Brief list of researching papers written by Prof. T. Yondon

         Prof. T. Yondon as initiator of Mongolian association of chartered financial analysts has started his lecturing & researching activities since 1999. Before lecturing he was worked for short time as specialist, who responsible for economical reform, & he successfully managed transitions of more than 10 real economical sectors as: light & food industry, auto transport, agriculture’s state economic entities, public utilities services, geology & mining, whole & retail trade, construction & its material manufacturing, & also water supply etc to market-oriented economy, besides he published many exceptionally interesting papers & articles related to economical reform & economical-mathematical approaches in professional journals & regular news papers in Mongolian & Russian editions. Below given brief list of researching books & textbooks in the field of financial statement analyzing & accounting modeling based on applied mathematical approaches & concepts of mathematical statistics, written by Prof. T. Yondon along with his family members for his lecturing period. By the way haven’t included into above cited list many researching articles released in professional journals & regular news papers last period. We consider that, actually he has opened newly directions in looking forward development of accountancy, particularly he introduced into practice & economics universities’ teaching many unique & extraordinary methods on cost & managerial accounting. Thus he made real contribution to financial analysis methodology & accounting further tendency in the unusual fashion of issued with him a lot of books leaned on integrated science knowledge & based on his self- researching results at his own account. His innovator’s proficiency had been shown in his written books, which contents obviously differ from all textbooks published in English & Russian editions so far.                                                                                                                          Table1

          Some materials related to his lecturing subjects & also created, developed with him new ideas & suggested innovations in the field of financial analyzing & accountancy placed in Mongolian & English editions at internet communications under blog titles as tyondon.blogmn.net or tyondon.blogspot.com etc. In addition to giving lectures at higher education establishment, he conducts advanced professional courses devoted to all people, who interested in possessing modern methods of financial analysis & techniques of creating new ideas on accountancy yourself. Do not hesitate applying to him, he is willing to share his wide experiences & many-sided knowledge in the line of financial & accounting modeling.    

Is possible to improve the accounting standards?

             Free thinking opens wide spaciousness for creating, developing, sharing, distributing & exporting owns new ideas & innovations, which related to extend information capacity & rise efficiency of analytical accountancy. Accounting standard sometimes leads to confusion of that it’s perfect in every way, & which impossible to suggest self-opinion rather feasible, simple & understandable methods of accounting cognition in parallel with enforcing accounting regulations, actually working by rote as established financial & accounting standards bridles after careful self-consideration, renewal, reinvent oneself new ideas etc. One’s property of accountancy as its everyday occurrence repeats & also monotonous condition of accounting accommodates accountants to way of work to while his/her time away. Accountants should make self-analysis & self-perfecting in order to keep abreast of social-economical boom & predict upcoming threat, contingency recession, & avoid any unbeatable force & silly convert misleads & difficulties into doing  management superiority. We really have full confidence, we are the first researchers who put perfect new ideas & renewals into contents of over all subjects of cost & managerial accounting independently, especially topics of variance analysis on manufacturing overhead, which calls real account of researchers as pending  theme of accountancy & analyzing.  Learners often outspoken of that, occur troubles to understand, well-consider, memorize also use in practice simplify if refer as to study variance analysis of mixed expenses (factory costs & operational expenses), which has been illustrated in many well-known fundamental textbooks issued by oversea famous universities. Taking into account this situation I have decided to implement elaborated analysis on allocation, isolation, budgeting, behavior forecasting, controlling, empiric analyzing of mixed expenses (manufacturing overhead, operating expenses-general administrative & marketing). The methods[1] created along with my family members have following obvious differences & appreciable advantages over others used at present time in training, meantime the first we have put into practical application of linear algebra transformation & elementary differential calculus in cost & managerial accounting modeling uniquely & extraordinarily:

·         We used to describe financial process, cost behavior, accounting indicators mainly  be means of simple straight linear equation: y = a +bx or y = a+bx1+cx2+…+nxm, but however their dynamic evolution mathematically expresses as of multiple curvilinear dependence y = a+bx+cx2+…+nxm, logarithmic function & exponential equation y =Aox1ax2b…xnm. Besides dependence some financial indicators denotes via inverse proportion to each others, namely in accordance with increase of selling revenue drops expenses on marketing y = a+b/x, also herein possible to refer to learning curve, which illustrates that if labor cost downs by 20% in proportion with that twice increases production output as followings y = 2xa.

