object crafted was decorative, ritual or purely utilitarian. The second and third stages occurred from the Renaissance period onward and during the second stage there was marked distinction between fine arts and craft. This was primarily during the Renaissance period. By the time of the Industrial Revolution craft was distinguished from those objects handcrafted and those objects produced by machine. (Lucie-Smith, 1981, 83-85) It was this last stage of craft that gave rise to Pye’s Workmanship of Risk and Workmanship of Certainty theories. With the advances in technology craft took on a different dimension. Man could rely on his own skill to create an object or he could rely on the advances in technology to create objects with a greater certainty that those objects would turn out the way they were designed. Contemporary craft has evolved into a â€Å"high-quality, unique one-off art object and limited-quantity design work.† (Kikuchi, 2004, 235) Craft by definition requires a specific knowledge and skill to a point where it reflects workmanship, function and art. (Kikuchi, 2004, 236) To this end contemporary craft challenges the mass production of objects that are turned out automatically because this kind of production: In distinguishing between the workmanship of risk and the workmanship of certainty, Pye maintains that the latter is not possible without the former. (Pye, 1995,23) While the dynamics of workmanship of certainty permits mad to put out objects in mass quantities

Mergers and Acquisitions Assignment Example | Topics and Well Written Essays - 1250 words

Mergers and Acquisitions - Assignment Example But in acquisition only the acquiring company remains after completion of the process. The acquisition of whatsapp by facebook is discussed in the following pages. Whatsapp is a relatively new free mobile messaging service company which allows user to send messages to each other freely over the internet (It charges $1 as subscription charges after 1st year). It has a customer base of 450 million compared to facebook which has a customer base of 1.23 billion. Facebook is a giant in the area of social network and whatsapp has the potential to be a giant in the mobile messaging service domain. Facebook has recently completed its acquisition of Whatsapp for a whooping sum of $22 billion (Oreskovic, 2014). Among the big startup acquisitions that has taken place it ranks the biggest. Now the question arises why did facebook acquire whatsapp for such a whooping price? Among the many reasons some are: 4. For whatsapp things couldn’t be better because facebook has said that it will allow whatsapp to grow independently and won’t interfere. So besides the cash and instant recognition whatsapp founders are also granted freedom of making decisions. Whereas Facebook has well established its presence in the social network where it has established itself as the market leader without any doubt, whatsapp on the other hand has all potentials to be a future leader in the mobile messaging service domain. In fact the growth rate of whatsapp in the first four years of operation is much higher that facebook had (A fact that was admitted by zuckerberg himself). Although this deal is pretty recent and its actual future implications and ramifications can be known at a later stage but, this deal is going to prove a major milestone and is actually a master stroke by Facebook CEO Zuckerberg. Effects of this deal are. 2. Through this deal Facebook has actually eliminated his competitor from a seemingly unrelated

The workmanship of risk CRAFTS, skill and the quality of materials Essay

The workmanship of risk CRAFTS, skill and the quality of materials - Essay Example Obviously when he does not and relies on manual tools he subscribes to the workmanship of risk theory. The discussion that follows demonstrates how. According to Edward Luci-Smith, craft has endured three stages throughout history. In the first stage, craft endured a period where all objects were created purely by hand. The emphasis was on craft and it mattered not whether the object crafted was decorative, ritual or purely utilitarian. The second and third stages occurred from the Renaissance period onward and during the second stage there was marked distinction between fine arts and craft. This was primarily during the Renaissance period. By the time of the Industrial Revolution craft was distinguished from those objects handcrafted and those objects produced by machine. (Lucie-Smith, 1981, 83-85) It was this last stage of craft that gave rise to Pye’s Workmanship of Risk and Workmanship of Certainty theories. With the advances in technology craft took on a different dimension. Man could rely on his own skill to create an object or he could rely on the advances in technology to create objects with a greater certainty that those objects would turn out the way they were designed. Contemporary craft has evolved into a â€Å"high-quality, unique one-off art object and limited-quantity design work.† (Kikuchi, 2004, 235) Craft by definition requires a specific knowledge and skill to a point where it reflects workmanship, function and art. (Kikuchi, 2004, 236) To this end contemporary craft challenges the mass production of objects that are turned out automatically because this kind of production: In distinguishing between the workmanship of risk and the workmanship of certainty, Pye maintains that the latter is not possible without the former. (Pye, 1995,23) While the dynamics of workmanship of certainty permits mad to put out objects in mass quantities

Dykeman Article Essay Example | Topics and Well Written Essays - 1250 words

