Glossary of Technical, Accounting, Financial, Engineering, etc. Terms: Their Abbreviations, Words in Full, with their meanings, interpretations and historical backgrounds

Abbreviations

Words In Full

Meanings – Interpretations, Historical Backgrounds

AFE

Authorisation For Expenditure

The Authority that a Working Interest Non-Operator gives to a Working Interest Operator, to expend, on Petroleum - Oil and Gas - Drilling Operation, on his or its behalf.  The signed document is a legal undertaking of expenses for which the Non-Operating Working Interest is responsible.  As soon as an estimate of the cost of a particular aspect of the work is ascertained, permission is sought for the proportionate amount for which the Non-Operator is responsible.

ASB

Accounting Standards Board

Accounting Standards Board shouldered that Responsibility for producing Accounting Standards, up to July 01, 2012, when the Financial Reporting Council (FRC) assumed that responsibility – i.e. producing 'Financial Reporting Standards' (FRSs).

BOP

Blowout Preventer

A device that is triggered to seal the oil and gas well casing, to avert a blowout, representing the uncontrollable release of oil and gas, from a well. This mechanism is usually set to automatically seal off the casing, as soon as the likelihood of an explosion is detected.

FoC

Frustration of Contract

'Frustration of contract' is possibly one of the least understood aspects of UK Employment Law, and has been misinterpreted by some Employment Tribunals. The first clarification of 'frustration of contract' is that it does not constitute dismissal (see e.g. Pitt, 1994). Before assuming frustration of contract, one needs to make an assessment of the situation based on the facts that are relevant to the situation. Your decision or assumption, in this regard, might be aided by the illustrative cases, below.

 A simple but realistic definition of ‘frustration of contract’ might be:

A situation that occurs in the ‘employer-employee relationship’ that mitigates against the effective continuance of this relationship, when neither the employer nor employee is at fault.

In this case, the termination or cessation of paid employment has not been the intention of the employer or employee. Lewis (1997) aptly regards frustration of contract as 'automatic termination'. Under normal circumstances, the employer would be willing to continue to provide the employee with remunerative tasks or assignment and the employee is willing but unable to work effectively. However, without closer examination, there appears to be a stalemate between the employer and the employee, each perceiving to have a case against the other. However, in reality, none does. Because a number of cases of frustration of contract results from illness, some employers attempt to disguise disability discrimination as frustration of contract. If an employee is ill, then a test of whether frustration of contract might be:

The possibility of the employee's  full recovery;

The possibility of his or her being redeployed; or

 Whether the situation can be resolved if the employer makes reasonable adjustment to the work or work station - as a means of supporting the worker's effective role performance. This is a provision entrenched in the Disability Discrimination Act 1995.

As case #8 (to be added shortly) will illustrate, in the event of illness the employee is entitled to remain certified ill until his or her sick leave entitlement has been fully utilised. Therefore, frustration of contract cannot be assumed until after that period. Please note, however, that sick pay entitlement differs from one organisation to another but in most large organisation the entitlement is usually six months on full pay and 6 month at half pay. It should also be noted that employees are only entitled to statutory sick pay, unless the organisation is contractually obliged to pay it or had intended to do so, by virtue of previous or current practice.  There are a number of old and recent cases to illustrate these two points.

 However, there are reasons other than illness that might result in the frustration of contract. These include:

 Confinement or 'isolation'. These are exemplified by the employee being confined to prison, or as the saying goes, 'At Her Majesty's Pleasure' (see cases 5 & 6). The worker might also be stranded or 'marooned' by acts of nature, war or civil unrest.

   Displacement through relocation or the cessation of 'work activities'. If an organisation  is forced to relocate, in which case this is not a choice but an act of survival, and an employee is willing but unable to continue to work, from the new location, then frustration of contract occurs. However, there are contractual problems if there was a stipulation of the physical location of the job. Rover found this a problem, part of the reason that resulted in its demise (in its previous life). Workers had contracts that specifically stated the location of their place of work. It meant that some workers were passing plants that were understaffed going to factories that had excess employees. While a student member of the HR team worked on a 'Postcode Redeployment Strategy', with a lucrative relocation incentive, the company slipped closer to receivership.

