Sir Richard Branson sells Virgin Money for $40m

BRITISH entrepreneurSir Richard Branson isselling his Virgin Money financial services business in Australia to Bank of Queensland in a $40 million deal.
Under the deal, the bank will have exclusive use of the Virgin Money brand for four decades in exchange for an ongoing royalty to Sir Richard's Virgin Group.
Virgin Group will alsobe given a seat on BoQ's board.
BoQ believes the dealwill allow it to expand into untapped markets by distributing its products marketed under the Virgin Money brand.
"It will enable us to sell BOQ-manufactured banking products marketed under the Virgin Money Australia brand to customers who wouldbe unlikely to walk into one of our branches, and provides a low risk, high potential entry point into online funds management distribution with an established brand," BoQ's chief executive Stuart Grimshaw said.
Virgin Money has about 150,000 customers in Australia.

Bank of Shanghai plans to raise about 15 billion yuan ($2.4billion) through an initial public offering in Hong Kong

SHANGHAI, April 9 (Reuters) - Bank of Shanghai plans to raise about 15 billion yuan ($2.4billion) through an initial public offering in Hong Kong this year to replenishcapital, the official Shanghai Securities News reported on Tuesday, citing an internal document distributed to shareholders.
The Chinese lender, whichis eight percent owned by HSBC Holdings Plc , also plans to raise a similar amount of money by selling shares publicly in mainland China, the newspaper said, without giving a timeframe.
Both listings are subject to regulatory approval, it added.
Bank of Shanghai and some other Chinese companies are looking to raise funds in overseas markets as China's securities regulator has frozen the domestic IPO market since last November as part of a campaign to get more than800 IPO applicants to clean up their books.
The newspaper said Bank of Shanghai is expected to have a capital shortfall of 59 billion yuan by 2014, ofwhich 35 billion yuan would be replenished through bond and share issuance.

Bank of Cyprus big depositors to get 37.5 pct equity

- Big depositors in Cypriot lender Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, a source with direct knowledge of the matter said on Friday.
The rest of their big deposits may never be paid back. About 22.5 percent of deposits over 100,000 euros will attract no interest. The remaining 40 percent will continue toattract interest, but will notbe repaid unless the bank does well.
Authorities were expected to officially announce the conditions on Saturday.

Eurogroup chief says European backing for banks last resort

European support for troubled banks is a last resort laid bare what has long been an open secret in Brussels: promises to create a euro zone backstop for banks may never be fulfilled.
Designed to secure a level playing field in the euro zone and prevent vulnerable countries having to contain financial problems alone, a European banking union was one of the biggest political commitments made to underpin the euro.
Comments from the head of the Eurogroup of finance ministers this week that countries which encounter bank problems may have to cope alone, however, underscore resistance to delivering on last year's promise.
"Strengthen your banks, fix your balance sheets and realise that if a bank gets in trouble, the response will no longer automatically be that we'll come and take away your problem," Jeroen Dijsselbloem told Reuters.
"We're going to push themback," the Dutch Finance Minister said shortly after announcing a bailout of Cyprus that forced the closure of the country's second-biggest bank and imposed huge losses on big depositors.
"That's the first response we need. Push them back. You deal with them."
His candid remarks, described by one EU official as "not the most brilliant thing to say", clashed with a commitmentby euro zone leaders to club together when banks fail. They irritated many in Brussels, used to gentler diplomacy.
The comments also grated in Dublin, which still hopesthe euro zone will stand by a pledge to allow its rescue fund, the EuropeanStability Mechanism, to recapitalise banks directly.
Bailed out by European countries and expected to resume normal borrowing on markets this year, Ireland wants direct assistance available for its banks should they get in trouble again to avoid the risk of adding to the country's debt.
It is also hoping the ESM will assume some of the burden of big recapitalisations that have already taken place.
"The principle which was agreed in June was to break the link between sovereigns and banks and the clear understanding... is that the ESM ... of course will potentially be used forrecapitalisations," Ireland'sEuropean Affairs Minister Lucinda Creighton told Reuters. "That's the whole point."
The euro zone's three maintriple-A rated states, Germany, the Netherlands and Finland, said last year the ESM could only be used if trouble arose at banks under European supervision in future, leaving "legacy" problems to home countries.
BANK RUNS
Dijsselbloem appeared to go further when he said the aim should be "a situation where we will never need to even consider direct recapitalisation".
After remonstrations from several euro zone partners,he issued a statement clarifying that Cyprus was not a template but a special case.
Another euro zone source said the Dutchman, barely one month in the job, had got carried away by his enthusiasm and needed tolearn that, as head of the Eurogroup, "you must giveup on expressing personal opinions"