·         Possible to calculate & explain each component (fixed cost & variable cost separately in parts & combined ya=a; yx=bx; ya/x=a/x; ybx/x=b) of cost classification affected to cost variances simply, understandable, & mathematically in 4-5 independent variants using applied mathematical approaches (differential calculus, linear algebra, stepwise elimination of each dimension, plane analytical geometry etc), which has extended & enriched scope & component of traditional analytical methods on mixed costs fundamentally.

·         Application of 4-5 mutually independent versions using applied mathematical approaches (differential calculus, stepwise elimination of each dimension, statistical index, graphic description etc) in order to determining affects as two variance (controllable variance & volume variance), than on basis of that further calculation of four variance (spending variance, idle capacity variance, variable efficiency variance & fixed efficiency variance). Obtaining the same accurate result by using some various mathematical methods in parallel had been targeted to illustrate wide range of tremendous opportunities to perfect, innovate, integrate & widen contents of accountancy. The first we have created & demonstrated affordability to further develop & extend here cited analyzing methods in other topics of cost & management accounting subjects, for example on standard costs variance analysis of factory overhead, direct labor & direct materials, & also on market expenses  variance analysis etc, which with we have discovered smart, simple & unique resources to rationally solve many pending solutions. Also we offered very interesting & unique method of variance analysis on factory overhead with comparing levels of budgeting, standard & actual in one calculating table simultaneously.

·         In addition to traditional methods also we put into university education & practice extraordinary & rather interesting methodology of linear algebra approaches & Gauss method on allocation of factory costs between operational departments & service departments, & also dividing market expenses between operational objects. By the way above mentioned thesis included into contents of 2 volume textbooks in associations with details application examples, which popularly used by tutors & graduates at computer & mathematical faculties of state controlled universities & received good notices from a wide readership. Indeed we had guided by one’s personal intuition, fantastic dream & ever prospect for new ideas different from others & created many innovations on financial analyzing & accountancy.

     Meanwhile we created more detailed methodology to calculate each showing of preparing income statement by as direct as well as indirect methods via tens of number simple financial equations, which has rendered favorable opportunities to issue commuter application program for this statement, & above mentioned methodology[2] has been published in the brochure titled “Financial statement analysis”, 2007. Unfortunately this book has led all accountant, including CPA (Certified public accountants) to soon-fed & copying mental state, distance from constructiveness consideration & thus who couldn’t cope with prepare income statement by hand method independently. Complying with an accounting standards & advocating conservatism in accountancy raise barriers on continuous development, integrated & diversified innovation of financial statement analysis methodology & contents of accountancy.  Increase a number of institutions, which engages grants any licenses like a awards to accountants & financiers, thus earns money & conducts specialized accounting trainings of low quality negatively affects on their professional promotion by skills, insights & reputation etc. The contents of cost & managerial accounting frequently compose of retrospective analysis based empiric distribution series, planning, budgeting & controlling, which renders favorable possibilities to lean on achievements of other science branches. Herein taking opportunities we’ll refer to meteorological forecasting in which observations prepare next year’s weather forecast basing on long-range data, however some elements of this methodology could be used in cost & management behavior analysis & predicting contingency financial recession. Besides to enrich & extend contents of accounting modeling & financial engineering should be approached to physics understandings, for instance sea waves (tsunami wave disperse), trigonometric sinuous shape of which similar to financial recession cycle & it would be feasible on accounting modeling. We consider that accounting standards aren’t perfect in every way, which would be changed out of all recognition in accordance with social-economics evolution, & their looking forward development. You know, standards are principles of conduct informed by notions of honor & decency, which isn’t like as law of nature.