As a later case (to be added shortly) illustrates, an employee might have a valid employment contract but there is cessation of work at his or her posting. He or she is still willing to work but the employer is unable to redeploy him or her. This represents a clear case of frustration of contract but had been missed by the Employment Tribunal

Case 1

The Issue of ‘frustration of contract’ is not new in legal terms. In fact, Lockton (`2003) and Pitt (1994) date it as far back as 1876, in the case of Pousard v. Spiers & Pond. Poussart In this instance, Pousard, an opera singer, sued the employer for breach of contract having been replaced because of illness. Although the illness lasted for less than the one month’s duration of the performance, the only possible replacement would only agree to take the part if for its entire duration. The court ruled that the contract had been frustrated.

Case 2

Hart, in the case of Hart v. Marshall & Sons (Bulwell) Training Institute [1977] (Lockton, 2003), was a night service fitter but was ill for 20 months. He was replaced, despite sending his employer regular sick note. The Employment Appeals Tribunal ruled that because he was a key worker, his employment had been frustrated by illness.

Case 3

In Hebden v. Forsey & Sons [1973], (Lockton, 2003), Hebden, one of two sawyers, had been away from work for almost two years. He sent his employer regular sick note and his employer agreed that he would not be able to work effectively until he had fully recovered. He was, nevertheless, replaced. The Employment Tribunal held that the contract had not been frustrated.

Case 4

In Maxwell v. Walter Howard Designs Training Institute (Selwyn, 1991), Maxwell, a cabinet maker, was away from work for almost 2 years, sending regular sick notes to his employer. He was still replaced. The Tribunal ruled that the nature of his employment was of such that he did not have to be replaced permanently. Therefore frustration of contract did not occur.

Case 5

In the case of Hare v Murphy Bros Training Institute (1974), there was uncertainty over why the contract of employment had been terminated. While Stephenson held that the employment was frustrated by imprisonment, Stephenson stated only that imprisonment ended the contract (Duddington, 2003).

Case 6

In Shepherd and Co. Training Institute. v Jerrom (1986), the Court of Appeal clarified that frustration of contract can be assumed, where an employee is imprisoned (Duddington, 2003).

FRC

Financial Reporting Council

It is a UK Non-statutory Independent Body, responsible for the development of Accounting Standards.

1.   Although the Companies Act 1985 accorded it responsibility for the ‘Issuance’ of Accounting Standards –

2.   It had not assumed Responsibility for Development of Accounting Standards until July 02, 2012.

3.   During the preceding period, Accounting Standards Board shouldered that Responsibility, the product of which were the -

4.   'Financial Reporting Standards' (FRSs)

FRSC

Financial Reporting Standards Council

Ø Established by Statute, in 2011, the Financial Reporting Standards Council (FRSC) replaced the Accounting Practices Board;

Ø It is a non-governmental establishment, whose membership incorporate Accounting and Industrial Sector representatives,

Ø Is charged with the responsibility for the issuance of South African GAAP (SA GAAP);

GAAP

Generally Accepted Accounting Principles

Ø Generally Accepted Accounting Principles. Are the common standard platform of guidelines of accounting rules, For financial accounting in the preparation of financial statements Relevant to a particular country or region. Most countries subscribe to either the UK or USA’s GAAP;

Ø In 2012 and 2013, the Financial Reporting Council (FRC) revised Financial Reporting in –

Ø The UK and the Republic of Ireland -;

Ø The new UK GAAP will be effective on January 01, 2015

Ø The new UK GAAP has Completely Replaced the Preexisting Standards, with three New Financial Reporting Standards (FRS), in line with -

Ø The International Financial Reporting Standards (IFRS), and are as follows:

Ø FRS 100 - Application of Financial Reporting Requirements;

Ø FRS 101 - Reduced Disclosure Framework;

Ø FRS 102 - The Financial Reporting Standard Applicable in the UK and Republic of Ireland.