HOW MONEY TRANSFER IS DRIVING KENYA ECONOMY

HOW MONEY TRANSFER IS DRIVING KENYA ECONOMY
Usage of mobile money transfer is on increase in Kenya day bay day. Some of the operation than by mobile money service include the following
 Paying of electricity and water bills, this days you do not see people lining up in banks just pay the bills.
 Shopping online many companies today in Kenya give their customers to pay for goods or service by paying through mobile money cash transfer. This process operate just like visa.
 Booking of travel ticket today in Kenya major airline services operating in the country allows it customers to pay for their tickets by Mpesa.
Cheap mobile phone being launched in Nairobi my major mobile manufacturers, especially those from china is the key to the success of the project I the country. the four major mobile providers companies in Kenya are;
a) Safaricom through Mpesa service
b) Airtel through Airtel money
c) Orange by Orange money
d) YU by Yucash
Just four months after safaricom launched M-shauri in collaboration with Commercial Bank of Africa a program that allow its customers to save cash or borrow cash. Its recorded massive response from Kenyans. Today it has more than 4 million customer already.
Statistics from Central Bank of Kenya shows that there are 15million bank deposits accounts compared with 24million money transfer accounts.

JPMorgan board "strongly endorses" dual role for Dimon

The board of directors of JPMorgan Chase & Co said on Friday it "strongly endorses" keeping Jamie Dimon as both their chairman and chief executive of the company.
The comment, contained inthe opening pages of the company's proxy filing ahead of its annual meeting on May 21, is a more vigorous affirmation of the same view the paneltook last year when it opposed an unsuccessful shareholder proposal to split the roles.
The remark comes even after the board said in January that it had cut Dimon's annual compensation in half for 2012 to $11.5 million after the company lost $6.2 billion on derivatives in the so-called "London Whale" trades.
The board said the"strength and independence" of its oversight had been demonstrated by actions the company took after thetrading debacle.
The company has since overhauled its risk controlsand replaced some of its top executives.
The new proxy includes a fresh shareholder proposalcalling for different peopleto hold the posts of CEO and chairman. It is similar to last year's proposal which received 40 percentof the vote.
That vote came five days after the company suddenly announced on May 10 that it had a loss of more than $2 billion on derivatives trades. The size of the loss grew afterward and investors learned more details from congressional hearings about how badly the company had handled its investment portfolio.
Proponents of this year's proposal, who include managers of pension fundsfor New York City employees and for the American Federation of State, County and Municipal Employees, haveadded the derivatives loss as a reason to separate the roles.
The board, as it did last year, said it while it is glad to have Dimon in both roles it has not ruled out separating the posts in the future.
This year's meeting, like last year's, is to be held in a JPMorgan office park in Tampa, Florida.
JPMorgan shares have recovered all of the marketvalue they lost after the derivatives debacle. The stock traded up 0.9 percent on Friday to$48.78 at the close of NewYork Stock Exchange trading. It was at $40.74 on May 10 before the company admitted it was losing billions of dollars onthe trades.
Dimon's total compensation, as presented according to theU.S. Securities and Exchange Commission format, was $18.7 million in 2012, down from $23.1 million in 2011. Company and SEC pay counts can differ with the timing of incentive compensation.