Dykeman Article - Essay Example Bureau of the Census, 1996 (Dykeman, 2003, p. 41). No doubt, theses parental divorces can adversely affect the future life of such children; these can negatively affect the psychological health of children and their performance at school. Children are also very much affected by the manner of interaction between their parents both before and after the divorce; children fail to meet academic and social expectations at school and are moved by feelings of anxiety, depression, aggression, lack of emotional well-being and self-esteem (Dykeman, 2003, p. 42). This highlights the role of school counselors and pinpoints the need of introducing primary, secondary and tertiary interventions among these children. The purpose of Dykeman’s study was to observe the effects of pre-referral tertiary-intervention program on such children who were referred for special education assessment due to behavioral difficulties that stemmed from their parents’ separation or divorce. 21 students (even though only 15 of them completed the treatment and follow up) were thus selected and the community agency counselors administered a conflict-resolution model of family-systems intervention on both the children and their respective custodial parents. The treatment focused mainly on the â€Å"cognitions and behaviors operant within the family environment that both preceded and followed classroom misbehavior and the strategies used by the custodial parent to discipline and socialize the child† (Dykeman, 2003, p. 43). The participant children were enrolled either in their seventh or eighth grade and the 15 custodial parents were middle aged, with 13 mothers and 2 fathers. The progress made by t he children were measured using the Conflict Tactics Scale in terms of their reasoning, verbal aggression, and violence. It is worthwhile to attempt a critique of the statistical analysis presented throughout the article. As already mentioned

Ethernet system Essay Example for Free

Ethernet system Essay Robert Metcalfe with his colleagues at the Xerox Palo Alto research Center (PARC) developed the experimental Ethernet system. According to O’Reilly and associates (2000) the main purpose of developing the Ethernet system is to interconnect a personal workstation with graphical user interface called Xerox Alto. The experimental system was used in order to connect Altos and also printers and servers. The systems interface‘s signal clock was patterned in the Alto’s system clock. This resulted to 2. 94 Mbps. data transmission rate on the experimental Ethernet. Ethernet was originally known as Alto Aloha Network. Alto Aloha Network was changed its name to Ethernet by Metcalfe to indicate that the system not only support Alto’s but also other computers. And Metcalfe also point out that the Ethernet has progressed way beyond the Aloha system. He chose the name ether as to describe the essential feature of the system which is the physical medium carries bits to all stations the same way as the aluminiferous ether was once believe to proliferate There are two ways which can be used to allocate the capacity of transmission media: baseband and broadband transmissions. Baseband transmission allocates the entire capacity of the medium to one communication channel. It uses distinct values by measuring the voltage in wire which only carried one signal at a time. In broadband transmission, the system allows two or more communication channels to share the bandwidth of the communication medium. The system uses the technique of dividing the bandwidth into frequency bands which is called frequency division multiplexing (FDM) which works only with analog signals. There is also another technique called time-division multiplexing (TDM) that supports digital signals. Figure 1, show the difference between baseband and broadband transmission mode of operation: Figure 1. Difference in the mode of operation between baseband and broadband Broadband transmission is used in the web hosting companies. This is because of the higher speeds of the broadband. With the use of broadband, people can enjoy the full range of internet services like downloading videos, music, watching movies and plying online games. Transceivers have different speeds which are measured in MHz and also specified in wavelengths. The larger the value of the fiber core of the transceivers, measured in microns, there will be more bandwidth possible but also the distance will be shorter. The 1000 Base-LX is the long wavelength with a signaling speed of 1. 25 ±100 ppm GBd. This transceiver can use both 62. 5 and 50 micron multimode fiber and it also uses single-mode fiber optic cables with distances of 440m, 550m and 5 km. Another transreceiver is the 100 Base-TX which uses 4B5B binary encoding to encode 100 Mbps data stream in a signal of 125 MHz. One pair is used for transmitting data while the other pair is used for receiving the data. Given this, one user can setup a system for full duplex communication given that there are only interfaces in the same collision domain. It is either the two computers are directly connected to each other by crossover cable or a computer directly connected to a switch. Full duplex communication result to doubling the potential throughput but not often reached more than the modest improvement. Based on Sheldon and Big Sur Multimedia (2001), link aggregation is the process of connecting together two or more data channels in order to become a single channel which appears as a single, higher-bandwidth logical link. Also this aggregated links can provide redundancy and fault tolerance if the links follow different physical path. By linking the digital lines, the link aggregation improves the access to public networks. The aggregation is also use in enterprise network to build multigigabit backbone links. It also allows the network’s backbone speed to grow increasingly when the demands on the network increases without replacing everything and buy new and expensive hardware. Carrier Sense Multiple Access with Collision Avoidance (CSMA/CA) protocol was intended for local area network (LAN) environments where in all the nodes are positioned few hundred feet from each other. The importance of the protocol is to listen up each node to the channels in a short period of time before it transmits. The main assumption of the protocol is that each node should be able to hear the transmission from every other station. But this assumption is violated in access network and this resulted to several problems. One of the serious problems encountered is the hidden transmitter problem. This occurs when the CSMA/CA cannot function properly due to a wireless node cannot hear one or more of the other nodes. And when this happen, multiple nodes attempt to transmit their data simultaneously over the shared data thus resulting to interference with each other. To address the hidden transmitter problem, the 802. 11 standard uses the protocol request to send/clear to send (RTS/CTS). Before transmitting each packet, each node transmit an RTS packet to other nodes to warn them that it is about to transmit data and after each transmission, it broadcasts CTS packet. This process is time and bandwidth consuming process and it is required for each and every transmission by each and every wireless node. But this process sill does not address the hidden transmitter problem fully because RTS/CTS packets are subjected to repeated collisions. In most applications, the wireless standard 802. 11b operating at 2. 