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Study Guide: Test Competencies and Tasks

A Concepts and Practices

Demonstrate effective techniques to gather, communicate, and manage client information.
1. Gathering information
  1. Client intake forms (questionnaire that collects info from potential customers) to collect personal details and financial info
  2. Conduct interviews to understand client goals, risk tolerance and financial needs
  3. Ensure compliance with the Gramm-Leach-Bliley Act (GLBA) or the Financial Services Modernization Act (1999) which seeks to protect consumer financial privacy and requires financial institutions to inform customers about data collection and sharing practices, allow them to opt out of sharing with non-affiliated third parties, and safeguard sensitive information through security measures. The GLBA includes three key rules: the Privacy Rule, the Safeguards Rule, and the Pretexting Rule. (further in detail below)
2. Communication
  1. Use active listening to understand client concerns and goals
  2. Provide clean, jargon-free explanations of financial products and services
  3. Use CRM (customer relationship management) software (e.g., salesforce) to track client interactions, preferences and history
3. Managing info
  1. Store client data securely using encryption and multi-factor authentication
  2. Regularly update records to reflect changes in client circumstances (e.g., marriage, new job, retirement, address change etc)
  3. follow internal compliance policies, industry best practices, and stay informed of updates to consumer data protection laws
Create and/or complete documents to process information.
1. Common Documents:
  1. Account Opening Forms: Collect client information for new accounts (e.g., checking, savings, or investment accounts).
  2. Loan Applications: Gather financial details (e.g., income, expenses, credit history) to assess creditworthiness (the extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past).
  3. Tax Forms: Complete forms like W-4 (for employee withholding (the process by which an employer or other income payer deducts a portion of an individual’s income and sends it directly to the government as a prepayment of taxes)) or 1099 (for independent contractors).
2. Compliance: Bank Secrecy Act (BSA) or Currency and Foreign Transactions Reporting Act (1970): A federal law aimed at detecting and preventing money laundering and financial crimes.
  1. Report cash transactions over $10,000.
  2. Monitor and report suspicious activities to FinCEN (Financial Crimes Enforcement Network).
  3. Maintain proper documentation and file Currency Transaction Reports (CTR) and Suspicious Activity Reports (SARs).
3. Processing:
  1. Use software like QuickBooks or Excel to input and organize data.
  2. Double-check entries to avoid errors that could lead to financial losses or compliance violations.
Utilize available techniques to effectively serve customers
1. Techniques:
  1. Active Listening: Pay attention to client needs and ask clarifying questions.
  2. Empathy: Understand and address client concerns with compassion.
  3. Problem-Solving: Offer solutions tailored to client goals (e.g., budgeting tips for debt reduction).
2. Tools:
  1. Chatbots: Provide instant responses to common inquiries (e.g., account balances, transaction history).
  2. Online Portals: Allow clients to manage accounts, pay bills, and transfer funds independently.
3. Customer Service:
  1. Follow up on inquiries promptly to build trust and satisfaction.
  2. Train staff to handle complaints professionally and escalate issues when necessary.
Use account knowledge to perform bookkeeping/accounting functions (including

payroll) and execute financial transactions

Bookkeeping practices: the process of keeping track of a business's financial transactions
1. analyzing financial transactions and assigning them to specific accounts
2. writing original journal entries that credit and debit the appropriate accounts
3. posting entries to ledger accounts
  1. Ledger account: where financial transactions are recorded
4. adjusting entries at the end of each accounting period
5. Record transactions using double-entry accounting, where every debit has a corresponding credit.
6. Use software like QuickBooks or Xero to maintain accurate ledgers.
Payroll:
1. Calculate gross wages, deductions (e.g., federal/state taxes, Social Security, Medicare), and net pay.
2. Ensure compliance with the Fair Labor Standards Act (FLSA), which sets nation-wide standards for minimum wage, overtime, and child labor.
  1. FLSA (1938): enacted in 1938 during the Great Depression, is a federal labor law designed to protect U.S. workers from unfair pay and labor conditions; enforced by the Wage and Hour Division (WHD) of the US Department of Labor (DOL)
    1. Minimum Wage: sets a federal floor for hourly pay; Current federal minimum wage: $7.25/hour (states can set higher).
    2. Overtime Pay: Non-exempt workers must be paid 1.5x their regular rate for hours worked over 40/week.
    3. Child Labor Laws: Protect minors from hazardous jobs and excessive hours; Rules vary by age:
      1. Under 14: severely limited
      2. 14–15: limited hours, non-hazardous jobs
      3. 16–17: no hour limit, still no hazardous work
    4. Recordkeeping: Employers must maintain accurate records of hours worked, wages paid, and employee info.
    5. Exempt vs. Non-Exempt Employees:
      1. Exempt (not entitled to overtime): salaried professionals, executives, certain administrative roles (must meet duties and salary tests).
      2. Non-exempt: usually hourly workers who must receive overtime pay.
Financial Transactions:
1. Process deposits, withdrawals, and transfers using banking software.
2. Verify account balances and client identification to prevent errors or fraud.

Analyze financial activities and compile business transaction data to report

financial information – balance sheet, income statement, cash flow statement

Balance sheet: assets, liabilities, and shareholder equity; at a single point in time
1. Assets : anything tangible or intangible that holds economic value to its owner (person/company) or can hold economic value in the future
2. Liabilities : something that a person/company owes, usually a sum of money.
3. Shareholders’ equity (stockholders’ equity/company’s net worth) : the total amount available for return to shareholders after paying off all debts
4. Equation : Assets = liabilities + shareholders’ equity
Income statement (Profit and Loss statement): Revenue, COGS, Gross Profit, Operating expenses, Operating income, non-operating items, income before taxes, taxes, net income, EPS; over a period of time
1. Revenue (sales):The amount of money a business takes in during a reporting period
2. COGS (Cost of goods sold) : the direct costs associated with the production of goods sold by a company
3. Gross profit : Total Revenue - COGS
4. Operating expenses: costs that operate a business and generate revenue
5. Operating income (EBIT - Earnings before interest and taxes): gross profit - operating expenses
6. Non-operating items:
  1. Non-Operating Income: Gains from activities not part of core operations (e.g., interest income, asset sales).
  2. Non-Operating Expenses: Costs not related to primary operations (e.g., interest expense, losses from investments).
7. Income before taxes : operating income +- non-operating items
8. Taxes: amount a company owes to the government; income before taxes * applicable tax rate
9. Net income : income before taxes - taxes; revenue - expenses (cogs + operating + non-operating + taxes)
10. EPS (Earnings per share) : net income / total number of outstanding shares; for publicly traded companies only
11. Sometimes shown: EBITDA, depreciation, amortization
  1. EBITDA: earnings before interest, taxes, depreciation and amortization
  2. The gradual reduction in value of a tangible asset (depreciation) or intangible asset (amortization) over its useful life
Cash flow statement: operating activities, investing activities, financing activities; over a period of time. The Cash Flow Statement is divided into three sections:
1. Operating Activities: Day-to-day business operations.
  1. Whether the company can generate enough cash from its normal business to sustain itself.
  2. Examples: Cash from customer sales, cash paid to suppliers, employee wages, rent.
  3. Adjustments: Net income, depreciation, changes in working capital.
2. Investing Activities: Buying or selling long-term assets or investments.
  1. Cash used to grow the company or return on investments
  2. Examples: Purchase/sale of equipment, land, or securities; acquisition of another company.
3. Financing Activities: How the business funds itself and returns capital to investors.
  1. How the company raises capital or returns value to shareholders
  2. Examples: Issuing stock, borrowing or repaying loans, paying dividends, buying back shares.
    1. Dividends: a portion of a company’s profits that is paid out to its shareholders. When a company accumulates retained earnings, management can choose to reinvest in the business to fuel growth, pay off debts, or save for future needs. Alternatively, management can decide to share some of these profits with shareholders. This profit sharing is called a dividend.