List of all the banks in Israel

Bank of Israel
2 Kaplan Street
Kiryat Ben Gurion
P.O.Box 780
Jerusalem 91007
Telephone: +972 2 655-2211
Fax: +972 2 652-8805
Mizrahi Tefahot Bank Ltd
P.O.B. 3450,
7 Jaboutinsky St Ramat Gan 52520
Tetephone: +972 3-7559000
Fax: +972 3-7559913
Arab Israel Bank Ltd
P.O.B. 207,
48 Bar Yehuda Nesher 36601
Telephone: +972 4-8205222
Fax: +972 4-8205250
Bank Hapoalim B.M
P.O.B. 27,
50 Rothschild Blvd Tel Aviv 66883
Telephone: +972 3-5673333
Fax: +972 3-5607028
Bank Leumi Le-Israel B.M
P.O.B. 2,
24-32 Yehuda Halevy St Tel Aviv 65136
Telephone: +972 3-5148111
Fax: +972 3-5148360
Bank Massad Ltd
P.O.B. 2639, 80 80,
Rothschild Blvd Tel Aviv 61025
Telephone: +972 3-5641333
Fax +972 3-5602384
Bank of Jerusalem Ltd
P.O.B. 2255,
2 Herbert Samuel St Jerusalem 91022
Telephone: +972 2-6706211
Fax: +972 2-6246742
Bank Otsar Ha-hayal Ltd
P.O.B. 3506,
11 Menahem Begin st., Ramat-Gan 52136
Telephone: +972 3-7556000
Fax: +972 3-7556007
Bank Poalei Agudat Israel Ltd
P.O.B. 29741,
9 Achad Ha'am St Tel Aviv 61297
Telephone: +972 3-5196650
Fax: +972 3-5196785
Bank Yahav Ltd
P.O.B. 36333,
80 Yirmiyahu St Jerusalem 91363
+972 2-5009666
Fax: +972 2-5385869
Dexia Israel Bank Ltd
Ha'tichon Tower Tel Aviv 64739
Telephone: +972 3-7647600
Fax +972 3-6868336
Israel Discount Bank Ltd
P.O.B. 456,
27-31 Yehuda Halevy St Tel Aviv 61003
Telephone: +972 3-5145555
Fax: +972 3-5145365
Mercantile Discount Bank Ltd
P.O.B. 1292,
103 Allenby St Tel Aviv 61012
Telephone: +972 3-5647333
Fax: +972 3-5647205
The First International Bank of Israel Ltd
P.O.B. 29036,
9 Ahad Ha'am St Tel Aviv 61290
Telephone: +972 3-5196111
Fax: +972 3-5100316
UBank Ltd
P.O.B. 677,
38 Rothschild Blvd Tel Aviv 61006
Telephone: +972 3-5645645
Fax: +972 3-5645210
Union Bank of Israel Ltd
P.O.B. 2428,
6-8 Achuzat Bait St, Tel Aviv 61024
Telephone: +972 3-5191111
Fax: +972 3-5191274
Industrial Development Bank of Israel Ltd.
2 Dafna Street
P.O.Box 33480
Tel Aviv 61334
Telephone: +972 3 697-2727
Fax: +972 3 697-2893/0

OPERATE OR TEMPORARY SHUTDOWN

Operate or Temporarily Shutdown

Differential cost analysis is also used when a business is confronted with the possibility of a temporary shutdown. This type of analysis has to determine whether in the short-run a firm is better off operating than not operating. As long as the product sold recover their variable costs and make a contribution towards the recovery of fixed costs, it may be preferable to operate and not to shutdown. Also management should consider the investment in the training of its employees which would be lost in the event of temporary shutdown. Recruiting and training new workers would add to present costs. Another factor is the loss of established markets. Also a temporary shutdown does not eliminate all costs. Depreciation, taxes, interest, and insurance costs are incurred during shutdown also. The other benefits which should be considered are the following: avoiding operating losses, savings in maintenance and repair costs, savings in indirect labour costs and savings in fixed costs.

Even if sales do not recover the variable cost and the portion of fixed cost that is avoidable, the firm may still be better off operating than shutting down the facility. Closing a facility and subsequently reopening it is a costly process. The shutdown may necessitate the incurrence of maintenance procedures in order to preserve machinery and buildings during periods of inactivity (e.g. rust inhibitors, dust covers, security equipment, etc). The shutdown also may require the incurrence of legal expenditures and employee maintenance pay. During the shutdown period, some employees will probably be lost (i.e., they may not wait until the facility is reopened to go back to work), in which case the investment in the training of those employees will be lost. The morale of other employees, as well as company goodwill, may be adversely affected, and the recruiting and training of replacement workers that must be incurred when the facility is later reopened may add to costs. Although difficult to quantify, the loss of established market share is also a factor to be considered. When a company leaves a market for a while, its customers tend to forget about the company’s product. As a consequence, re-entering the market at a later time will probably require re-educating consumers about the company’s product. These shutdown costs must be weighed against losses from continued operations.