4 ghz is ample enough. This wireless standard is the mostly widely accepted standard among the three wireless standards and also the price of the equipment is the cheapest because of the rising demand for the 802. 11g. Its distance will rely mostly on the communicating devices whether it have line of site or not. And with fewer obstacles among the transmitting and receiving devices, there will be better wireless connection and therefore much better web surfing. The 802. 11b wireless standard is good enough if using wireless route or access point only for internet usage because the connection to internet via broadband modem operates about 2mbps which is very fast. The 802. 11b transfer data at the rate of 11mbps which is sufficient for internet usage. This device saves money on equipment and gives great web surfing services. Another wireless standard being used is the 802. 11g standard. It is replacing the widely accepted standard which is the 802. 11b because both operate on the same frequency and the price drastically goes down on products. This standard is much very similar to 802. 11b because it also usually needs a line of site to achieve optical performance. Both standards, 802. 11b and 802. 11g operate at the same frequency range of 2. 4ghz and are inter-operable with each other. All the devices of 802. 11g can communicate with 802. 11 devices and the main advantage of the 802. 11g devices is that when transferring files betweens computers or networks, it is usually at a greater speed. It is recommended to use 802. 11g when using wireless connection to transfer files (data files, voice, music, and videos) around the home and office. 802. 11g standard also allows manufacturers to developed devices which work at speed of up to 108mbps because it recommended when transferring large data or audio files within LAN. Wi-Fi Protected Access (WPA) is a security technology that is used in wireless network. This was created by an industry trade group called the Wi-Fi Alliance which owns the trademark for the name Wi-Fi and certifies products that bear the name. WPA was created in order to response on the serious weaknesses of the previous system, the Wired Equivalent Privacy (WEP) and also to improve the authentication and encryption features of the WEP. It implements majority of the IEEE 802. 11i and intended to take place the place of WEP. It was designed in order to work with all wireless network interface cards but not with first generation wireless access point. Temporal Key Integrity Protocol (TKIP) is one of the key technologies behind WPA which deals with the encryption weaknesses of the WEP. Also the WAP have built-in authentication which is a key component. The WAP uses the RC4 stream cipher which has a 128-bit key and a 49-bit initialization vector (IV). With the combination of the TKIP and the RC4 stream cipher; this solves the problem of key recovery attacks which was found in WEP. In addition, the WPA provides much improved payload integrity. WPA uses a more secured message authentication code (MAC) but also termed as MIC which stand for message integrity code which is an algorithm â€Å"Michael†. MIC includes a frame counter preventing replay attacks. With the features of the WPA like having increased size of the keys and IV’s, reduced number of packets sent with related keys and adding up of a secured message verification system, it is far more difficult to break in within the system. There is one variation in WPA which is called the WPA pre shared key (WPA-PSK), which is also known as personal mode. This was designed for home and small office usage and networks which can’t afford the cost and complexity of the 802. 1X authentication server. To access the network, the user must enter a pass phrase, with 8 to 63 printable ASCII characters or 64 hexadecimal digits. This can be stored in the user’s computer with discretion under most operating system in order to avoid re-entry and must remain in the Wi-Fi access point. Protected Extensible Authentication Protocol (PEAP) securely transmits authentication information which includes password, over wired and wireless network. It is also an 802. 1x authentication type for wireless LAN’s. The PEAP is created by the Cisco Systems, Microsoft and RSA Security which is base on the Internet Draft submitted to the IETF. (Cisco Systems, 2007) The system uses only server side public key certificates which authenticate clients by creating encrypted SSL/TLS tunnel in between client and authentic server. This protects from casual inspection the resulting exchange of authentication. According to the Cisco Systems Inc. , the following are important benefits of the PEAP web security system: †¢ It relies on the Transport Layer Security (TLS) which allow non-encrypted authentication types (EAP-Generic Token Card and One Time Password (OTP)) support †¢ It uses the server-side Public-Key Infrastructure (PKI) based digital certification authentication †¢ It allows for the authentication to an extended suite of directories which include Lightweight Directory Access Protocol (LDAP), Novell NDS and OTPA databases †¢ It uses the TLS in order to encrypt all the user-sensitive authentication information †¢ It supports the password change at expiration †¢ It does not display the logon username in the EAP identity response †¢ The system is not susceptible to dictionary attacks †¢ It offer dynamic privacy protection while using in combination with Temporal Key Integrity Protocol (TKIP) or the Advanced Encryption Standard (AES) Also the PEAP have enterprise benefit. Based on the Cisco System Inc. , PEAP is based upon the server-side EAP-TLS. This means that organization can avoid the issue associated in the installing of digital certificates on every client machine which is required by the EAP-TLS. This provides the enterprise to choose what method of client authentication depending on their needs. PEAP authentication work in two phases: ? In phase 1, performing the server-side TLS authentication will result to creation of an encrypted tunnel and will achieve server-side authentication. One the process is done the data are encrypted with all the user-sensitive information ? For phase 2 according to the Cisco System Inc. , the client is authenticated by using methods like the EAP-GTC and the Microsoft Challenge Authentication Protocol (MS-CHAP) Public switched telephone network (PSTN) is referred as the public communication providing local, extended and long distance call telephone service. It is composed of telephone exchanges arranged in order to have nationwide telephone communication system. The system is open for those who can afford the