Understand the importance of audits and regulations
1. Internal Audit: Audit within the business
2. External Audit: Third party audit; independent firms (Deloitte, PwC, EY, KPMG - big 4)
3. Tax Audit: Audit at the accuracy of the tax return
4. Financial Audit: Accuracy of the financial statement
5. Compliance Audit: checks policy adherence
6. Regulations such as Dodd-Frank Act, Sarbanes-Oxley Act, Consumer Financial Protection Bureau (CFPB) (mentioned in detail below)
Perform banking operations such as opening and closing teller stations, processing loans, processing deposits and withdrawals, etc
1. Teller Operations:
  1. Open/close cash drawers, count cash, and balance transactions at the end of the day.
  2. Use cash recyclers to automate cash handling and reduce errors.
2. Loans:
  1. Evaluate creditworthiness using credit scores (e.g., FICO) and debt-to-income ratios.
  2. Process applications, disburse funds, and set repayment schedules.
3. Deposits/Withdrawals:
  1. Verify client identification and account ownership.
  2. Use banking software to record transactions and update account balances.
Understand the Federal Reserve System
1. ("The Fed"): The central bank of the U.S.
2. created by the Federal Reserve Act on December 23, 1913 (President Woodrow Wilson) to prevent bank failures and financial panics (especially the Panic of 1907) and stabilize the economy.
3. The Fed is independent in its decision-making but reports to Congress and is influenced by economic data like inflation, unemployment, and GDP.
  1. Conducting the nation's monetary policy
  2. Promotes the stability of the financial system and works to minimize risks within it
  3. Promotes financial institution safety and soundness and monitors their impact
  4. Providing financial services to banks and the U.S. government
  5. Promoting consumer protection through supervision, regulatory policy, research, and analysis
4. Structure
  1. One central Board of Governors in Washington, D.C. (7 members including the Fed Chair)
  2. 12 regional Federal Reserve Banks: Boston, New York (most prominent), Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
5. Dual mandate - two main goals assigned by congress:
  1. maximum employment
  2. stable prices (low inflation)
6. FOMC (Federal Open Market Committee):
  1. the fed’s main policymaking body for setting interest rates and controlling monetary policy
  2. meets 8 times a year to set the federal funds rate
  3. 12 members (7 board of governors + 5 regional bank presidents)
7. Federal Funds Rate
  1. The interest rate banks charge each other for overnight loans of reserves
  2. Affects all interest rates across the economy
  3. Main tool of monetary policy
8. Discount rate (4.5 %):
  1. The interest rate the Fed charges banks when they borrow directly from the Fed
  2. Higher than the federal funds rate to discourage overreliance
9. Open market operations:
  1. The buying/selling of U.S. government securities (like Treasury bonds) to adjust the money supply
  2. Buying bonds → increases money supply → lowers rates
  3. Selling bonds → decreases money supply → raises rates
10. Reserve Requirement:
  1. Minimum percentage of deposits banks must hold in reserve (either in vaults or at the Fed)
  2. Rarely changed, but still a powerful tool to control lending capacity
  3. As of March 2020, the Board of Governors at DC reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.
11. Inflation:
  1. A general rise in prices
  2. Fed aims for around 2% annual inflation to keep the economy stable
Understand the role of FDIC (Federal Deposit Insurance Corporation):
1. insures minimum up to 250 k if a bank fails
Describe the check clearing system
1. The process of transferring funds from the payer’s bank to the payee’s bank.
2. The check is deposited at the deposit bank, which then contacts the drawing bank, where the funds are drawn from The check is considered cleared when the depositing bank receives the check and funds from the drawing bank
3. The Check 21 Act (Check clearing for the 21st century act) (2004) allows banks to process checks electronically, speeding up the process.
  1. Allows creation of "substitute checks":
    1. A substitute check is a paper copy of an original check that includes all the information from the front and back.
    2. It is legally the same as the original for processing and proof of payment.
4. Often managed by the Fed; takes 1–3 business days depending on banks
Possess general knowledge of checking, savings, loans, certificates of deposit,

investments, IRAs, customer services, trust services, ATMs, and credit/debit cards

Checking account: Type of account that allows you to deposit and withdraw on demand
Savings account: A savings account is a deposit account that generally earns higher interest than an interest-bearing checking account
CD (Certificate of Deposit): a type of savings account offered by banks and credit unions you generally agree to keep your money in the CD without taking a withdrawal for a specified length of time Withdrawing money early means paying a penalty fee to the bank
IRA: A tax-advantaged investment account individuals use to save for retirement, with rules on contributions, withdrawals, and penalties
Trust services: Financial services in which the bank acts as a fiduciary (someone who manages money of property for someone else), managing assets, estates, or trusts on behalf of clients according to legal terms.
ATMs: Allow clients to withdraw cash, deposit checks, and check balances.
Credit/Debit Cards:
1. Credit Cards: Allow borrowing up to a credit limit, with interest charged on unpaid balances.
2. Debit Cards: Deduct funds directly from a checking account.

Implement loan procedures from beginning to closure
1. Pre-Application Stage:
  1. Research and Preparation: Borrowers research different loan options, lenders, and their eligibility criteria They gather necessary documents such as proof of income, identification, and credit history
  2. Budgeting and Affordability: Borrowers assess their financial situation to determine how much they can afford to borrow and repay They consider factors such as monthly income, expenses, existing debts, and credit score
2. Loan Application:
  1. Submit Application: Borrowers complete the loan application form provided by the lender They provide accurate information about their personal, financial, and employment details
  2. Document Submission: Borrowers submit supporting documents required by the lender, such as pay stubs, tax returns, bank statements, and proof of assets
3. Loan Processing:
  1. Review and Verification: The lender reviews the loan application and supporting documents to verify the borrower's information and assess their creditworthiness
  2. Underwriting: the stage where the lender evaluates whether a borrower is creditworthy. Key factors include:
    1. Fair Issac Corporation (FICO) score: company that created the most widely used credit scoring model in the United States. A FICO Score is a three-digit number (typically ranging from 300 to 850) that represents a person’s creditworthiness; important because it is used by lenders, landlords, insurers, and sometimes employers to assess your financial responsibility and risk; influences:
      1. Loan Approvals
      2. Interest Rates
      3. Credit Limits & Terms
      4. Rental Applications
      5. Insurance Premiums
    2. Debt-to-income ratio (DTI): a financial metric that compares your monthly debt payments to your monthly gross income (before taxes)
      1. (Total monthly debt payments / Gross monthly income) * 100
      2. Lenders use your DTI to assess how well you can manage monthly payments and repay loans. A lower DTI suggests better financial health and less risk.
        Under 36% = Generally considered good
        Over 43% = May limit your ability to qualify for loans, especially mortgages
      3. Key uses: Loan underwriting (determines if you're eligible, how much you can borrow, and on what terms), Evaluating credit risk, Setting loan limits and terms
    3. Collateral: An asset (e.g., a house, car, savings account) pledged by the borrower to secure the loan. If the borrower defaults (failing to repay the borrowed money according to the agreed-upon terms), the lender can seize the collateral.
4. Loan Approval:
  1. Conditional Approval: If the borrower meets the lender's eligibility criteria and the loan application is deemed creditworthy, the lender issues a conditional approval subject to certain conditions (eg, additional documentation, property appraisal (assessment))
  2. Final Approval: Once all conditions are met, the lender provides a final approval and prepares the loan for closing (the final stage in the loan process where the loan is officially funded and the borrower becomes legally responsible for the loan)
5. Closing Process:
  1. Disclosure and Documentation: The lender provides the borrower with a loan estimate detailing the terms and costs of the loan The borrower reviews and signs various loan documents, including the promissory note (a written, signed, and legally binding document where one party promises to pay a specific sum of money to another party), loan agreement, and disclosures
  2. Funding and Disbursement: The lender disburses the loan funds to the borrower or relevant parties (eg, seller in the case of a mortgage) according to the terms of the loan agreement
  3. Recording and Title Transfer: For secured loans (eg, mortgage), the lender records the mortgage or deed of trust with the appropriate government authority Ownership of the property is transferred to the borrower, and the lender establishes a lien on the property as collateral
    1. Secured loans are secured by collateral; unsecured loans are not
6. Post-Closing:
  1. Loan Servicing: The borrower begins making regular loan payments according to the repayment schedule outlined in the loan agreement
  2. Customer Service and Support: The lender provides ongoing customer support to address any questions, concerns, or issues related to the loan
Maintain records and reports to manage investments, cash, loans, and other