ADVANTAGES AND DISADVANTAGES OF INTERNAL CONTROL SYSTEM

ADVANTAGES AND DISADVANTAGES OF INTERNAL CONTROL SYSTEM

Advantages of ICS to the Auditor

a) ICS will reduce the amount of audit work to be done in so far as the auditor will be able to use systems based audits to apply tests which will facilitate his audit work.
b) A strong ICS will minimise chances of errors and frauds, and the introduction of inter-checking supervision and improved custody will in turn minimise liabilities to third parties, who would have depended on his opinion with greater surety and speed.
c) Will reduce the amount of audit evidence to be gathered, because it will facilitate reaching and using a greater variety of audit evidence available within the business. This will enable him to form an opinion with greater surety and speed.
d) The presence of an internal check system strengthens the credibility of audit evidence gathered.
e) ICS minimises the work load and the time need to take in order to produce his report.
f) The preparation of an ICS will identify those areas prone to errors and frauds, which will enable the auditor to plan his audit work so that he allocates more time and effort to those areas where for organisational reasons the internal check system is weakest.
g) ICS emphasises the use of control accounts thus assuring the auditor of up to date account reconciliation information which will facilitate his examinations.
h) ICS enables him reduce the sample size to be tested and thus facilitate his ability to carry out as many varied audit checks as possible.
i) ICS can only be strong normally with support of a strong internal audit function which in turn enables the auditor to use internal auditor’s work to facilitate his work.
j) A strong ICS boosts accountability which depends on clearly segregated and defined duties and responsibilities and this will enable the auditor to know who to contact in case of difficulties.
k) It also helps him to give quality advice to management; this in turn may minimise his work load in future audits.
l) ICS enables the auditor to have greater knowledge of his client’s business and facilitates the drawing up of a balanced audit opinion.

Disadvantages of ICS to the Auditor

1. The management may over rely on the strength of the ICS and therefore relax their supervision which may leave room for errors and frauds thus exposing the auditor to potential civil liabilities.
2. The presence of ICS may lead to the auditor reducing the volume of examination carried out which may lead to smaller samples of data thus leaving other areas to possibilities of errors and frauds which may expose him to civil liabilities.
3. It may be frustrated by management through collusion and manipulation which may mislead the auditor’s opinion leading to biased reports.
4. The presence of ICS is supposed to minimise the auditor’s volume of tests but not his liabilities which means that its strength may leave some errors and frauds undetected due to relaxed tests. This will increase his liabilities. ICS may be manipulated so that errors and frauds by the management cannot be easily detected and this may lead to a biased opinion.
5. ICS may reduce the auditor’s vigilance and observations with an unfavourable effect on the quality of the audit.
6. ICS may be abused by the internal auditors through collusion with the management and this may lead to the external auditor being mislead.

Advantages of ICS to the Client
a. Safeguarding client’s assets against:
a) Misuse
b) Misappropriation
c) Manipulations
d) Abuse of the Company’s assets (for reasons that will not benefit the Company)
e) Facilitates optimal use of the Company’s assets.

b. Reduces audit fees. This is because less audit work is needed and less audit staff.
Increased efficiency through management supervision and a defined organisation chart. Routine and automatic checks also increase efficiency.
c. Chances of errors and frauds are minimised.
d. This ensures minimum losses, facilitates audit work and hence early reports and attainment of budgeted performance.
e. Facilitates corrective measures in so far as the objectives of the business are better defined and therefore the facilities available can be suitably directed to their achievements.
f. Facilitates up to date records.
g. This is advantageous in that is prompts decisions through feed back to management which helps detect irregularities.
h. Leads to balanced opinion (unqualified report) improving public opinion of the business.
i. This helps in raising finances by selling shares through public sale and improving investment
implementation.
j. It boosts morale of staff through motivation of supervision. This may lead to high output and high profitability.
k. ICS helps in the redress of disastrous decisions especially in high risk situation. This is done through close application of management controls in development situations.
l. ICS assists in the co-ordination of operations. This is done through definition of duties and responsibilities of all employees and it boosts efficiency in the:
1. Carrying out of operations,
2. Efficiency in delegation,
3. Efficiency in execution.

