Letter Of Comfort

A letter issued to a lending institution by a parent company acknowledging support of a subsidiary company's attempt for financing. A letter of comfort does not imply that the parent company guarantees repayment of the loan being sought by the subsidiary company. It merely gives reassurance to the lending institution that the parent company is aware of the credit facility being sought by the subsidiary company, and supports its decision

A letter of comfort is typically couched in vague wording, in order to prevent the parent company from being saddled with a legally enforceable obligation. As such, a letter of comfort creates a moral obligation for the parent company rather than a legal one. Companies generally do not furnish letters of comfort unless absolutely necessary. This is because in the worst-case scenario, where the subsidiary is unable to repay the debt, the parent company may either be on the hook for the full amount if the letter of comfort was poorly worded, or may have to incur expensive legal fees to prove that its letter of comfort was not a tacit guarantee of its subsidiary's loan

Cash Flow

Is a revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance.

An accounting statement called the "statement of cash flows", which shows the amount of cash generated and used by a company in a given period. It is calculated by adding non-cash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. Cash flow can be used as an indication of a company's financial strength.

In business as in personal finance, cash flows are essential to solvency. They can be presented as a record of something that has happened in the past, such as the sale of a particular product, or forecast into the future, representing what a business or a person expects to take in and to spend. Cash flow is crucial to an entity's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business or person does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy should the insolvency continue.

The statement of a business's cash flows is often used by analysts to gauge financial performance. Companies with ample cash on hand are able to invest the cash back into the business in order to generate more cash and profit

The difference between a Bank Guarantee and a Letter of Credit

A bank guarantee and a letter of credit are similar in many ways but they're two different things. Letters of credit ensure that a transaction proceeds as planned, while bank guarantees reduce the loss if the transaction doesn't go as planned.

A letter of credit is an obligation taken on by a bank to make a payment once certain criteria are met. Once these terms are completed and confirmed, the bank will transfer the funds. This ensures the payment will be made as long as the services are performed.

A bank guarantee, like a line of credit, guarantees a sum of money to a beneficiary. Unlike a line of credit, the sum is only paid if the opposing party does not fulfil the stipulated obligations under the contract. This can be used to essentially insure a buyer or seller from loss or damage due to non-performance by the other party in a contract.

For example a letter of credit could be used in the delivery of goods or the completion of a service. The seller may request that the buyer obtain a letter of credit before the transaction occurs. The buyer would purchase this letter of credit from a bank and forward it to the seller's bank. This letter would substitute the bank's credit for that of its client, ensuring correct and timely payment.

A bank guarantee might be used when a buyer obtains goods from a seller then runs into cash flow difficulties and can't pay the seller. The bank guarantee would pay an agreed-upon sum to the seller. Similarly, if the supplier was unable to provide the goods, the bank would then pay the purchaser the agreed-upon sum. Essentially, the bank guarantee acts as a safety measure for the opposing party in the transaction.

These financial instruments are often used in trade financing when suppliers, or vendors, are purchasing and selling goods to and from overseas customers with whom they don't have established business relationships. The instruments are designed to reduce the risk taken by each party

Akwa Ibom State Widows Act 2003

Akwa Ibom Govt. Outlaws Drinking of Corpse Bath-water By Widows, Commends AKHA Speaker.

The custom allowing the seizure of deceased husbands properties and subjecting their widows to inhuman practices such as shaving of the head and making them drink the water used to bath their husbands, among others, have now become illegal in Akwa Ibom State.

The state government, in a bill passed by the House of Assembly and signed by the governor, Chief Godswill Akpabio, outlawed the custom which maltreats widows after the deaths of their husbands, declaring it as unlawful and inhuman.

In his Democracy Day speech, the governor declared that it had become unlawful for widows to be maltreated in Akwa Ibom, saying defaulters of the law risk fines and three years’ imprisonment.