banking procedures

Document Organization:
1. Establish a systematic method for organizing documents related to investments, cash flow, loans, and banking procedures This may include physical filing systems or digital folders with clear labeling and categorization
Investment Records:
1. Keep detailed records of all investment transactions, including purchase/sale dates, transaction amounts, asset types, and associated fees or commissions
2. Maintain records of investment performance, including periodic statements, dividend distributions, and capital gains/losses
3. Track investment goals, strategies, and asset allocation to monitor progress and make informed decisions
Cash Flow Management:
1. Record all income sources, including salaries, dividends, interest, and rental income
2. Track expenses categorically (eg, housing, transportation, groceries) to analyze spending patterns and identify areas for potential savings
3. Maintain records of bank statements, credit card statements, and other financial transactions to reconcile (verifying if two sets of records match) accounts and detect errors or discrepancies
Loan Management:
1. Keep copies of loan agreements, promissory notes, and other loan documents for reference
2. Track loan balances, interest rates, repayment schedules, and payment history to ensure timely payments and monitor debt obligations
3. Monitor credit reports and scores regularly to detect any inaccuracies or signs of identity theft
Banking Procedures:
1. Document banking procedures and protocols related to account openings, closings, transfers, and wire transactions
2. Maintain records of bank statements, account balances, and transaction history for reconciliation and auditing purposes
3. Monitor bank fees and charges to identify opportunities for cost-saving measures or account optimization
Reporting and Analysis:
1. Generate regular reports summarizing investment performance, cash flow, loan status, and banking activities
2. Conduct periodic reviews and analysis of financial reports to assess overall financial health, identify trends, and make strategic decisions
3. Utilize financial management software or spreadsheets to automate data entry, calculations, and report generation for efficiency and accuracy
Security and Backup:
1. Implement security measures to protect sensitive financial information, such as encryption, password protection, and access controls
2. Regularly backup electronic records and store physical documents in a secure location to prevent data loss or theft

Handle customer inquiries and situations such as interpreting business policies
1. Inquiries:
  1. Respond promptly, professionally, and accurately to customer questions about accounts (e.g., balances, recent transactions, fees).
  2. Use clear communication and verify customer identity when needed.
  3. Escalate complex or sensitive issues (e.g., fraud, account closures) to the appropriate supervisor or department.
2. Business Policies:
  1. Clearly explain banking policies and procedures, ensuring customers understand:
    1. Overdraft fees (charges for spending more than available balance)
    2. Loan interest rates (difference between fixed and variable rates)
      1. Fixed rates:
        Interest rate and payments stay the same for the entire term, offering predictability and stability, ideal for long-term borrowers.
        Downside: Starts higher than variable rates and you miss out if market rates drop.
      2. Variable rates:
        Rate changes over time with the market, often lower upfront, good for short-term borrowers or risk-tolerant consumers.
        Downside: Payments can rise unpredictably, making it harder to budget long-term.
    3. Minimum balance requirements
    4. Hold times on deposits
  2. Remain patient, respectful, and informative, even in difficult situations.

Identify consumer protection provisions of appropriate agencies
1. Federal Trade Commission (FTC)
  1. Founded: 1914 under the Federal Trade Commission Act
  2. Mission: Protect consumers from unfair, deceptive, or fraudulent business practices and promote competition.
  3. Core Functions:
    1. Enforces consumer protection laws (e.g., false advertising, online scams, deceptive marketing)
    2. Investigates fraud, identity theft, and privacy violations
    3. Oversees marketing, e-commerce, and advertising industries
  4. Key Laws Enforced:
    1. Federal Trade Commission Act (1914):
      1. Established the FTC
      2. Prohibits unfair or deceptive acts or practices in commerce
    2. Fair Credit Reporting Act (FCRA) (1970):
      1. Promotes accuracy, fairness, and privacy in consumer credit reporting
      2. Regulates credit bureaus like Equifax, Experian, and TransUnion
    3. Children’s Online Privacy Protection Act (COPPA) (1998):
      1. Requires websites and apps to obtain parental consent before collecting data from children under age 13
2. Consumer Financial Protection Bureau (CFPB)
  1. Founded: 2010, under the Dodd-Frank Wall Street Reform and Consumer Protection Act
  2. Mission: Ensure fair, transparent, and competitive financial markets for consumers.
  3. Core Functions:
    1. Oversees financial institutions and products (e.g., mortgages, credit cards, payday loans)
    2. Enforces laws protecting consumers in financial transactions
    3. Provides financial education, complaint resolution, and public data tools
  4. Key Laws Enforced:
    1. Fair Debt Collection Practices Act (FDCPA) (1977):
      1. Regulates third-party debt collectors
      2. Prohibits harassment, false statements, and abusive practices
    2. Truth in Lending Act (TILA) (1968):
      1. Requires clear disclosure of loan terms, APR, total costs
      2. Aims to promote informed borrowing decisions
    3. Equal Credit Opportunity Act (ECOA) (1974):
      1. Prohibits credit discrimination based on race, religion, gender, marital status, etc.
      2. Applies to all creditors offering any form of credit
3. Food and Drug Administration (FDA)
  1. Founded: 1906 under the Pure Food and Drug Act, modern structure defined by the Food, Drug, and Cosmetic Act (FDCA) of 1938
  2. Mission: Protect public health by ensuring the safety, efficacy, and accurate labeling of food, drugs, and medical products.
  3. Core Functions:
    1. Regulates food safety, cosmetics, pharmaceuticals, vaccines, medical devices, and tobacco
    2. Conducts inspections, approves drugs, recalls unsafe products
    3. Enforces rules for clinical trials, product labeling, and manufacturing standards
  4. Key Law Enforced:
    1. Federal Food, Drug, and Cosmetic Act (FDCA) (1938):
      1. Authorizes FDA to oversee the safety of food, drugs, and cosmetics
      2. Empowers pre-market approval and post-market surveillance
      3. Created in response to drug-related deaths and consumer safety demands
4. Consumer Product Safety Commission (CPSC)
  1. Founded: 1972 under the Consumer Product Safety Act
  2. Mission: Protect the public from unreasonable risks of injury or death from consumer products.
  3. Core Functions:
    1. Sets safety standards for household items, toys, furniture, tools, and electronics
    2. Issues recalls of dangerous or defective products
    3. Conducts research, product testing, and data collection on injuries
  4. Key Law Enforced:
    1. Consumer Product Safety Act (1972):
      1. Establishes the CPSC and gives it authority to regulate, ban, or recall unsafe products
      2. Requires manufacturers to report defects and safety risks
5. Securities and Exchange Commission (SEC)
  1. Founded: 1934 under the Securities Exchange Act of 1934
  2. Mission: Protect investors, maintain fair and efficient markets, and facilitate capital formations
  3. Core Functions:
    1. Enforces laws related to stocks, bonds, and financial markets
    2. Regulates public company disclosures, brokers, investment advisors, and exchanges
    3. Investigates insider trading, securities fraud, and misleading filings
  4. Key Law Enforced:
    1. Securities Exchange Act of 1934:
      1. Gave the SEC the power to regulate secondary securities markets
      2. Requires public companies to file reports (10-K, 10-Q, etc.)
      3. Prohibits fraud in stock trading and enforces insider trading laws
Implement safe and secure environment controls to enhance productivity and