[1] All rights reserved

[2] All rights reserved

How to rationalize wage stimulation?[1]

             Arrangement of accounting work is variety, obviously tremendous queries incur for accountants in practice, which requests to apply for professional advice, some of them solve difficulties in one’s own fashion & also others pass it over in silence. Wage is one component of both direct expenses through which meets combined economical interests as of individuals & also labor collectives, that requires rather fair, rational, motivated & time-server leverage for  wage incentive. Employee as of member of labor team admits one’s joint responsibilities for making a real contribution to labor achievements of one’s aims to others. People who copies others intellectual writings & repeats the action of an others are often out of step with the times. Obviously the ultimate financial result of any company expresses by means of as following combined & condensed showings as: efficiency of labor, income growth, net income per unit share or economy per price cost of product sold, & also reduction of unproductive expenses. In order to raise productivity of labor to employees, give moral support them & to encourage them usually notifies labor collective fund of stimulation from company Board of directors. By the way in Mongolia have practiced prioritizing one’s earned scores by economics entities, grants a title of top entity & elevates to higher rank. Managers & accountants often suffer troubles related to allocate collective fund of stimulation or joint responsibility for compensation fairy & honestly, arrange in order of scores collected by prize-competitors according to contribution made to collective labor result & collective valuables. We have used[2] an elements of weighted mean (scores) & inverse factor ratio index to solve above mentioned problem without dispute about the allocation of encouragement between team workers as possible & satisfy economic interest equilibrium as of joint participants. Thus this method which expresses contribution paid into collective labor result would be used in distribution of any other money fund via meeting economic interest equilibrium between some parties concerned. However scholars, financial analysts & mathematicians couldn’t find most feasible approaches & established notion to solve simple, also on the other side puzzled above cited question so far. 

            Assume, Board of directors of company АВС decided to award worth 5 million MNT for five staffs of accounting department depending on obtained financial results for 2011. Staffs have agreed to allocate sum of bonus between department staffs in subject with following indicators, which could be demonstrated everybody’s contribution into collective labor achievements as: economical returns of introduced innovation & know how; productive spending of working time, in %; length of permanent service, years; number of printer’s sheets of one’s papers & articles got published; realization of planned work for current year, in % etc.

                                                                                                                                           Table1

     E(x) = y1ּp(x)1 + y2ּp(x)2 +ּּּ+ y5ּp(x)5 = 0.15 ּ 0.095625 + 0.20ּ 0.04368 +ּּּ+ 0.22ּ 0.1053= 9.066075*.

            Allocation of bonus in prioritizing with taking of places                               Table2

             Let us assume, have been chosen following indicators for prioritizing in order of collected scores:

·         x1 = economical returns of introduced innovation & know how,  

·         x2 = productive spending of working time, in %,

·          x3 = length of permanent service, years, 

·          x4 = number of printer’s sheets of got one’s papers & articles published, 

·         x5 = realization of planned work for current year, in %,

Would be used inverse factor ratio index in occasion of stimulation of saving on the material expenses.

[1] All rights reserved

[2] T.Yondon., Gombo. Dariimaa ”Analysis of human resources management”, 2011

Calculation of premium wage[1]

          Actually, haven’t introduced rational methods on stimulation for hourly-paid employees, but however for piece-workers used various combined system of most stimulation on number of manufactured products & worked hours according to work done as bonus plan at 100%, collective stimulation of employees’ know how, allocation plan of income & seniority pay etc. Some wage system showings rise in instant dependence, but however on the contrary others drop in inverse relation to growing indicators. Various directions on ratio changes of wage efficiency indicators cause difficulties to find sound decision on wage stimulation of labor efficiency, which requires mathematical approaches distinguishable from traditional direct calculation methods. Many renowned managers as Frederick W. Tailor, Halsey, Henry Gantt, Lilian Gilbreth & Harrington Emerson & other managers-analysts of efficiency plan & wage system have created plan of wage stimulation but however most of them weren’t used so far. Takes place of leaving out that, weren’t include following indicator ratios into allocation showings of wage bonus between team employees: as declining of production defects, every body’s high professional skill, saving of raw materials, complying labor discipline (loss of working hours) etc. We are as initiators of Mongolian association of Chartered financial analysts have considered the computation methodology[2] on premium wage in dependence with below cited multiple alternative indicators: as earned by employees fulfillment rate of targeted productivity norm, saving in direct material expending, contribution putted into sales revenue with every worker respectively referring to inverse factor ratio index, application of probability notion, & saving concept of material costing.        Table1                                                                                                          

Here have denoted index of saving in direct material spending via 1.20* =1000,0:900,0, & over expending of direct material spending through 0.91**= 550,0:500,0,  pay for everybody expressed in columns 1,2,5,8,9. Assume wage of worker A demonstrates as: 99360=40ּ2000ּ0.90ּ1.20ּ1.15.

