Balance sheet .

• Balance sheet

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Sarbanes-Oxley - Sarbanes–Oxley Section 401: Disclosures in periodic reports (Off-balance sheet items)

1 Sarbanes-Oxley required the disclosure of all material off-balance sheet items


Recession - Balance sheet recession

1 In a balance sheet recession, GDP declines by the amount of debt

repayment and un-borrowed individual savings, leaving

government stimulus spending as the primary

remedy.[http://www.paecon.net/PAEReview/issue58/Koo58.pdf Richard Koo

– The World In Balance Sheet Recession – Real World Economics

Review – December 2011]https://store.theartofservice.com/the-balance-sheet-toolkit.html


1 In more technical terms, Krugman argues that the private sector savings curve is elastic even during a balance sheet recession (responsive to changes in real interest rates) disagreeing with Koo's view that

it is inelastic (non-responsive to changes in real interest

rates).[http://krugman.blogs.nytimes.com/2010/08/17/notes-on-koo-wonkish/ NYT – Paul Krugman –

Notes on Koo – August 2010][http://www.voxeu.org/article/debt-

deleveraging-and-liquidity-trap-new-model VOX – Paul Krugman – Debt, Deleveraging and the Liquidity

Trap – November 18, 2010]



1 A July 2012 survey of balance sheet recession research reported that

consumer demand and employment are affected by Household debt|

household leverage levels


Japanese asset price bubble - Household/Corporate balance sheet

1 It was important to note that since the prices of assets tumbled,

increasing liabilities on long term basis projected a bad balance sheet

to investors


Balance sheet - Types

1 A balance sheet is often presented alongside one for a different point in time (typically the previous year) for

comparison.


Balance sheet - Personal balance sheet

1 A personal balance sheet lists current assets such as cash in checking

accounts and savings accounts, long-term assets such as common stock and real estate, current liabilities such as loan debt and mortgage

loan|mortgage debt due, or overdue, long-term liabilities such as

mortgage and other loan debt


Balance sheet - US small business balance sheet

1 A small business balance sheet lists current assets such as cash,

accounts receivable, and inventory, fixed assets such as land, buildings,

and equipment, intangible assets such as patents, and liabilities such

as accounts payable, accrued expenses, and long-term debt


Balance sheet - Public Business Entities balance sheet structure

1 Government organizations do not generally follow standards established for individuals or

businesses.[http://www.finance.uvic.ca/accounts/bsvsop.shtml University of Victoria (Canada)

balance sheet accounts][http://www.comptroller.state.al.us/pdf

s/ChartofAccts/bacc.pdf STATE OF ALABAMA CHART OF

ACCOUNTS][http://www3.dps.ny.gov/N/nycrr16.nsf/Parts/763994601AEFFF5A85256FC80060B523

?OpenDocument New York State (USA) public utilities balance sheet accounts]


Balance sheet - Equity

1 The net assets shown by the balance sheet equals the third part of the

balance sheet, which is known as the shareholders' equity. It comprises::


Balance sheet - Equity

1 Records of the values of each account in the balance sheet are

maintained using a system of accounting known as double-entry

bookkeeping


Balance sheet - Balance sheet substantiation

1 Balance Sheet Substantiation is the accounting process conducted by

businesses on a regular basis to confirm that the balances held in the primary accounting system of record (e.g. SAP

ERP|SAP, Oracle Database|Oracle, other ERP system's General Ledger) are

reconciled (in balance with) with the balance and transaction records held in the same or supporting sub-systems.



1 Balance Sheet Substantiation includes multiple processes including Bank reconciliation|reconciliation (at a

transactional or at a balance level) of the account, a process of review of the

reconciliation and any pertinent supporting documentation and a formal certification (sign-off) of the account in

a predetermined form driven by corporate policy.



1 Balance Sheet Substantiation is an important process that is typically carried out on a monthly, quarterly and year-end basis. The results help to drive the regulatory balance sheet

reporting obligations of the organization.



1 These solutions are suitable for organizations with a high volume of accounts and/or personnel involved in the Balance Sheet Substantiation

process and can be used to drive efficiencies, improve transparency

(behavior)|transparency and help to reduce risk.