minimize loss

Risk Assessment: Conduct a thorough risk assessment to identify potential hazards, vulnerabilities, and threats to your environment This could include physical risks (such as accidents or natural disasters), cybersecurity threats, and internal risks (such as employee misconduct)
Develop Policies and Procedures: Based on the risk assessment, develop clear and comprehensive policies and procedures to address identified risks This should include protocols for physical security, data security, emergency response, and employee conduct
Employee Training: Educate employees on security protocols and procedures Ensure they understand the importance of adhering to security policies and their role in maintaining a safe and secure environment

Practice safety and security procedures such as identifying valid currency,

recognizing potential risk customers, and securing cash

Identifying valid currency:
1. Look for a security thread (a plastic strip) running from top to bottom
2. Hold the bill up to the light and look for it
3. Anti-counterfeit techniques such as watermarks, color-shifting ink, microprinting, serial numbers
Securing Cash
1. Have cash in paper form
2. Put cash in a safe for safekeeping
Recognizing potential risk customers
1. red flags like unusual cash activity, frequent account changes, or identity issues

B Basic Terminology

Explain the purposes and components of budgets
1. Maintain expenses deficits and losses
2. The components of a budget
  1. Net expenses
  2. Net income
  3. Variable expenses
  4. Discretionary spending
Define general accounting terms
1. Accounts Payable: A company’s debt
2. Accounts Receivable: The debt owed to the company
3. Accrual: Written down transactions over time (haven’t actually happened yet though)
4. Chart of Accounts: Master lists of all accounts in an organization’s general ledger
5. General Ledger: Complete record of a company’s transactions
6. Double entry bookkeeping: Records each financial transaction as a debt (losing money) and credit (gaining money)
7. Equity: Assets minus Liabilities
8. Single Entry Book-keeping: Records each financial transaction as a debt or credit
9. Trial Balance: Balances of all general ledger accounts at a given time
Understand banking terms such as check register, savings account, interest, deposits, ATM, bank reconciliation, and withdrawals
1. Check register: a check register or checkbook register is a document, usually part of the general ledger, used to record financial transactions in cash
2. Savings account: an interest-bearing deposit account held at a bank or other financial institution
3. Interest: the monetary charge for borrowing money
4. Deposits: a sum of money placed or kept in a bank account, usually to gain interest
5. ATM: Automated Teller Machine
6. Bank reconciliation: a statement that summarizes banking activity, allowing individuals and companies to compare their own records with the bank's records
7. Withdrawals: A sum of money taken out of the account
Identify the advantages and disadvantages of credit and other credit-related terms

such as credit ratings, credit reports, and secured and unsecured credit

Credit: The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future
Credit ratings: A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting
Credit Reports: information about the types of credit accounts you've had, your payment history and certain other information such as your credit limits
Secured credit: Guaranteed by collateral, higher credit limit If a borrower defaults, the lender can seize collateral Ex: Home mortgage or car loan
Unsecured credit: Not guaranteed by collateral, lower credit limit More difficult to be approved by lenders Ex: Credit Card
Credit bureaus, also known as credit reporting agencies, are organizations that collect and maintain credit information on individuals and businesses

main:

Equifax
Experian
TransUnion

Functions:

Credit Reports
Credit Scores
Credit Monitoring
Dispute Resolution
Free Annual Credit Reports
Lender Access

Define bankruptcy – types and major causes
1. Definition: the state of being completely lacking in a particular quality or value

Chapter 7 bankruptcy (liquidation)

The court automatically places a temporary stay on your debts
The court-appointed trustee takes and sells certain property
You can keep exempt property
The court discharges remaining debts
Used for: Individuals and businesses who cannot repay debt
Also called: “Straight bankruptcy”

Chapter 11 bankruptcy (wage earner’s plan - FOR INDIVIDUALS/BUSINESS WITH HIGH DEBT, HIGH INCOME)

schedules of assets and liabilities;
a schedule of current income and expenditures;
a schedule of executory contracts and unexpired leases; and
[Required by Federal Rules of Bankruptcy Procedure 1007(b)]
Used for: Individuals with regular income who want to repay debts over 3–5 years

Chapter 12 bankruptcy (for farmers/fishermen)

A list of all creditors and the amounts and nature of their claims;
The source, amount, and frequency of the debtor's income;
A list of all of the debtor's property; and
A detailed list of the debtor's monthly farming and living expenses, ie, food, shelter, utilities, taxes, transportation, medicine, feed, fertilizer, etc
Used for: Family farmers or fishermen with regular income
More flexible than Chapter 13 due to the seasonal nature of farming

Chapter 13 bankruptcy (wage earner’s plan – BUT FOR INDIVIDUALS with REGULAR income)

A list of creditors and the amount of their claims
Proof of income
List any properties you own and any leases in your name
List your monthly living expenses
Provide tax information, specifically your federal tax return and any statements of unpaid taxes
Note: This overlaps with earlier Chapter 13 info — just non-farming version

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005: Designed to deter people from pursuing bankruptcy by making filing for it more difficult and expensive, as well as less financially advantageous; Goal: Prevent abuse of the system and encourage debt repayment where possible

Main Causes
1. Loss of Income
2. Medical Expenses
3. Mortgage/foreclosure
4. Overspending
5. Financial Assistance

Define mandatory and voluntary pay deductions
1. Mandatory pay deduction: Deductions required by law
  1. Income tax
  2. Social security and medicare
  3. Court ordered child support
2. Voluntary pay deductions: Deductions that are only allowed with the consent of the employee
  1. Retirement
  2. Health insurance
  3. Life insurance

Define tax terms such as “exemptions”, “dependents”, and “taxable and nontaxable

Income”

