Chapter 16 Blog: Payroll Accounting

http://www.cv-library.co.uk/news/1527/Jobseekers-warned-of-employers-‘cheating’-minimum-wage-rules-.html

Summary

The article that I have chosen to base my blog upon, dealt with employers cheating employees in terms of wages. In 2009 research was conducted by TUC (Trades Union Congress) which discovered that around 1.5 million Britons above the age of 21 were being paid under the countries national wage which is 5.73 pounds an hour. The exploitation of employees can be mainly seen within retail, construction and engineering jobs. Like in the case of a 32-year old construction worker, name unknown, who was only paid a very low 4.10 pounds an hour. Currently organizations like HM Revenue and Customs are doing all they can to crack down on employers employing an ethical practice, but according to Brendan Barber general secretary at TUC they could always implement a special hotline to inform workers of their rights. Although currently the situation seems dim for these workers, for every cloud there is a silver lining, and for these employees they will only have to wait as the national wage is expected to be increased.

Connection

This article concerning the underpayment of employees by employers connects with Chapter 16 Payroll Accounting in one main way, gross pay or in greater detail wages. From the perspective of the employee he will constantly see a low payment figure on his wages, while from the perspective of an employer he will probably see an increase on the payment figure on his wages. Employees don’t have to only worry about the amount given to them by the employer, their gross profit, but they will also have to worry about the tax deductions that are inevitable.

Reflection

Firstly I would just like to say, that after reading this article I strongly hope that any of my future employers will not try to underpay me. Employers should not have the right to underpay employees, especially in this economic crisis where money is the most covenanted object. Money runs this world, and by employer’s underpaying employees they are only furthering homelessness and the likelihood of another depression as less money is being circulated throughout the economy. The blame should not be entirely put upon the employer and his unethical practice, as an accountant should be intelligent enough to notice a small wages figure and be ethical enough to report this to various wage dealing agencies. An accountant needs not only the skills taught within a classroom, but also the ethical practices taught throughout life.

Chapter 15 Blog

Well Care Revises Past Financial Statements To Include Refunds Owed to Florida, Illinois Medicaid Programs

http://www.medicalnewstoday.com/articles/115887.php

Summary
The article that I have chosen to base my blog upon concerns the huge overstatements and understands on the financial statements of Well Care (medical insurance company). During the time period of 2004-2007 Well Care neglected to include refunds owed to Florida and Illinois Medicaid programs and the Florida Healthy Kids programs, amounting to earning being overstated by 28 million and liabilities being understated by 46 million. Since 2007 Well Care had not audited their statements, leading to huge discrepancies and thus ultimately leading to a raid by the FBI. Well Care claims that the incident was caused by the charging of certain ineligible expenses, thus supposedly reducing the amount owed. But what is surprising is that after the incident occurred the current CEO, CFO and general counsel resigned, leaving people to think if the incident was just a mere accident.

Connection
This articles concerning Well Care connects to chapter 15, Analyzing Financial Statements, in two ways. The first connection simply being that both this chapter and this article revolve around financial statements. In retrospect to the users of the financial statements this article can be related to both the insiders and the outsiders. In the case of the “insiders” the owners and management group followed an unethical practice, by not having the statements audited and having ineligible medical expenses recorded in the books, thus leading to their resignations and immense accounting errors. And in the case of the “outsiders” (FBI), by them using the financial statements, they were able to determine the sources of error and now the “victoms” of this error face reimbursement.

Reflection
Firstly after reading this article, it left me thinking about how many well known companies out there have supposed “accounting errors.” Well Care could have avoided this entire incident only if the owners and executives didn’t make the decision to stop auditing their records. For a business to thrive and for the owners and executives to keep their jobs, it’s always key to employ a strong accounting department and to always, always, always audit. If a business ever decides to veer away from an audit, then it is time for employees to question the legality of the operations and the following of the generally accepted accounting principles.