1 Balance Sheet Substantiation is a key control process in the SOX 404 top-down risk

assessment.


Balance sheet - Sample balance sheet

1 The following balance sheet is a very brief example prepared in accordance with IFRS. It does not show all possible

kinds of assets, liabilities and equity, but it shows the most usual ones. Because it shows Goodwill (accounting)|goodwill, it

could be a Consolidated financial statement|consolidated balance sheet.

Monetary values are not shown, summary (total) rows are missing as well.


Knowledge Balance Sheet - Criticism

1 * connection between knowledge balance sheet and future revenue opportunities

difficult to verify


Off-balance sheet - Differences between on- and off-balance sheets

1 Therefore, two types of items are of interest: on-balance sheet and off-balance sheet


Off-balance sheet - The Banking Example

1 A bank may have substantial sums in off-balance sheet accounts, and the distinction between these accounts

may not seem obvious



1 As an example UBS has CHF 60.31 billion Undrawn irrevocable credit facilities off its balance sheet in

2008 (USD 60.37 billion.) [http://www.ubs.com/global/en/about_ubs/investor_relations/annualreporti

ng/archive.html UBS 2008 Annual Report]



1 Citibank has USD $960 billion in off-balance sheet assets in 2010, which

amounts to 6% of the GDP of the United

States.[http://emac.blogs.foxbusiness.com/2010/07/15/pandit-speaks

Pandit Speaks, Fox Business]


Federal Reserve responses to the subprime crisis - Expansion of Fed Balance Sheet (Credit easing)

1 Ben Bernanke called this approach credit easing, possibly to distinguish it from the widely used

expression Quantitative easing, which however originally also referred to the expansion of credit

creation (reference: Richard Werner, Keizai Kyoshitsu: Keiki kaifuku, Ryoteiki kinyu kanwa kara, Nikkei,

Nihon Keizai Shinbun, 2 September 1995) .[http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm Bernanke-The Crisis and the

Policy Response] In a March 2009 interview, he stated that the expansion of the Fed balance sheet was

necessary ...because our economy is very weak and inflation is very low



1 Both the actual and authorized size of the Fed balance sheet (i.e., the

amount it is allowed to borrow from the Treasury to lend) was increased significantly during the crisis. The

money created was funneled through certain financial institutions, which

use it to lend to corporations issuing the financial instruments that serve as collateral. The type or scope of assets eligible to be collateral for

such loans has expanded throughout the crisis.



1 In March 2009, the Federal Open Market Committee (FOMC) decided to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional

$750 billion of government-sponsored agency mortgage-backed securities, bringing its total purchases of these

securities to up to $1.25 trillion during 2009, and to increase its purchases of agency debt this year by up to $100 billion to a

total of up to $200 billionhttps://store.theartofservice.com/the-balance-sheet-toolkit.html

Ivar Kreuger - Off Balance Sheet Entities

1 He said it is only customary to consolidate the assets and liabilities

of companies in such a balance sheet when a substantial majority of the

outstanding shares are owned by the parent company


Balance sheet substantiation

1 Of the three basic financial statements, the balance sheet is the

only statement which applies to a single point in time of a business'

calendar year.



1 A standard company balance sheet has three parts: assets, liabilities and

ownership equity. The main categories of assets are usually listed

first, and typically in order of liquidity. Assets are followed by the

liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or financial capital|capital of the company and according to the

accounting equation, net worth must equal assets minus

liabilities.Williams, p.50



1 Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity. Looking at the equation

in this way shows how assets were financed: either by borrowing money

(liability) or by using the owner's money (owner's or shareholders' equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in

the other section with the two sections balancing.


Economic recession - Balance sheet recession

1 Economist Paul Krugman wrote in 2014 that the best working

hypothesis seems to be that the subprime mortgage crisis|financial

crisis was only one manifestation of a broader problem of excessive debt--that it was a so-called balance sheet

recession


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Balance sheet .

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balance sheet recessionin

balance sheet recessiona

current assets

longterm assets

current liabilities

fixed assets

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