Exemptions: The reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions
Dependents: Qualifying child or a qualifying relative of the taxpayer
Taxable income: Any gross income earned that is used to calculate the amount of tax you owe
Nontaxable income: Gross income that does not count toward the calculation of the amount of tax you owe

List examples of short- and long-term financial goals
1. Short Term
  1. Emergency fund
  2. Create a budget
  3. Pay off debt
  4. Credit card debt paydown
  5. Funding a vacation
  6. Investment
  7. Credit
  8. Save for a house
  9. Assess your finances
  10. Student
  11. Saving money
  12. Track spending
  13. Achieving larger goals
  14. Automate savings
  15. Boost emergency savings
  16. Create a will
  17. Cut back on expenses
  18. Invest in a retirement account
  19. Business
  20. Meet with a financial professional
  21. Negotiate a raise
  22. Personal loans
  23. Reduce your spending
2. Long Term
  1. Save for retirement
  2. Emergency savings
  3. Avoid debt
  4. Debt repayment
  5. Sending kids to college
  6. Start budgeting
  7. Build your savings
  8. Consider an estate plan
  9. Financial independence
  10. Credit
  11. Business
  12. Maximize your earning potential
  13. Income
  14. Create end of life documents
  15. Cut back on expenses
  16. Finance
  17. Saving up to buy a home
  18. Set financial goals
Explain the similarities and differences between leasing and buying and renting

versus purchasing

Leasing vs. Buying (e.g., cars, equipment, property)
1. Similarities
  1. Both give you access to use the asset (car, equipment, property)
  2. Both usually involve monthly payments
  3. Both may require credit checks or financial review
  4. Both can include contractual obligations and penalties for default
2. Leasing
  1. You don’t own the asset — it’s temporary use
  2. Usually lower monthly payments
  3. Often includes mileage limits or wear & tear restrictions (e.g., car lease)
  4. At end of lease, you return it or pay to buy it out
  5. Good for short-term needs or staying current with upgrades
3. Buying
  1. You own the asset after full payment
  2. Higher upfront costs or monthly payments (especially if financing)
  3. No restrictions on usage
  4. Asset can be sold, modified, or kept long-term
  5. Builds equity over time
Renting vs. Purchasing (usually homes or buildings)
1. Similarities
  1. Both provide a place to live or operate
  2. Both may require a lease or agreement
  3. Both often involve monthly payments
  4. Tenants and owners are responsible for upkeep (varies by contract)
2. Renting
  1. Temporary use of property — no ownership
  2. Easier to move out (shorter commitment)
  3. Typically no equity gained
  4. Lower responsibility for maintenance or property taxes
  5. Often requires security deposit, not down payment
3. Purchasing
  1. You own the property (once paid off)
  2. Builds home equity and net worth
  3. Greater control over modifications and use
  4. Responsible for property taxes, insurance, repairs
  5. More complex upfront: down payment, mortgage, closing costs

Compare the terms and rates of mortgages, leases, investments, and other

financial documents such as insurance

A mortgage is a legal agreement between a borrower and a lender, where the lender provides funds to buy a home, and the borrower agrees to repay the loan with interest over time. If the borrower defaults, the lender can seize the property through foreclosure.

Key Terms & Features:

15-Year Fixed Rate: Lower interest rate (~5.5–6.5% as of 2024), higher monthly payments, less total interest paid.
30-Year Fixed Rate: Higher interest rate (~6.5–7.5% as of 2024), lower monthly payments, more interest over time.
Adjustable-Rate Mortgage (ARM): Initial lower rate (e.g., 5.5%) that adjusts after a set period (often annually).
Down Payment: Typically 3%–20% of the home’s purchase price. Larger down payments reduce monthly payments and eliminate PMI.
Collateral: The home serves as collateral — if the borrower defaults, the lender can repossess the property.
Private Mortgage Insurance (PMI): Required if down payment < 20%. PMI protects the lender, not the borrower.
Closing Costs: One-time fees paid at the end of the home-buying process, typically 2%–5% of the loan amount.
Escrow Accounts: Lender-managed accounts to collect property taxes and homeowners insurance monthly.
Reverse Mortgages: Allow homeowners 62+ years old to convert home equity into income or lump-sum cash without selling. No monthly payments — repaid when the home is sold or the owner passes away.

A lease is a contract where one party (the lessee) pays to use property or equipment owned by another (the lessor) for a specified period.

Key Terms & Features:

Used for rental properties, vehicles, equipment, etc.
Monthly lease payments are not building ownership (unlike mortgage).
Lease rates are typically 0.5% to 2% higher than equivalent mortgage interest rates (based on credit, term, and risk).
Terms typically range from 6 months to 3 years.
May include mileage limits (for cars), penalties for early termination, or damage fees.

An investment is the commitment of money to an asset or endeavor with the expectation of earning a return or profit.

Key Types & Rates:

Stocks: Average return ~7–10% annually (long-term).
Bonds: Lower risk; returns ~2–6%.
Mutual Funds/ETFs: Diversified; ~5–8% depending on portfolio.
Real Estate: Rental income + property appreciation; ROI varies.
Crypto/High-Risk Assets: Volatile; potential for high return or loss.
Risk and return are positively correlated — higher return potential = higher risk.

Financial documents are legal or accounting documents used to summarize, analyze, or communicate financial data.

Common Types:

Balance Sheet: Assets, liabilities, and equity snapshot.
Income Statement: Revenues and expenses over time.
Cash Flow Statement: Cash inflows and outflows.
Budget: Forecasted income and expenses.
Loan Agreement: Terms of borrowed funds.
Lease Agreement: Terms of renting property

Insurance is a contract (policy) where an individual or business pays premiums to an insurer in exchange for financial protection against specific losses.

Types & Rates:

Life Insurance: Based on age, health, amount of coverage.
Health Insurance: Premiums depend on coverage level and provider network.
Auto Insurance: Rates affected by age, driving record, car type, location.
Homeowners Insurance: Based on property value, location, risk factors (fire, flood).
Premiums can range from $20/month to hundreds/month, depending on type and risk profile.
Deductibles, co-pays, and coverage limits all vary by plan.