service. Packets, pieces of the caller’s conversation are switched and then sent simultaneously to many connections to reach a receiver in the other end. All the phones in PSTN are connected in a way that any phone can call to any other phone due to all the local phone systems are connected to each other. Mitchell (2007) cited that PSTN provides the traditional Plain Old Telephone Service (POTS) to establishments and residences and also some parts of the PSTN are being utilized for DSL, VoIP and other internet-based network. In much relation to internet, this provides much of the internet’s long-distance infrastructure. Internet service providers (ISP) pay the long distance provider for the access to their infrastructure and they share the circuits among users in the process called packet switching. PSTN network link supports 64 kbps and in residences the PSTN phone lines carrying the bandwidth is made up of copper cable. Dial-up modems utilize 56kbps of the bandwidth when they are connected to a phone line. Also the PSTN utilizes the SS7 signaling protocol. SS7 signaling protocol support the exchange of special-purpose messages on public telephone networks. SS7 messages pass over separate channel different from the channel used for voice communication and it is referred as out of band signaling. Wireless local loop is sometimes called radio in the loop (RITL) or fixed –radio access (FRA). It is a system that connects users and subscribers to the public switched telephone network (PSTN) by the use of radio signals as substitute for copper for all part of the connection between subscriber and the switch. This includes cordless access systems; propriety fixed radio access and fixed cellular systems. One of the advantages of the wireless local loop is that it can be deployed in just weeks or months in comparison with copper wire systems which took months and years for the deployments. The instillation of the wireless local loop considerately has much lower construction cost than laying copper lines. The maintenance and operations of the wireless local loop are that easy and the average maintenance time per subscriber is shorter by 3 to 4 times. Signaling is the exchange between information which concerns about the establishment and in the control of a connection and the management of the network. There are many types of signaling: †¢ In-band signaling pertains to the exchange of signaling information within the same channel of the telephone call †¢ Out-of-band signaling is telecommunication signaling meaning exchange of information to control telephone call. It is done over a channel and it separates from channels which is use for telephone call. This signaling is used by Signaling system #7, the signaling standard controlling the world’s phone calls †¢ Line signaling is much concerned in transmitting information on the state of line or channel †¢ Register signaling is focused on the transmittance of information in the calling/ called telephone number †¢ Channels-associated signaling utilizes signaling channels dedicating to a specific bearer channel †¢ Common-channels signaling, utilizes signaling channels which transmit signaling information to multiple bearer channels. †¢ Compelled signaling pertains to the need of the receive signal to be fully acknowledged before the next signal is sent. †¢ Subscriber signaling pertains to the telephone and the telephone exchanges †¢ Trunk signaling pertains to the exchange. References Buis, Paul. (1996, September). Common 100 Mbps Hardware Variations. Ethernet Technology:Underlying Technologies. (Chapter 4). Retrieved September 16,2007 from http://www. cs. bsu. edu/homepages/peb/cs637/ethernet/100mbps. htm Computer Hope. (2007). Ethernet. Retrieved September 16,2007 from http://www. computerhope. com/jargon/e/ethernet. htm ETSTechNEWS. What is the difference between 802. 11g and 802. 11b? Retrieved September 17, 2007 from http://web. monroecc. edu/ETSTechNEWS/80211g Fleishman, Glenn. (2003, November 4). Weakness in Passphrase Choice in WPA Interface. Retrieved September 17,2007 from http://wifinetnews. com/archives/002452. html GNS Wireless LLC. 802. 11a vs. 802. 11b vs. 802. 11g. 2007. Retrieved September 16, 2007 from the http://www. gnswireless. com/AvsBvsG. htm Laverty, Denis. WPA vs. WEP: How your Choice Affects your Wireless Network Security. Retrieved September 16,2007 from http://www. openxtra. co. uk/articles/wpa-vs-wep. php McLauren, Bruce. (1998). Cabling Options. How Gigabit Ethernet works. Retrieved September 15,2007 from http://misnt. indstate. edu/coutinho/ge/WORKS. HTM Mitchell, Bradley. Wireless/networking: â€Å"WPA: Wi-Fi Protected Access. Retrieved September 16,2007 from http://searchnetworking. techtarget. com/sDefinition/0,,sid7_gci214316,00. html Ou, George. (2005,June 2). Understanding the updated WPA and WPA2 standards. Message posted to http://blogs. zdnet. com/Ou/index. php? p=67 Pidgeon,Nick. Introduction to how Ethernet Works. The Ethernet. Retrieved September 16,2007 from http://computer. howstuffworks. com/ethernet. Sheldon, Tom. Link Aggregation. â€Å"The Encyclopedia of Networking and Telecommunications. Retrieve September 16,2007 from http://www. linktionary. com/l/link_aggregation. html Spurgeon, Charles E.. (2000). Why is it called Ethernet?. Ethernet: The Definitive Guide. Retrieved September 16,2007 from http://www. ethermanage. com/ethernet/ethername. html ICT Global. What is Ethernet?. Ethernet FAQ. Retrieved September 16,2007from http://www. ictglobal. com/ICT010/faq1. html Networking Essentials. Band Usage (Baseband or Broadband). Retrieved September 17,2007 from http://www. measureup. com/testobjects/MS_NetEss/5a67289. htm

The Benefits And Challanges Of Accrual Accounting Versus Cash Accounting Application Accounting Essay