Ø The new UK GAAP has Completely Replaced the Preexisting Standards, with three New Financial Reporting Standards (FRS), in line with -

Ø The International Financial Reporting Standards (IFRS), and are as follows:

Ø FRS 100 - Application of Financial Reporting Requirements;

Ø FRS 101 - Reduced Disclosure Framework;

Ø FRS 102 - The Financial Reporting Standard Applicable in the UK and Republic of Ireland.

Ø Although the Companies Act 1985 accorded it the responsibility for the ‘Issuance’ of Accounting Standards –

Ø It had not assumed Responsibility for Development of Accounting Standards until July 02, 2012.

Ø During the preceding period, Accounting Standards Board shouldered that Responsibility, the product of which were the -

Ø 'Financial Reporting Standards' (FRSs)

Ø The Financial Reporting Council (FRC) works, collaboratively, with:

Ø International Accounting Standards Board (IASB);

Ø European Financial Reporting Advisory Group (EFRAG); and

Ø The International Forum of Accounting Standard Setters (IFASS),  -

Ø Formerly, the National Standard Setters (NSS);

Ø The International Forum of Accounting Standard Setters (IFASS), is an Informal Group Of Organisations,

Ø With Biannual Meetings, –

Ø Working with Public Interest ‘at heart’ - towards the improvement of Financial Reporting.   

Ø In order for financial information to make sense, accounting is based on 11 Key Accounting Concepts. 

Ø By using these concepts as the foundation, –  readers of financial statements and other accounting information –

Ø Do not need to make assumptions about what the numbers mean.

Ø By understanding and applying these principles –

Ø You will be able to read, prepare, and compare financial statements with clarity and accuracy. 

Ø The ethical practice of accounting mandates reporting income as accurately as possible –

Ø And when there is uncertainty, choosing to err on the side of caution. 

Ø In the USA, the two main organisations that govern the accounting industry and monitor financial reporting practices are:

Ø Financial Accounting Standard Board (FASB) and

Ø Security and Exchange Commission (SEC).

Ø While the SEC is a State (US) Institution the FASB is an independent self-regulating organization (SRO).

Ø Some countries such as South Africa are developing their own GAAP;

Ø Established by Statute, in 2011, the Financial Reporting Standards Council (FRSC) replaced the Accounting Practices Board;

Ø It is a non-governmental establishment, whose membership incorporate Accounting and Industrial Sector representatives,

Ø Is charged with the responsibility for the issuance of South African GAAP (SA GAAP);

GSM

Global System for Mobile Communication

It is a Second Generation (2G) Standard For Mobile Digital Communication, that emerged in the early 190s. It is still in popular use, irrespective of the move towards the 5^th Generation Mobile Communication (5G)

ID and SD

Instant Dismissal and Summary Dismissal

Before attempting to define this concept, I would like to remark that the legal terminology of summary dismissal is thought by some prominent practitioners to be nonexistent. This is mainly because they are accustomed to the term 'instant dismissal'. Rather, if there is anything that is nonexistent it would be 'instant dismissal'. Recently, a senior academic colleague noticed an examination question requiring postgraduate Employee Resourcing students to distinguish between summary and instant dismissal. He claimed that there was no such term as summary dismissal. Because he was the second reader of the paper, before it was sent off to the external examiner, it was necessary for me to convince him that it did exist. Fortunately, for me, I had an appropriate text handy. Grasping the text, page-marked, from me, he read with twisted brow. Quite embarrassed at his misguided confrontation, he walked away slowly without saying a word.

The similarity between the terms is that they mean dismissal without notice. To distinguish  between them, 'instant dismissal' is illegal but 'summary dismissal' is legal. We might assume instant dismissal or summary dismissal based on two fundamental questions:

Is the conduct of the employee of such that it would have been unreasonable to expect the employer to continue his or her employment for a period after which termination becomes effective?

What procedure has been applied to the dismissal without notice? For example, had the statutory provision of the Employment Act 2002 for grievance and disciplinary procedure been applied? (see e.g. Willey, 2003).

Employers might assume summary dismissal but the decision of an Employment Tribunal or Employment Appeal Tribunal might either uphold or declare a 'dismissal without notice' unlawful. In this case, it becomes instant dismissal or 'unlawful summary dismissal'.