Compare stocks, bonds, and commodities
1. Stocks: a share in the ownership of a company, including a claim on the company's earnings and assets
  1. May appreciate or depreciate
  2. May return dividends
2. Bonds: a promise by a borrower to pay a lender their principal and usually interest on a loan
  1. May appreciate or depreciate
  2. Returns interest payments
  3. Guaranteed return of principal
3. Commodity: a raw material or primary agricultural product that can be bought and sold, such as copper or coffee Ex: Gold
  1. May appreciate or depreciate
4. Treasury securities: these are debt instruments issued by the U.S. Department of the Treasury to fund government operations. They are considered among the safest investments since they are backed by the full faith and credit of the U.S. government; Main Types of Treasury Securities (Bullet Points + Details)
  1. Treasury Bills (T-Bills)
    1. Short-term securities: maturities of 4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks
    2. Sold at a discount from face value; Example: Buy for $980, get $1,000 at maturity
    3. Do not pay interest (zero-coupon); instead, you earn by buying at a discount and receiving full face value
    4. Popular for short-term cash management
    5. Auctioned weekly by the Treasury
  2. Treasury Notes (T-Notes)
    1. Medium-term securities: maturities of 2, 3, 5, 7, or 10 years
    2. Pay semiannual interest (fixed coupon rate)
    3. Face value repaid at maturity
    4. Commonly used in retirement and investment portfolios
    5. Quoted as a percentage of par value (e.g., 98.5 means $985 for a $1,000 bond)
  3. Treasury Bonds (T-Bonds)
    1. Long-term securities: maturity of 20 or 30 years
    2. Pay fixed interest every 6 months
    3. Face value ($1,000 per bond) repaid at maturity
    4. Used by long-term investors such as pension funds
    5. Slightly higher yield due to long duration and inflation risk
  4. Treasury Inflation-Protected Securities (TIPS)
    1. Protect against inflation
    2. Principal is adjusted based on changes in the Consumer Price Index (CPI)
    3. Pay fixed interest every 6 months, but interest payments vary since they’re based on the adjusted principal
    4. At maturity, investor receives adjusted principal or original principal, whichever is higher
    5. Typically issued with maturities of 5, 10, or 30 years
    6. Ideal for risk-averse investors concerned with preserving real purchasing power
  5. Savings Bonds
    1. Includes Series EE and Series I Bonds
    2. Series EE Bonds:
      1. Guaranteed to double in value if held for 20 years (if bought after 2005)
      2. Fixed interest rate, compounded monthly
      3. Maximum purchase: $10,000 per calendar year
    3. Series I Bonds:
      1. Combines fixed rate + inflation rate (CPI-based)
      2. Updated every 6 months (May and November)
      3. Designed to preserve value in inflationary times
      4. Cannot be redeemed for at least 1 year, and full interest is earned after 5 years
  6. Floating Rate Notes (FRNs)
    1. Maturities of 2 years
    2. Interest rates reset every quarter based on a spread over the 13-week T-bill rate
    3. Designed to perform better in rising interest rate environments
    4. Pay interest quarterly
Define investment terms such as “risk management” and “rate of return”
1. Risk management: the forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact
2. Rate of Return: the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment's initial cost
3. Decreasing your risk will decrease your rate of return, it's important to balance both risk and return to your adequate tolerance and goals when investing
Identify types of retirement plans
1. IRAs: tax-deferred investments to provide financial security when you retire
  1. Traditional: Contributions may be tax deductible but withdrawals are taxed
  2. Roth: Contributions are taxed but withdrawals and qualified distributions may be tax deductible
  3. Payroll deduction: Employer makes contributions from deductions out of pay, may go to a Roth or traditional IRA
  4. SEP: Simplified Employee Pension, contributions are made by the employer directly to an IRA set up for each employee
  5. SIMPLE: Savings Incentive Match Plan for Employees set up by an employer, employees may choose to make salary reduction contributions, and the employer makes matching or nonelective contributions
  6. SARSEP: the Salary Reduction Simplified Employee Pension Plan, a type of SEP set up by an employer before that includes a salary reduction arrangement
2. 401(k) Plan: A 401(k) plan is a qualified retirement savings plan that allows employees to defer a portion of their wages into a retirement account. Contributions are typically pre-tax, meaning they reduce the employee’s federal taxable income. The plan is governed by Section 401(k) of the Internal Revenue Code (IRC).
  1. Traditional 401(k)
    1. Allows eligible employees to make pre-tax elective deferrals through payroll deductions.
    2. Employers may:
      1. Make matching contributions (e.g., 50% match up to 6% of salary)
      2. Make non-elective contributions (to all eligible employees, regardless of their deferral)
      3. Or both.
    3. Subject to annual nondiscrimination testing to ensure benefits do not disproportionately favor highly compensated employees.
    4. Contributions grow tax-deferred until withdrawal.
  2. Safe Harbor 401(k)
    1. Designed to automatically satisfy nondiscrimination testing rules.
    2. Must include mandatory employer contributions that are:
      1. Either matching (only for employees who contribute), or
      2. Non-elective (given to all eligible employees, regardless of contributions).
    3. Employer contributions must be 100% vested immediately.
    4. Common in small businesses seeking to avoid complex IRS testing requirements.
  3. SIMPLE 401(k)
    1. Stands for Savings Incentive Match Plan for Employees.
    2. Available only to employers with 100 or fewer employees who received at least $5,000 in compensation during the preceding calendar year.
    3. Not subject to nondiscrimination testing.
    4. Employer must either:
      1. Make a dollar-for-dollar match up to 3% of the employee's compensation, or
      2. Provide a non-elective 2% contribution for all eligible employees.
    5. All contributions are immediately 100% vested.
  4. 403(b) Plan
    1. Also known as a Tax-Sheltered Annuity (TSA) plan.
    2. Available to:
      1. Public school employees
      2. Employees of 501(c)(3) tax-exempt organizations
    3. Functions similarly to a 401(k):
      1. Employees make pre-tax contributions
      2. Employers may also contribute
      3. Contributions grow tax-deferred
    4. Often includes investment in annuities or mutual funds
    5. Subject to similar contribution limits as 401(k), but may have special catch-up provisions for employees with 15+ years of service.
  5. 2025 IRS Contribution Limits (for reference)
    1. 401(k) / 403(b) elective deferral limit: $23,000
    2. Catch-up contribution (age 50+): Additional $7,500
    3. Total annual contribution limit (employee + employer): $69,000

Use insurance terminology to explain insurance risks
1. Insurance risks are an uncertainty of the occurrence of an event that can cause economic losses
Compare term and whole-life insurance and annuities
1. Whole-life insurance: Life insurance with a term that lasts for the entire life. It has a tax-free death benefit and also contains a savings component in which cash value may accumulate. Interest accrues on a tax-deferred basis
2. Annuities: a form of insurance or investment entitling the investor to a series of annual sums
3. Annuities are for shorter terms and may change more based on the circumstance
Identify major characteristics of the basic types of life, health, and disability

Insurance

Life insurance: a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period
Health insurance: A contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium
Disability insurance: An insurance plan that pays some of a person's income when he or she is disabled from an illness or injury and cannot work

C Government Regulation of Financial Services

Dodd-Frank Wall Street Reform and Consumer Protection Act (2010):

Enacted in response to the 2008 financial crisis.
Created multiple oversight agencies:
- Financial Stability Oversight Council (FSOC): Identifies risks to financial stability from large, interconnected financial institutions ("too big to fail").
- Orderly Liquidation Authority: Manages dismantling of failing financial institutions without taxpayer bailouts.
- Orderly Liquidation Fund: Funds used to wind down failing institutions instead of public tax dollars.
- Consumer Financial Protection Bureau (CFPB): Regulates mortgage lending, protects against predatory practices, and ensures financial disclosures are clear.
- Volcker Rule: Limits banks' abilities to engage in speculative investments, proprietary trading, and relationships with hedge/private equity funds.
- SEC Office of Credit Ratings: Oversees credit rating agencies to ensure ratings are accurate and reliable.
- Whistleblower Program: Incentivizes reporting of violations; whistleblowers may receive 10% to 30% of settlement amounts.

Emergency Economic Stabilization Act (2008):

Authorized the Troubled Asset Relief Program (TARP) to bail out failing banks and stabilize the economy.

Gramm-Leach-Bliley Act (1999):

Repealed part of the Glass-Steagall Act, allowing commercial banks, investment banks, and insurance companies to affiliate.
Contains privacy and security provisions:
- Privacy Rule: Protects consumers' financial data.
- Safeguards Rule: Requires institutions to maintain data security.
- Pretexting Rule: Prohibits obtaining personal information under false pretenses.

