Hedging is a risk management strategy used by businesses and investors to protect themselves from potential losses caused by fluctuations in markets such as currency, commodities, interest rates, or stocks. Instead of aiming for higher profits, hedging focuses on minimizing uncertainty and safeguarding existing positions. For example, an Indian exporter who earns in U.S. dollars… Continue reading Hedging
Author: Naveen Kumar
Essential Risk mathematics you must know for investing in stock markets
Measuring risks For an investor, the investment decision should always be in sync with his/her risk appetite. Hence, it is very critical to measure risk. Some common measures of risk include : Standard deviation This conveys how volatile a fund is by measuring the deviation in the stock returns as compared to its average returns spread… Continue reading Essential Risk mathematics you must know for investing in stock markets
Presentation and disclosure of Financial Statements: IFRS18
The IASB has issued IFRS 18, the new standard on presentation and disclosure in financial statements, with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to: the structure of the statement of profit or loss; required disclosures in the financial statements for certain… Continue reading Presentation and disclosure of Financial Statements: IFRS18
Tax residency
In India, the residential status of an individual is a crucial determinant for taxation purposes. The Income Tax Act, 1961, outlines the criteria for determining the residential status of an individual. The three categories of residential status are: Resident: An individual is considered a resident in India for a particular financial year if any of… Continue reading Tax residency
Revenue recognition in Software Consulting
Here’s how revenue recognition generally works in a software consulting business: Identifying the Contract: The first step is to determine whether a contract exists with a customer. A contract is a legally enforceable agreement that specifies the rights and obligations of both the customer and the software consulting company. Identifying Performance Obligations: Next, the software… Continue reading Revenue recognition in Software Consulting
Revenue Recognition in Insurance Business
Here’s an overview of how revenue recognition works for insurance contracts under IFRS: Contractual Service Margin (CSM): One of the key concepts introduced by IFRS 17 is the Contractual Service Margin (CSM). The CSM represents the unearned profit on insurance contracts at the inception of the contract. Revenue is recognized over the coverage period as… Continue reading Revenue Recognition in Insurance Business
ISA 550: Audit process of Related Parties
The standard defines related parties as parties that are closely associated with the reporting entity, including subsidiaries, associates, joint ventures, key management personnel, and entities under common control. Related parties can also include individuals or entities with significant influence over the reporting entity or vice versa. Audit Procedures: ISA 550 outlines specific audit procedures that… Continue reading ISA 550: Audit process of Related Parties
Capital Budgeting
Capital Budgeting is defined as the process by which a business determines which fixed asset purchases or project investments are acceptable and which are not. Using this approach, each proposed investment is given a quantitative analysis, allowing rational judgment to be made by the business owners. Capital asset management requires a lot of money; therefore,… Continue reading Capital Budgeting
Gold Reserves Importance
Gold reserves contribute to a nation’s financial stability. Gold is seen as a stable asset in times of economic uncertainty and fluctuations to maintain confidence in the financial system. Gold allows countries to mitigate risk around the volatility of other assets like currencies and securities providing a balance to withstand economic shocks. Gold is a… Continue reading Gold Reserves Importance
Summary of IT audits in India as per Institute of Chartered Accountants of India guidelines
IT audit techniques in India, like in any other country, involve assessing and evaluating an organization’s information technology infrastructure, systems, and processes to ensure they meet established standards, comply with regulations, and are secure. Here are some common IT audit techniques employed in India: Risk Assessment: Identify and assess potential risks associated with the organization’s… Continue reading Summary of IT audits in India as per Institute of Chartered Accountants of India guidelines