The Benefits And Challanges Of Accrual Accounting Versus Cash Accounting Application Accounting Essay ABSTRACT This paper propose a depth understanding and critical evaluation of the benefits and challanges of accrual accounting versus cash accounting aplication for budgeting and reporting in Municipal Council of Kota Kinabalu, a local government in Malaysia. Motivation of this paper is drawn on the potential benefits of accrual accounting in budgeting and financial reporting of a local government as empirically established in other countries. However, despite the success stories of accrual accounting aplication in other countries, it has yet to be fully replicated in Malaysia. The expected contribution of this paper are; (i) Critical evaluation of financial management and reporting practices of local government in Malaysia; (ii) Empirically analysing the benefits and limitations of cash versus accrual accounting application in budgeting and accounting transaction of a local government, the case of DBKK; and (iii) Contributing to enrich the literature and body of knowledge of local government accounting practices in Malaysia. Keywords: Budgeting, Financial Reporting, Accrual Accounting, Local Government, Malaysia INTRODUCTION Motivation for Research The government manages its financial economic activities through public accounting. Public accounting systems aim at authorizing and recording cash receipts and expenditures in respect of an agreed budget. In most countries, it is not consistently regulated. There are two types of approach in public sectors financial reporting which are cash accounting and accrual accounting. In Malaysia, cash and modified cash is the current basis adopted by the Malaysian government. Malaysian government has also made a move in implementing the accrual accounting for public sectors (Abdul Samad, 2001). This is because accrual basis of accounting generates better quality of financial information and this information is necessary for the discharge of accountability and better decision making by internal management (Sutcliffe, 2001). Moreover, the traditional cash accounting system adopted in many countries is perceived as no longer satisfactory (Abdul Samad, 2001). Many countries like Australia, New Zealand and Canada have fully implemented this accounting reform in their government accounting. As for Malaysian context, according to Abdul Samad (2001), by looking at the experiences of the countries that had undergone reformation in the public sector, it could be concluded that the major demand for the push to accrual accounting is the growing demand for a greater transparency and better performances of the government sector and the companies controlled by the government. The objective of this study is to investigate and critically evaluate the benefits and challanges of accrual accounting versus cash accounting aplication in Municipal Council of Kota Kinabalu (DBKK), a local government in Malaysia. Arrangement of research proposal is as follows; the next section will discuss about the philosophical background related to Public Sector (PS) as well as accounting standards employed by them. This is follow by empirical analysis of cash vs. accrual budgeting and accounting application in PS. This expected to sheeds a light on identifying the potential research gaps. Following this is the research questions and contributions which are designed based on the identified research gaps. The final part of this paper summarises the research methodology and structure as well as research planning. PHILOSOPHICAL BACKGROUND Defining Public Sector in Malaysia Public sector is part of the economy concerned with providing basic government services whether federal, state or local/municipal council. Components of Public Sector in Malaysia is categorised into three tiers of government namely; federal government, state government and local government (Fatimah et. al., 2008). Public sector organisations exhibit a variety of social, economic, political and legal characteristics (xxxxx). Figure 1: Components of Public Sector in Malaysia The federal government s the highest tier of the government, which comprises of the minsitries, departments and public enterprises. Ministris are the highest boy in the federal administratives followed by government department/agencies which responsibles for implementing government policies. While, a public enterprises can be classified eiher as a statutory or non-statutory bodies. State government is the second tier of the government, which comprises of ministries (for Sabah and Sarawak only), department and public enterprises. The administrative mechniery of the State is headed by the State Secretary. The local government is in the third tier of the government hierarchy in Malaysia. The local government is governed by the Local Governmen Act 1976. By virtue of Section 2 of this Act, local authority mean any City Council, Municipal Council or District Council. In Malaysia, the power of the decision making is transferred to the local authorities administer their respective areas. In respect to the accounting management, Section 9(2) states that the local authority shall furnish the State Authority with such returns, accounts and other information with respect to the property and activities of the local authority. The Malaysians Public Sector Accounting Theory and Practices Accounting has been generally defined as the system of identifying, classifying, recording, summarising, analysing and reporting of financial data and information of an organisation in accordance with the accepted principles, concepts, conventions, standards, and regulation (Fatimah et. al., 2008). Public sector accounting is different from private sector accounting. Accounting and financial reporting for public sector are based on distinctive concepts, standards and procedures designed to accomondate their environment and needs of their accounting information users (Fatimah et. al., 2008). In Malaysia, the public sector accounting system is designed to comply with the Federal Constitution, statutory and other legal requirements. In general, the public sector uses fund accounting where seperate accounts are maintained for each fund so that limitations and resrictions placed on use of the resources allocated can be properly monitored. The government financial system and procedures can be devided into two categories namely financial procedures and non-financial procedures. The financial procedures related to the finance and accounting of public funds. While, the non-financial procedures on the aspects including finance and accounting. The government financial system and procesures are based on; (i) Federal Constitution, (ii) Financial Procedure Act 1957, (iii) Treasury instructions, (iv) Treasury circulars, (v) Government Accounting Standards, and (vi) International Public Sector Accounting Standards (IPSASs). The Government Accounting Standards (PPK) has been set p by the Accountant General Department since 2002. Its objective is to prescribe the standards and the basis for preparation of government financial statements in accordabce with the requirements of the Federal Constitution and the Financial Procedures Act 1957 (Revised 1972). According to the Public Accounts 2006, the Accountant General Department has issued the following PPK; Table 1: PPK Particulars Issued On Effective for Financial Year 1 Government Accounting Policies