Truth in Lending Act (1968):

Promotes informed consumer credit use by requiring standardized disclosures of terms and costs.

Glass-Steagall Act (1933):

Separated commercial banking from investment banking to reduce risk.
Four major provisions included limits on securities activities of commercial banks.

Expedited Funds Availability Act (1987):

Ensures timely access to deposited funds.
Mandates next-day availability for certain checks (e.g., U.S. Treasury checks).
Differentiates availability timelines for local, non-local, and electronic deposits.

Check 21 Act (2003):

Modernized check processing by allowing digital check images.
Enabled remote deposit and faster funds availability.

Sarbanes-Oxley Act (2002):

Enacted after corporate scandals (e.g., Enron).
Key provisions:
- CEOs/CFOs must certify financial statements.
- Public companies must have independent audit committees.
- Personal loans to executives are prohibited.
- Established the Public Company Accounting Oversight Board (PCAOB).
- Imposes strict penalties for fraud.

Fair Debt Collection Practices Act (1977):

Protects consumers from abusive debt collection tactics by third-party collectors.

Key Financial Regulatory Agencies

Consumer Financial Protection Bureau (CFPB)
Department of the Treasury
Federal Deposit Insurance Corporation (FDIC)
Federal Reserve (Fed)
Financial Stability Oversight Council (FSOC)
National Credit Union Administration (NCUA)
Securities and Exchange Commission (SEC)

International Affairs and Global Financial Impact

Key Events:

Cold War (1947–1991): Massive military spending and aid programs influenced global financial flows.
Decolonization of Africa (1950s–1970s): Shifted economic alliances, increased demand for aid and development financing.
Vietnam War and Oil Shocks (1970s): Triggered inflation and economic instability.
International Debt Crisis (1980s): Led to structural adjustment and IMF/World Bank intervention.
Collapse of Communism (1991): Transition of Eastern Bloc to market economies.
Debt Forgiveness Initiatives (2000s): Efforts like HIPC reduced debt burden in developing countries.
2008 Global Financial Crisis: Triggered worldwide economic downturn and major policy shifts.
COVID-19 Pandemic (2020–): Massive global stimulus spending and reevaluation of debt management.

Audits & Compliance

Internal Audit:

Conducted by employees within the organization.
Evaluates internal controls, corporate governance, and risk management.

External Audit:

Performed by independent third parties.
Offers credibility to financial statements and checks regulatory compliance.

Audit Process Techniques:

Inspection
Observation
Confirmation
Recalculation
Reperformance
Analytical procedures

Insurance Regulation

Insurance companies are regulated at the state level.
Must be licensed in each state of operation.
Must meet capital and surplus requirements.
Rates must be adequate, not excessive or discriminatory.
States monitor companies for solvency and consumer protection.

Document Retention Laws

Businesses must keep financial records for 1, 3, or 7 years, depending on the type.
Rule 204-2 (SEC): Accounting firms must retain audit records for 7 years.
Records remain confidential unless legally required to be disclosed.
IRS and other federal guidelines also affect retention policies.

Examples:

Tax Returns: 7 years
Employee Payroll Records: 3–4 years
Audit Reports & Financial Statements: 7 years

D Impact of Technology on Financial Services

Identify various financial management software packages
1. Xero
2. FreshBooks
3. NetSuite
4. QuickBooks
5. Sage Intacct
6. Quicken
7. By sap
8. Oracle
9. Acumatica
10. Mint
11. Moneytree
12. Sage
13. Workday Adaptive Planning
14. Happay
15. Moneydance
16. Sage cloud
17. Wrike
18. Zoho Books
19. Zoho Finance Plus
20. Agicap
21. Anaplan
22. BankTree
23. CMW Platform
Use databases and other computer management tools to manage office records

and general information

Database
1. an organized collection of structured information, or data, typically stored electronically in a computer system

Produce documents integrating current word processing, database, and

spreadsheet files

Create worksheets using spreadsheet commands, functions, and formulas
Study component operation to prevent, diagnose, and solve computer operations

Problems

Assist customers/clients in maintaining online services

E Ethics

Identify ethical character traits (honesty, integrity, compassion, respect,

responsibility, citizenship, justice) and practice professional conduct and good

ethical behavior

Integrity: Adhering to a strong moral and ethical code, being honest, and acting with consistency
Honesty: Telling the truth and being transparent in communication, even when faced with challenges or consequences
Fairness: Treating others with impartiality and justice, ensuring that decisions and actions are just and equitable
Respect: Showing consideration and esteem for the dignity, rights, and autonomy of others
Compassion: Demonstrating empathy and concern for the well-being of others, and taking action to alleviate their suffering
Responsibility: Taking ownership of one's actions, being accountable for decisions, and fulfilling obligations
Caring: Showing genuine concern for the welfare of others and actively supporting their needs
Courage: Facing challenges and standing up for what is right, even in the face of adversity or personal risk
Generosity: Being willing to share time, resources, and assistance with others without expecting something in return
Loyalty: Remaining faithful, supportive, and committed to individuals, groups, or principles
Gratitude: Recognizing and appreciating the kindness, help, or positive aspects in one's life, and expressing thanks accordingly
Humility: Acknowledging one's limitations and being open to learning from others, without arrogance or excessive pride
Self-discipline: Exercising control over one's behavior, impulses, and emotions in order to act in accordance with ethical principles
Empathy: Understanding and sharing the feelings of others, and being sensitive to their experiences
Tolerance: Accepting and respecting differences in opinions, beliefs, and backgrounds, even when they differ from one's own

Determine ethics and social responsibilities and analyze the effects of unethical

practices on business and on consumers

Damage to Reputation
Legal Consequences
Financial Loss
Employee Morale and Productivity
Job Loss
Social and Environmental Impact
Erosion of Social Trust
Customer Dissatisfaction
Crisis Management Costs
Employee Turnover
Innovation and Creativity Diminution

Maintain confidentiality and sensitivity of company information: Do not share the following

Personal Identifiable Information (PII)
Financial Information:
Health Information:
Employee Information:
Business and Trade Secrets:
Customer Data:
Legal and Compliance Documents:
IT and Network Information:
Supply Chain Information:
Communication Records:

Exhibit nondiscriminatory behavior
Define common, unfair, and deceptive practices such as bait and switch, identity

theft, and fraudulent misrepresentation

Bait and Switch: Seller advertises an appealing but ingenuine offer to sell a product or service that the seller does not actually intend to sell Instead, the seller offers a sub-par, defective, or unwanted alternative
Theft: the action or crime of stealing
Fraudulent Misrepresentation: intentional or reckless misrepresentation of fact or opinion with the intention to coerce a party into action or inaction on the basis of that misrepresentation
Spamming: send the same message indiscriminately to (large numbers of recipients) on the internet
Phishing: the fraudulent practice of sending emails or other messages purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers
Insider trading: Trading securities based on material nonpublic information
Ponzi Scheme: Fraudulent investment schemes where returns to earlier investors are paid from the capital of newer investors
Front-Running: A broker or trader executes orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers
Churning: Excessive trading in a client's account to generate commissions, often without regard for the client's investment goals
Market Manipulation: Engaging in activities that artificially inflate or deflate the price of a security
Pump and Dump: fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price