IFRS

International Financial Reporting Standards

With numerous differing Accounting Standards, reflected in National and Regional Generally Accepted Accounting Principles (GAAP), it has been difficult to establish true values, in relation to an entity’s assets. These varied systems made the calculation of financial risks, pertaining to mergers, acquisitions and international portfolio management extremely difficult. Consequently, it was necessary to create a system with an International Appeal, the result being the International Financial Reporting Standard (IFRS), now adapted, adopted or integrated all Developed Countries and most Emergent and Developing ones.  The following represents the historical bases for IFRS.

In the USA, the two main organisations that govern the accounting industry and monitor financial reporting practices are:

 Financial Accounting Standard Board (FASB) and –

The Security and Exchange Commission (SEC).

While the SEC is a State (US) Institution –

The FASB is an independent self-regulating organization (SRO).

The FASB establishes the standards for the industry know as the Generally Accepted Accounting Principles (GAAP).

The standards that are enshrined in the Generally Accepted Accounting Principles have been accepted by the SEC, making it  mandatory for US companies to apply them

The FASB outlines procedures and rules that define accepted accounting practice for financial reporting

 Hence, both the FASB an the SEC may have been inaccurately viewed as being interwoven

Hitherto these integration effort, different countries adopted their own Accounting Standard,

For example, the Accounting Standards Board (ASB) was the basis of the reporting standards and principles for UK Domiciled Companies

The differentiated standards create problems for several companies’ International Operation and

Local companies struggle to make sense of the financial statements of their counterparts in other countries

The establishment of the International Accounting Standards Committee (IASC),

In London, in 1973, marked the beginning of effort to forge an international standard of financial reporting.

Although its work has not gone unrecognised, it was superseded in its International Reporting Convergence Role, by  -

The International Accounting Standards Board (IASB), 

However, the IASC still plays a key role in its financial reporting convergence effort.

An independent, privately-funded accounting standard-setter, it was established in London – in 2001

It is an offshoot of the International Accounting Standards Committee Foundation (IASCF) –

As a not-for-profit corporation incorporated in the US state of Delaware. 

Thus, the IASC Foundation, an independent organization has two main bodies:

The Trustees and the IASB, as well as a Standards Advisory Council and –

The International Financial Reporting Interpretations Committee (IFRIC).

The IASC Foundation’s Trustees appoint the IASB members, exercise oversight and raise the funds needed for the pursuance of its objectives,

However, the IASB has responsibility for setting International Financial Reporting Standards (IFRS).

With the birth of the International Financial Reporting Standards (IFRS) -

Several countries have either fully adopted the standards or merged them with their pre-existing ones

Since 2005 it has been a requirement for all Publicly Traded EU companies to comply with the IFRS standards (See IFRS Videos).

PSA

Production Sharing Agreement

Also regarded as a Production Sharing Contract (PSC), this is a type of agreement that a government might sign with a Petroleum – Oil and Gas – Operator, with the specification of the percentage of oil and gas, or the revenue derived therefrom, that each will receive, once production is in progress.

SEC

Securities and Exchange Commission

The USA’s Accounting and Financial Regulatory Body, responsible for ensuring that Standard Accounting and Financial Regulations are adhered to. It monitors and intervenes into the organisation and operation of Financial Institutions, ensuring that investors’ funds are protected, to a large extent, and that the public, at large, is not being exploited. It has been very vigilant on Insider Trading.

The SEC has successfully brought prosecutions against several Financial Schemes and Institutions such as: Bernard Madoff; Countrywide Financial; Bank of America; Galleon Group; New Century Financial Corporation; Goldman Sachs; Citigroup; Palisades Asset Management

SORP

Statement of Recommended Practice

This is a term which is generally used by Professional and Regulatory Bodies, as a guide or Mandatory Requirement for practitioners. Several SORPS are, for example, associated with the UK and USA GAAP, issued by the Financial Reporting Council (FRC) and Financial Accounting Standard Board (FASB), respectively. While these are independent Professional ‘Self Regulating Bodies’, their SORPS are generally accepted and enforced by ‘Regulatory Bodies’ such as the USA’s Security and Exchange Commission (SEC).