While reacting on the new law, the First Lady of the state, Chief (Mrs) Unoma Ekaette Akpabio, commended the House of Assembly and the governor for the pro-women law, describing the passage of the law as a breakthrough for the womenfolk in the state.

According to her, “I appreciate the state House of Assembly and the state governor for standing with the womenfolk through this law. Akwa Ibom State has, in the last five years, shown itself as pro-masses and pro-women.”The Speaker of Akwa Ibom State House of Assembly, Rt. Hon. Samuel Ikon has assured widows in the state of its poise to protect their rights as is reflected in the recent passage of a law to protect widows against certain obnoxious practices and maltreatments.

Rt. Hon. Ikon made the assertion when members of the Widows Right Action Network (WRAN) came on a courtesy call on him. He stated that that the House of Assembly will not relent in its effort to make Akwa Ibom state a better place, where everyone's right is protected, irrespective of status.

The AKHA Speaker who said the state Assembly will continue partnering with Governor Godswill Akpabio to ensure that the rights of women are protected also stated that the assembly holds them in high esteem, calling on them to remain united. He commended the Ministry of Women Affairs and Social Welfare, for providing office accommodation for the group at the women development centre.

"It is unjustifiable for widows to be treated badly after the husband’s death" he said. Explaining that it was one of the reasons the House, with the 1st Lady's support passed a law to protect them. Rt. Hon. Ikon Used the opportunity to call on the Ministry of Justice to expedite action on the very important bill.

Ikon intimated Members of WRAN that the AKHA will remain effective partners, he disclosed that when the Bill is eventually signed into law, the Assembly, with the support of widows in the state, will embark on massive sensitization workshop. "No one will be allowed to harass widows, we have done our own part; we are waiting for the Governors assent" the Speaker said.

He explained that the laws would stop the practice of forcing widows to forfeit the property of their dead husbands to their in-laws, and would protect children of the deceased who often suffer from such act.

The following are prohibitions under the law, as no widow will be;
(a) forced to take any form of oath, or
(b) forced to cut the hair on her head or pubic area, or
(c) forced to cry loudly, or be
(d) forced to lie down or sit next to the corpse of the husband, or
(e) forced to drink water which has been used to wash the husband or
(f) striped naked or made to bathe in public, or
(g) jeered or pushed around if she fails to cry loud enough, or
(h) forced to sit on floor or mat to mourn her husband or
(i) force to dress in filthy clothes or rags as a sign or mourning, or
(j) prevented from washing her clothes or having a bath
(k) forced to cook with or eat from unwashed or broken pots or bowls, or
(l) forced to observe a period of supervised mourning, or
(m) prevented from cleaning her surrounding during mourning period
(n) forced to sleep in the grave yard, or
(o) forced to wear dull brown or black attire or any other clothe of any colour, or
(p) forced to marry or co-habit with a relative of the deceased or spouse, or
(q) subjected to any kind of confinement or ordeal.

Offence and penalty: Any person who contravenes the provisions of section 1 of this Law shall be guilty of an offence and shall be liable on conviction to imprisonment for three years or a fine not exceeding N500, 000.00

 

Summary trial: Every trial for an offence created in the Law shall be commenced in the Magistrate's Court.

This Law will be cited as A Law to prohibit certain Obnoxious Traditional Widowhood Practices and Rites and for Other Matters Connected there to, came into force on 28th day of February, 2013

 

Specimen of Audit Engagement Letter

 

Date

The Managing Director

 

Lagos

 

ATTENTION:

Dear Sir

Letter of Engagement

statutory Audit- Year Ended 31 December, 2011

We thank you for the opportunity given to us to act as your Company’s statutory auditors. The immediate assignment is to audit the financial statements of

 Segun Adelanwa & Co. (Chartered Accountants) are pleased to carry out this engagement to the company.  This letter of Engagement (L.O.E.) which forms the contract between us (“the contract”) summarizes:

-          The scope of the services we will perform

-          The responsibilities which both parties will assume in relation to the services discussed in this letter,

-          Our fee structure.       