F Types and Differences of Institutions

Identify the various types of financial institutions

Central Banks: responsible for overseeing and managing all other banks Federal Reserve in the US

Retail and Commercial Banks: Retail banks offer products to individual consumers, while commercial banks work directly with businesses Large banks offer deposit accounts, loans, and limited financial advice to both consumers and businesses

Credit Unions: A type of nonprofit financial institution providing traditional banking services and is created, owned, and operated by its members

Savings and Loan (S&L) Associations: individual consumers with checking accounts, personal loans, and home mortgages A savings and loan is a type of thrift that is required by law to produce a certain number of loans secured by residential real estate, but the aim of most savings and loans is to lend for residential mortgages

Investment Banks: financial institutions that provide services and act as an intermediary in complex transactions—for instance, when a startup is preparing for an initial public offering (IPO) They can also act as a broker or financial advisor for large institutional clients such as pension funds

Brokerage Firms: Brokerage firms assist individuals and institutions in buying and selling securities among available investors

Insurance Companies: Financial institutions that help individuals transfer the risk of loss are known as insurance companies

Mortgage Companies: Financial institutions that specialize in originating or funding mortgage loans

Describe the types of services offered by each type of financial institution
Compare the differences in the various types of financial institutions
Describe the role of government in the various types of financial institutions:
1. Both the federal and state governments issue bank charters for "public need and convenience," and regulate banks to ensure that they meet those needs
2. The Federal Reserve controls the money supply at a national level
3. the nation's individual banks facilitate the flow of money in their respective communities
Identify the various sources and procedures for institutions that offer credit
1. Banks: Credit Application
2. Credit unions: Credit Application

FICO Credit Score

Payment History (%): how consistently and on time a borrower has made payments on credit accounts, including credit cards, mortgages, and other loans
Credit Utilization (%): Credit utilization measures the ratio of the outstanding balance on revolving credit accounts (eg, credit cards) to the total credit limit Lower credit utilization ratios are generally viewed more favorably, as they suggest responsible credit management
Length of Credit History (%): The length of credit history considers how long your credit accounts have been established
Types of Credit in Use (%): This factor considers the mix of credit accounts, such as credit cards, installment loans, and mortgages A diverse mix of credit types may have a positive impact on the score
New Credit (%): New credit looks at recently opened credit accounts and recent inquiries into your credit report Opening multiple new accounts within a short period or having numerous recent inquiries may be viewed as a potential risk
Public Records and Derogatory Marks: Negative information such as bankruptcies, liens, judgments, and collection accounts can significantly impact a credit score

G Careers in Financial Services

Determine roles and functions of individuals to perform professional financial

service careers

Financial Advisor/Planner: Provides clients with advice on financial matters, such as investments, retirement planning, and estate planning They help clients set financial goals and develop strategies to achieve them
Investment Banker: Assists companies in raising capital by issuing stocks or bonds They also provide advisory services for mergers, acquisitions, and other financial transactions
Financial Analyst: Analyzes financial data and trends to provide insights and recommendations to businesses or individuals They assess the performance of stocks, bonds, and other investments
Accountant: Prepares and examines financial records to ensure their accuracy and compliance with laws and regulations They also provide advice on tax planning and preparation
Auditor: Reviews financial statements to ensure they are accurate and comply with relevant regulations They also identify areas where improvements can be made in financial reporting
Risk Manager: Identifies and assesses potential risks that could impact an organization's financial health They develop strategies to mitigate these risks and protect the organization's assets
Loan Officer: Evaluates loan applications and determines the creditworthiness of applicants They also negotiate loan terms and ensure compliance with lending regulations
Insurance Underwriter: Evaluates insurance applications and determines the risk involved in insuring a particular individual or asset They set premiums based on the risk assessment
Financial Manager: Oversees the financial health of an organization by developing financial strategies, managing investments, and ensuring financial reports are accurate and compliant
Compliance Officer: Ensures that financial institutions comply with relevant laws and regulations They develop and implement policies and procedures to prevent illegal, unethical, or improper conduct

Identify traditional and nontraditional finance-related careers including

requirements, salary range, and working conditions

Bank Officer: has the legal capacity to act for a bank, make agreements, and sign documents on the bank's behalf The duties of a banking officer are usually carried out by a branch manager, loan officer, or another staff member in a supervisory role
Bank Teller: an employee of a bank whose responsibilities include the handling of customer cash and negotiable instruments
Secondary Reserve: securities banks purchase, which may be sold to meet short-term cash needs
Data Analyst/Data Scientist: While not directly in finance, these roles often require analyzing financial data and trends to provide insights for business decision-making
Management Consultant: Consultants often work with businesses to improve their financial performance, which can include advising on financial strategies and operations
Real Estate Developer: Involves managing financial aspects of real estate projects, including financing, budgeting, and financial analysis
Entrepreneur/Startup Founder: Requires financial management skills to manage business finances and seek funding
Nonprofit Financial Manager: Manages finances for nonprofit organizations, including budgeting, financial reporting, and compliance
Government Financial Analyst: Analyzes government budgets, expenditures, and financial policies
Insurance Sales Agent: While sales-focused, this role requires understanding financial products and risk management
Financial Journalist: Reports on financial news and trends, requiring knowledge of financial markets and concepts

Develop employability skills and meet position requirements to obtain a career in

finance

Plan appropriate education activities to achieve licensing and certification

Requirements

Chartered Financial Analyst (CFA): the gold standard in the investment management profession
Certified Financial Planner (CFP): Administered by the Certified Financial Planner Board of Standards, Inc, this certification is focused on financial planning CFPs are trained in areas such as retirement planning, estate planning, tax planning, and insurance
Series License: administered by the Financial Industry Regulatory Authority, allows individuals to sell a broad range of securities including stocks, bonds, mutual funds, and options
Series License: Also administered by FINRA, this license allows individuals to solicit orders for any type of security in a particular state It's often required in addition to the Series for individuals who want to work as securities agents
Series or License: required for individuals who provide investment advice or financial planning services on a fee basis They are also administered by FINRA
Chartered Financial Consultant (ChFC): Similar to the CFP, this designation is offered by the American College of Financial Services and focuses on comprehensive financial planning
Certified Public Accountant (CPA): While not specific to finance, CPAs often work in finance-related roles such as auditing, tax preparation, and financial planning
Chartered Alternative Investment Analyst (CAIA): This certification is focused on alternative investments such as hedge funds, private equity, real estate, and commodities
Financial Risk Manager (FRM): Offered by the Global Association of Risk Professionals (GARP), this certification focuses on risk management in areas such as credit risk, market risk, and operational risk
Insurance Licenses: Individuals who sell insurance products typically need to obtain licenses specific to the types of insurance they sell, such as life insurance, health insurance, or property and casualty insurance

Utilize resources that contribute to professional development (trade

journals/periodicals, professional trade organizations, industry sponsored training

opportunities, etc) in financial careers

Trade journals: a periodical containing news and items of interest concerning a particular trade
Professional trade organizations: membership organizations, usually nonprofit, that serve the interests of members who share a common field of activity
Industry sponsored training opportunities
Financial publications
Mentorship and networking

H Taxation

Reference the latest tax code to guide tax return preparation and actions
Use tax preparation procedures to determine tax liability and apply tax code

professionally and complete basic tax reporting forms

Tax Liability: Taxable Income - Tax Deductions - Tax Credits = Income tax liability