November 2002 2003 2 Presentation of Financial Statements May 2004 2005 3 Consolidated Revenue Account May 2004 2005 4 Consolidated Trust Account December 2004 2006 5 Consolidated Loan Account December 2004 2006 6 Investment December 2004 2006 7 Cash December 2005 2007 8 Statement of Memorandum Account December 2005 2007 9 Foreign Exchange June 2007 2008 10 Government Grant June 2007 2008 Source: Public Account 2006, as cited in Fatimah et. al., 2008 Basis of Accounting The Federal and State Government have been adopting modified cash basis of accounting in the preparation of the annual financial statements where expenditures incurred in the old financial year but not yet paid will be paid in January of the new financial year and are reported as expenses for the old financial year. As for the Local Government, Statutory Bodies and Government Linked Companies, they have been adopting accrual basis of accounting in the preparation of the general purpose financial statements. Types of accounting systems The bases of accounting systems are generally classified into four broad categories: cash, modified cash, modified accrual, and full accrual. This classification refers to the accounting principles that determine when the transactions or events should be recognized for financial reporting purposes. Problem Statements Traditionally, governments used to deploy input-based budgeting systems and cash-based accounting systems. However, these systems do not provide information that is necessary for a government to operate efficiently and effectively (Hoek, 2005). Despite the potential benefits of the accrual system in promoting financial efficiency and accountability (Wynne, 2004; xxxx; xxxx; xxxx), still not all government agencies have implemented this system and empirical research have established evidence on why some countries have not done so (Wynne, 2004; xxxx; xxxx; xxxx). Additionally, no cost benefit study has been undertaken on the move to accrual based accounting (Wynne, 2004). In Malaysia, in line with the financial budgeting and reporting reforms in public sector, government has also made a move in implementing the accrual accounting for public sectors (Abdul Samad, 2001). This is because accrual basis of accounting generates better quality of financial information and this information is necessary for the discharge of accountability and better decision making by internal management (Sutcliffe, 2001). Moreover, the traditional cash accounting system adopted in many countries is perceived as no longer satisfactory (Abdul Samad, 2001). Empirically, many research on accrual accounting have been carried out in western countries such as New Zealand, Australia, Finland, Greece, Denmark, Sweden and United States (Hoek, 2005; xxxx; xxxx; xxxx), but few researches have been done covering public sector in Malaysia. Based on the identified problems and motivated to carry out this research to determine whether local authorities have fully adopt the accrual accounting in recording the income and expenditures. This research is expected to contribute to the enrichment of body of knowledge in the area of Local Government Accounting Practices specifically in Malaysia. Research Questions The main research questions of this study are as follows:- RQ_1: Understanding of accounting prnciples and practices of DBKK RQ_2: Investigation of current accounting systems used by DBKK RQ_3: Adoption of cash vs. accrual budgeting and accounting in DBKK. What are the problems? RQ_4: Will accrual accounting improves the financial performance of DBKK? RQ_5: Cost-Benefits analysis and program implementation design of accrual accounting implementation in DBKK. Research Contributions Critical evaluation of financial management and reporting practices of local government in Malaysia. Empirically analysing the benefits and limitations of cash versus accrual accounting application in budgeting and accounting reporting of a local government. Comprehensive program implementation design for implementation of accrual-based accounting in local government. Contributing to enrich the literature and body of knowledge of local government accounting practices in Malaysia. LITERATURE REVIEW This section will discussed the empirical findings of previous papers related to the application of Accrual Budgeting and Accounting in Government Sector all over the world. Specific attention will be focused on financial reporting in local government of Malaysia. The Move to Accrual Budgeting and Accounting in Government Sector Identifying Strategic Research Issues Budgeting Accounting Reporting in Government Sectors Public Sector Accounting Principles Practices Figure 2: Mapping the Literature Review The Public Sector Accounting Principles and Practices: The World Views Budgeting and Accounting Reporting in Government Sector . Innovation Cronological Events The Move to Accrual Accounting : Identifying The Research Gaps The move from the cash basis to the accrual basis of accounting in the Australian Public Sector (APS) was a key element of the New Public Management (NPM) reform program and an event of historical significance (Davis, 2010). One of the most crucial aspects of New Public Management (NPM) was the wave of reforms in financial information systems. These changes are an essential element in improving the management and decision-making of government institutions, which is also called New Public Financial Management (NPFM) (Guthrie et al., 1999). The cornerstone of reforming financial information systems is the introduction of accrual accounting in the public sector, at the expense of traditional cash accounting systems (Lapsley, 1999). Several governments have been adopting and implementing accrual accounting systems Over the last 20 years, there have been increasing calls for the government and public sector organization to move to accrual based accounting and adopt private-sector style financial statements (Wynne, 2004). Traditionally, cash accounting in public sector focused on the control of expenditure. The reform of the public sector has changed the traditional role of accounting to one that is focused on accountability and the efficient allocation of resources. This implies that accounting should concentrate upon outputs, performance measurement, efficiency, cost saving, productivity and performance measurement (Hoque and Moll, 2001; Broadbent and Guthrie, 1992). This in turn requires that new accounting technologies be employed such as planning program budgeting, accrual accounting, performance indicators and annual reporting mechanism (Hoque and Moll, 2001). Accrual