Read the article and discuss the problem posed in it.
Customs blacklists business
“Business Russia” calls for the Ministry of Economic Development to audit the risk management system (RMS), developed by the Federal Customs Service (FCS). Traders are increasingly complaining that the system is triggered by the factors that are not generally associated with the protection of the state.
Despite the numerous complaints from the traders about the illegal actions of customs authorities, the Ministry of Economic Development is trying to stay away from this problem. If the Ministry of Economic Development takes the problem under its control, the customs will not be able to include in the risk profiles their opponents, especially those who dare to defend their interests in court.
“The main problem is that RMS does not work automatically,” says Vice-President of "Business Russia" Vitaly Survillo. He adds that “the cost of physical inspection at seaports places an additional financial burden on importers or exporters of cargo.”
We tried to analyze the administrative measures that have been applied to such companies. For example, the Baltic Customs has blacklisted 200 companies. This list is constantly updated, experts say. Moreover, customs officials have started encrypting these lists and arranging them on paper.
17. Speak on:
· The peculiarities of customs risk management
· The objectives the customs faces in managing its risks
· A new approach which the customs applies to implement risk management procedures
You are a risk manager. Consult the trader(s) you are dealing with on possible risks of crossing the border related to the tasks of customs control, duty collection and international trade development.
Draw a risk map that identifies the potential vulnerabilities of a certain customs check point or the Federal Customs Service (FCS) of the Russian Federation as a whole. Browse the internet sites www.customs.ru and www.riskovik.com/news/customs/ for relevant information. The project is to be implemented in a team and/or on a competitive basis. The accomplishments are to be reported in class for mutual evaluation by the classmates.
|Tick (✓) “Yes” or “No” answers in appropriate columns and lines to self-assess your knowledge and skills.||Yes||No|
|- the topical vocabulary “Risk management in Customs procedures”;|
|- the objectives the customs faces in managing its risks;|
|- what are customs risks;|
|- what risk management procedures Customs needs to apply;|
|- why customs administrations need to adopt a more structured approach to managing risk;|
|- the difference in the meaning of the forms (the)other(s)/another.|
|- form compound words with the prefix anti-;|
|- choose proper words while speaking on the problems of customs risk management;|
|- render texts about risk management in English using the appropriate grammar and vocabulary;|
|- speak on the topics related to customs risk management.|
|- make a project (draw a risk map).|
|Total number of positive/negative answers:|
1. What is finance?
2. Is it necessary to manage finance?
3. Can it be viewed as a special area of management?
4. What is the goal of finance managers?
Financial management, sometimes called corporate finance or business finance, is an area of finance concerned primarily with financial decision-making within a business entity. Financial management decisions include maintaining cash balances, extending credit, acquiring other firms, borrowing from banks, and issuing stocks and bonds.
The decision making of financial managers can be broken down into two broad classes: investment decisions and financing decisions. Investment decisions are those decisions that involve the use of the firm’s funds. Financing decisions are those decisions that involve the acquisition of the firm’s funds.
Many business decisions simultaneously involve both investing and financing. For example, if a company may wish to acquire another firm, it is an investment decision. The success of the acquisition may depend on how it is financed: by borrowing cash to meet the purchase price, by selling additional shares of stock, or by exchanging existing shares of stock. If managers decide to borrow money, the borrowed funds must be repaid within a specified period of time. Creditors (those lending the money) generally do not share in the control of profits of the borrowing firm. If, on the other hand, managers decide to raise funds by selling ownership interests, these funds never have to be paid back.
Whether a financial decision involves investing, financing, or both, it also will be concerned with two specific factors: expected return and risk. Expected return is the difference between potential benefits and potential costs. Risk is a degree of uncertainty associated with these expected returns.
Financial analysis is a tool of financial management. It consists of an evaluation of the financial condition and operating performance of a business firm, an industry, or even the economy, and the forecasting of its future condition and performance. It is, in other words, a means for examining risk and expected return.
So far we have seen that financial managers are primarily concerned with investment decisions and financing decisions within business organizations.
What goal (or goals) do managers have in mind when they choose between financial alternatives – say, between distributing current income among shareholders and investing it to increase future income? There is actually one financial objective: the maximization of the economic well-being, or wealth, of the owners. Whenever a decision is to be made, management should choose the alternative that most increases the wealth of the owners of the business.
(From: Financial Management and Analysis)
1. What is financial management concerned with?
2. What do financial management decisions include?
3. What do investment decisions involve?
4. Must borrowed money be repaid within a specified period of time?
5. What is “expected return”?
6. What is “risk” as an economic category?
7. Is financial analysis viewed as a tool of financial management?
8. What does financial analysis include?
9. What is the main financial objective?
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