Scope of the Engagement

a)    Our functions as auditors under Section 357 of Companies and Allied Matters Act (CAMA) 1990 is to examine the accounts presented to us by the Directors.  As auditors, we are not responsible for the preparation of the accounts presented to us, nor for the maintenance of the accounting records of the Company, which duties are imposed on the Directors by Section 334 of the Act.  Any accounting services we may provide for you are distinct from our functions as auditors.

b)   We shall, as required by Schedule 6 to the CAMA 1990, report to the members whether in our opinion the accounts of the Company, which have been prepared by you, give a true and fair view of the state of the Company’s affairs as the date of the balance sheet, and of the profit or loss for the period ended on that date, and whether those accounts comply with the Companies and Allied Matters Act, 1990.

c)    In arriving at our opinion, we are required by law to consider the following matters but only to report on any aspect of which we are not satisfied:

i,    Whether proper books of account have been kept by your Company.

ii,   Whether your Company’s Balance Sheet and Profit and Loss Account are in agreement with the books of account.

iii,  Whether we have obtained all the information and explanations which we think are necessary for the purposes of our audit.

   d)   In accordance with normal practice our audit will be planned primarily to disclose defalcations or other irregularities but their disclosure if they exist may well result from the audit tests we undertake.

e)   The work we shall do to enable us form our opinion referred to in © above will include:

(i)           Day to day operations of the business.

(ii)          The verification of assets and liabilities, but their nature and extent will vary according to our assessment of your Company’s system of internal control, and may cover all aspects of the business.

We shall report to the Directors any material weakness in our observation on the Company’s system, which comes to our notice, which we think, should be brought to their attention, and  a copy sent to Central Company of Nigeria.

 

Accounting

You have agreed that your staff will be responsible for

(i)           Maintaining records of receipt and payments of cash through cash and Company accounts.

(ii)          Reconciling cash and Company balances monthly with Company statement(s).

      (iii)        Maintaining Income and Expenditure books and keeping these posted and      balanced to date.
     (iv)         Preparing detailed list of ledger balances monthly.

(v)          Maintaining and balancing monthly petty cash records.

(vi)         Maintaining suitable system for filing all income records and other items relating to the accounting systems.

(vii)       Preparing details of loans and advances.

(viii)      Preparing details at the accounting date of prepayments, creditors and accruals.

(ix)        Summarizing the accounting records as appropriate, prior to their being posted to the ledger.

(x)         Completing the posting to the ledger.

(xi)        Completing the writing up of your books and records in so far as they are incomplete when presented to us.

(xii)       Preparing draft accounts.

In dealing with our work of auditing the financial statements, we shall conduct tests of the records and make further enquiries as are necessary to enable us prepare the accounts.

Our work must not be relied upon to disclose defalcations or other irregularities, which may exist but their disclosure, if they do exist, may well result from the tests we normally undertake in course of our audit.

 

Fees/Structure

Our fee for services under this assignment shall be N         including reimbursable, but excluding VAT

 We shall expect a payment of N      on commencement of the assignment and the balance including VAT on submission of report

 Where it is necessary for us to perform work  outside the responsibilities set out in the earlier part of this letter, may we remind you that this will involve additional time on your Company’s affairs and will therefore, involve additional fees to be discussed and agreed prior to commencement of such additional, but separate,  assignment.

 Conclusion

Please confirm that these terms and arrangements are satisfactory and in accordance with your understanding of what you expect from us, and arrange for the enclosed copy to be countersigned on behalf of the company and returned to us as soon as possible. We would be pleased to clarify any queries you may have prior to your signing the letter.

 

Yours faithfully,

For:

 

M. A. Adelanwa

Managing Partner

 

ACCEPTANCE

The above stated terms and conditions of the contract are hereby acknowledged and accepted.

For: 

Signature:  …………..………………………………………

Date: ……………………………………………………………

Name:  ………….………………………………………………

Designation: …………………………….…………………