accounting if being adopted in public sector, provides a better quality of information and a better way of discharging accountability among the public sector managers. Many countries like Australia, New Zealand and Canada have fully implemented? this accounting reform in their government accounting. As for Malaysian context, according to Abdul Samad (2001), by looking at the experiences of the countries that had undergone reformation in the public sector, it could be concluded that the major demand for the push to accrual accounting is the growing demand for a greater transparency and better performances of the government sector and the companies controlled by the government. Public Sector Accounting : Some International Evidence Governments and Public Sector Entities (PSEs) of the developed part of the world which were once using Cash-Basis of Accounting are now rapidly moving towards Accrual-Based Accounting System. Some of these countries have not only implemented the full Accrual-Based Accounting but have also adopted International Public Sector Accounting Standards (IPSASs) for compilation of government accounts and financial reporting. Status of implementation of Accrual-Based Accounting and adoption of IPSASs by the Governments is as under: à ¢Ã¢â€š ¬Ã‚ ¢ Australia (State, Federal and Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Canada (State, Federal and Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Finland (Government agencies and whole of Government) à ¢Ã¢â€š ¬Ã‚ ¢ France (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Germany (Some Government Organizations) à ¢Ã¢â€š ¬Ã‚ ¢ Ireland (Pilot Project For Selected Government Departments) à ¢Ã¢â€š ¬Ã‚ ¢ Italy (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Malaysia (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Netherlands (Government agencies and Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ New Zealand (National and Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Sweden (Central Government agencies and Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Switzerland (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ Tanzania (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ United Kingdom (Local Governments) à ¢Ã¢â€š ¬Ã‚ ¢ USA (Federal Government) Source: South Asian Federation Of Accountants, 2006 Comparative analysis of the governmental financial information systems: International Evidence Source: Christiaens et. al., (2010) Accrual vs Cash Cash accounting requires the record of inflows and outflows of cash. Accrual accounting as defined by Federal Accounting Standards Advisory Board, the recognition of the financial effects of transactions, events and circumstances in the period(s) when (they) occur, regardless of when cash is received or paid. It also requires revenue to be recognized in the period in which economic benefits can be measured reliably. Like wise, expenses are recognized when the consumption of goods is capable of reliable measurement (Hoque and Moll, 2001). Table 2: An Overview of Cash Accounting vs. Accrual Accounting systems Basis of comparison Cash Accounting Accrual Accounting Full knowledge of all payment flows Only cash transactions Complete financial overview possible Time of booking Recognizes transactions and economic events only when cash is received or paid Recognizes transactions and economic events when they occur Management of Assets and Resources No single accounts for assets and resources Full knowledge on the value of resources and assets Depreciations, reserves, revenue, expenses Not possible Resource consumption and the wear and tear of resources is displayed Cost and results accounting No knowledge of costs by specific cost centres or service products since the linkage between source and application of funds is missing; no matching of revenues and expenses Full knowledge of true costs by specific cost centres and products Source: Adapted from Athukorala, S. Reid, B. (2003) The main advantage of the cash system is simplicity, objectivity and the need to assess the compliance with cash budgets. However there are limitations like the system does not disclosed a true financial and economic position of the entity, no performance indicator and information on cost of services provided available for performance evaluation and control purpose (Montesinos and Bargues, 1996). In addition, the cashbased system also does not provide sufficient information to assess the government financial requirements like cash and revenue requirement to pay for past debts as well as future services, besides fail to provide the government complete information on all that they owe (Hillier, 1996). Advantages of accrual accounting in government A number of researchers argue that cash based financial system and accrual accounting is both useful, however financial reports based on accrual accounting has its own advantages and significance to the modern government. Accrual accounting in government provides better quality financial information, more comprehensive and increase efficiency. This allows a better way of discharging accountability (Abdul Samad, 2001; Sutcliffe, 2001; Hoque and Moll, 2001; Wynne, 2004) by extending the assessment of financial performance beyond the application of cash (OECD, 1993) and supports a better decision making by internal management (OECD, 1993; Sutcliffe, 2001) by providing information on the full cost of operations and the resources used to deliver services to the public (Hoque and Moll, 2001). Reasons for not adopting accrual accountinga Panel A: Local governments Panel B: Central governments Balance sheets and profit/loss calculations are of less importance in the public sector Cash accounting systems are better complement to budgetary accounting systems Accounting reform would lead to considerable costs The current cash accounting system meets all requirements A cash based system fits the characteristics of a public sector organization The accounting system has only just been changed to a modified cash accounting system Local governments resist accounting reform Some public sector efforts cannot be accounted for Former accounting reforms have shown significant implementation problems Accrual accounting has limited potential to support political decision-making aMultiple reasons simultaneously possible. Source: Adapted from Wynne, 2004. Comprehensive Analysis of Accrual Based Accounting in Government Sector Advantages Disadvantages Risk Essential Pre-Conditions Accrual based financial accounts have more information than cash based accounts and have a greater focus