Disadvantages of ICS to the Client

a. ICS is expensive to install and maintain. For example, the physical control security systems require qualified personnel to maintain them and constant servicing.
b. ICS could lead to a problem of over reliance on the ICS. This may lead to relaxation in supervision and allow manipulation of accounts and assets and can also bring about inefficiencies. Maintaining controls requires constancy and consistency.
c. If not well instituted it may encourage over staffing.
d. Rigid implementation may lead to a slowdown in the operation of the business.
e. The ICS requires continuos updating as the organisation changes, if not the ICS may become increasingly obsolete.
f. Use of wrong controls may expose the Company to more problems, e.g. errors and frauds. These are more easily perpetrated if the ICS used is inappropriate.
g. ICS may be frustrated if through changes in company organisation the checks become uncoordinated.

TYPES OF INTERNAL CONTROLS

TYPES OF INTERNAL CONTROLS
This refers to the various types of control procedures that management can put in place in running the operations of the company. The mix of types of controls implemented by management will depend on the control objectives in each accounting area.
(a) Organizational plans/controls
Companies should have proper organisation plans.
They seek to ensure that the entity is properly departmentalized. The functions of every department are specified and the duties of every individual in the department are specified. Delegation of authority and limits of authority should be well and clearly defined. Such a plan boosts accountability within the organisation and reduces duplication of effort.
(b) Segregation of duties
This refers to the separation of the various duties and responsibilities such that one person cannot process and record complete transactions from beginning to the end without being checked by another person. E.g. in the purchase of a company’s fixed assets a single individual should not authorise the purchase, place the order, receive the asset and record the transaction in the accounting records.
To minimise the risk of error and/or intentional manipulation of information. In this regard for every transaction the following functions should be performed by different individuals and departments as much as possible and practicable.
1. Initiation
2. Authorisation- different levels of management should be given authority limits as to what they can authorise or commit the company’s resources. The authority limit should depend on the position, integrity, qualifications and competence.
3. Execution- transactions should be carried out by persons independent from those who authorise the transactions. If one person authorises expenditure a different person should execute.
4. Custody of the asset- officials authorisin/executing a transaction should not have custody to the assets arising out of the transaction.
5. Recording
6. Segregation of duties also covers internal check which refers to the activities of one person must be complementary to the activities of another or subjected to independent checking.

(c) Physical controls
These are security measures concerned with the custody of assets by limiting access to authorized people only. Restriction of access to valuable assets to only authorized persons. There should be direct measures and indirect measures.

Direct measures include:-
a. Lock and key
b. Watchmen or guards
c. Proper fence
d. Mirrors
e. Closed circuit TV’s

Indirect measures will include documentation of all transactions. Controls aim at restricting valuable, portable, exchangeable and desirable assets.

(d) Authorisation and approval
Authorisation should be done by responsible persons. In other words a transaction that commits organisation’s resources should be subject to authorisation and approval by a responsible official. The limits for authorisation should also be specified.

(e) Arithmetical and accounting control.
These are controls within the accounting function, which check that transactions are authorized, correctly and accurately recorded. This is aimed at ensuring completeness and accuracy of the accounting records.
Key features are:
i. Use of standardised documentation raised at every stage of the transaction.
ii. Use of pre-numbered documents.
iii. Documents should be issued in sequence.
iv. Monitor movement of documents by use of a register.
v. Production of exceptional reports for example when a local purchase order has been raised and the order has not been fulfilled by the supplier.
vi. Reconciliation between the different accounts and related control accounts.
(f) Personnel
Proper functioning of any system is dependent on the competence and integrity of those operating it. The entity must therefore recruit competent staff that has integrity. Staff should be assigned responsibilities that match their capabilities. Staff should undergo proper training to ensure that the company’s operations are carried out in the best way possible.

(g) Supervision
Day to day transactions and their recording should be subjected to supervision by competent responsible officials.

(h) Management controls
These controls are exercised by management outside the day to day routine of the system. They include:
i. Review of management accounts.
ii. Comparison of actual performance with budgets.
iii. Internal audit function.
iv. Any other special review procedures.

(i) Rotation of duties
Duties should be rotated between personnel at the same level. Staff should be encouraged to take annual leave.
(j) Routine and automatic checks.
These are checks conducted on routine duties and operations to ensure that they are operating efficiently. Such checks are conducted on a surprise basis to minimise errors and frauds. These include controls such as surprise cash counts and physical inspection of fixed assets.

(k) Internal audit
This is a control function set up by management to review the accounting and internal control systems. Internal audit carries out continuous evaluation of the operating effectiveness of the internal control policies and procedures. The findings and recommendations are reported to management.