on outputs rather than just inputs The information available from accrula based accounts facilitates a better quality of management and decision making, including in the case of allocation of resources. It enables comparisons of full cost of services with the costs of the provision of those services by the private and voluntary sector. It provides greater comparability of management performance results which are not affected by the timing of cash payments and receipts and which information about fixed and current assets and liabilities. It designed to measures profit, a concept which is meaningless in the public sector, where surpluses can arise from the failure to provide agreed services. Maintenance of public asets is mopre important than providing information on their value. It takes budgetary control away from finance staff, as they decide when cash is paid, but non-financial managers and suppliers decide when invoices are issued. It does not appear to have ensured adequate costing system. It has not been wiodely used by other countries. Cash-based accounting is comparatively simple and abjective. Its complexity may mean that there is less surveillance by Parliment and so the government is less accountable. It requires greater professional judgement by both the preparers and auditors of government accounts. Loss of financial control with the introduction of a more complex system. Diversion of resources from more productive reforms. The possibility of government accounting being bought into dispute if accrual accounting fails. The possibility that international accounting standards could be applied with no real understanding of issues involved. The gaps in the standards not being properly addressed. Decision on accounting treatements being made on political grounds. The external auditor being unable to prevent politically-based amendments to the accounts. An adequate timescale and budget not being allowed for the change. The IT systems not being adequate. The process of financial management and expenditure control being made more difficult. Accounting issued to be agreed before accrual absed accounting can be introduced; Taxation revenues Depreciations Approaches to the recorgnition of assets Military assets Infrastructure assers Natural resources Acceptance for change Participation of the accountancy and other profeessions Joint development of accounting standards Support of the government auditors Comprenensive management trainning; Understanding of concepts underlying accrual accounting in budgeting and financial reporting. An appropriate culture approach A robust audit process No corruption A recognition of the time needed for change. An IT capacity. A willingness to use incentives and penalties. That the accrual based approach is part of a process of reform. Source: Summarised from Wynne, 2004 The Research Focus : Local Government Accounting in Malaysia Local Government (LG) accounting has attracted the attention of some members of the academic and professional community since the end of the 19th, early 20th century (e.g. Cooke, 1887; Cleveland, 1909; Metz, 1909; Walker, 1923; Morey, 1933, 1934; Welcker, 1934) as cited in Sargiacomo and Gomes (2010). A LG can be defined as the government of a town, city, county, or region at a local level by locally elected politicians. Consequently, a local government will typically only have control over their specific geographical region, and can not pass or enforce laws that will affect a wider area. Local governments can elect officials, enact taxes, and do many other things that a national government would do, just on a smaller scale. This research will be focusing on a local government accounting issues in Malaysia and taking Municipal Council of Kota Kinabalu City as the sole local government body that is to be investigated. Development of Theoritical Framework The following theoritical framework elaborates the process flows for consideration in decision making for choice of accounting systems in local government. Empirical evidence shows that there are internal and external factors that will influence the choice of cash-based or accrual-based budgeting and accounting. The choice is strategically important for local government efficiency and accountability. Cash-Based System Efficiency? Accountability?in LG Choice of Accounting Systems in LG Internal External Factors Policies Accrual-Based System The choice to move from cash-based to accrual-based accounting systems is not an easy tasks. It will involve a total change of the entire organixation accounting systems and facility supports. Thus, this ideas involve a costs. (explain further) RESEARCH METHODOLOGY This research will need to employ a combination of qualitative and quantitative research techniques to investigates and clarifies the identified research questions. Summary of the research investigations and methodologies are as tabulated below: No. Research Questions Methodology Instruments RQ_1 Understanding of accounting prnciples and practices of DBKK Qualitative Technique Structured interview and inspections of records/policies/circulars RQ_2 Investigation of current accounting systems used by DBKK Qualitative Technique Structured interview and inspections of records/policies/circulars RQ_3 Application of cash vs. accrual budgeting and accounting in DBKK Qualitative Technique Structured interview and inspections of records/policies/circulars RQ_4 Will accrual accounting improves the financial performance of DBKK? Quantitative Technique Accounting Experiments comparing the effects of cash versus accrual accounting on 10 years historical financial performance. Is there any different? RQ_5 Cost-Benefits analysis and program implementation design of accrual accounting implementation in DBKK. Quantitative Technique Determinantion of costs and benefits associated with implementation of accrual-based accounting in DBKK. This research also will provide a comprehensive program implementation design for adoption of accrual-based accounting in DBKK. RESEARCH STRUCTURE [2] State the research objectives [3] Determine relevant questions [1] Define and refine the research problems [6] Interpret the results and write report [5] Collect data and perform analysis [4] Formulate relevant research hypotheses RESEARCH PLANNING Gantt Chart and Milestones GANTT CHART YEAR 1 YEAR 2 YEAR 3 2011 2012 2013 2014   ACTIVITIES/MONTHS 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 1 Initial Preparation 2 Literature Review 3 Research Design 4 Proposal Defence 5 Proposal Refinement 6 Fieldwork 7 Data Analysis 8 Documentation of Report