      












Rise necessary in comparable dynamic analysis by means of 3-5 empiric matched data as of output as well as wage expenditures to estimate naturally determinate business tendency & efficiency for long range period over the whole company & also in the context of its structural components as operation & service departments.  Assume, below given corresponding retrospective data belongs to growth rates of labor productivity & average wage for company ABC.Table2

Let’s determine average growth rate of above selected both showings by computing geometric mean of chain growth rate: lgy1=0.144064:5=0.0288128. Hence antilogarithm is y1=100.0288128=1.0686 or 106.86%, like this lgy2=0.0213157:5=0.0042631. Thus antilogarithm is too y2=100.0042631=1.0098 or 100.98%.  Obtained   results led to make conclusion that achieved proper ratio shows productivity rate exceeded average wage rate approximately at ∆=106.86-100.98=5.88%. Sometimes generate the thoughts to calculate appropriate indicators of employees’ productivity & their average wage from the point of view of man-hour or man-day productivity, length of working hours etc respectively & make a decision by taking these circumstances into analytical consideration. Assume that planned needs in 2012 for company ABC expressed below.                        Table3

       Remarkable, scope & contents of financial statements are seriously restricted & tightened with information capacity at present. Indeed contents of 4 forms of financial statements & their showings couldn’t cope with which main goal as analytical function. Obviously, haven’t included necessary schedules, clusters, items & showings related cost & managerial accounting into financial statements, which  tells on reputation as of accountants-analysts as well as of accounting qualification properly. Began facing with necessity to express physical indicators as possible in association with pecuniary valuation for preparing financial statements as just monetary showings couldn’t accord with the modern, changeable but then uncertainty of economic behavior, thus foresee contingency economics recession, reduction & avoid its negative consequences, & also modify which into superiority. Data contained in financial statements has belated property of time lagged & follows on the past events & uses only for rectifying suffered misleads, but no to predict expected troubles. Recommendable to include some physical indicators which would be rendered feasible & measurable opportunities to conduct financial analysis associated with physical volume method, & consider physical index in dependence with value index taking into account inflation waves. Measurable of any physical & costing indicators newly suggested would be expressed on their controllable property. Many available itemized showings belong to measurable labor, production, factory overhead, output & operation (marketing & administrative) activities on disposal of accounting department haven’t demonstrated in financial analytical statements, thus which  no used in analyzing, planning, forecasting, & controlling etc so far. In this connection we have cited above wage efficiency & labor system analysis, which could be launched by using labor activity levels as machine-hours, labor-hours, & standard-hours etc. Indeed analysts are recognizing probable economical risk & its consequence within collected data basis, also restricted sphere of financial statement information capacity, which complies with accountancy thus far. Inexhaustible & unregistered  evidence, uncertain event & seemed operation, which left outside of financial statement contents causes to follow  chaos in management, increases unmeasured random, & misleads analysts thinking. Recall that learning, Socrates’ wisdom was limited to an awareness of his own ignorance. Socrates believed wrongdoing was a consequence of ignorance & those who did wrong knew no better[3].

[1] All rights reserved

[2] T. Yondon., Gombo. Dariimaa” Analysis of human resources management”, 2011

[3] Wikipedia

Thoughts of financial analysis

        Some people consider that financial statements needn’t if their contents weren’t matched to needs & desired purposes of financial statement analysis, namely forecasting, rational investing, monitoring & avoiding financial troubles etc. Besides researchers express their opinion about that contents of financial statements & their indicators mainly render opportunities to do ratio analysis, but which isn’t predict upcoming recession & insolvency, & also couldn’t guide outlook. It is good that cost & managerial accounting leaned on free thinking & hasn’t strangled by abstract declarations of international financial reporting standards (IFRS), which allows favorable opening for looking forward innovation, improving & developing by integrating with other branches of science learning or its diversifying. The cognition is having no limit, everything varies, changes, renews, rises, converts & promotes into advanced level of developments. For example impossible to diagnose return on investment & its forecasting by using only Du-Pont model, which could lead to isolated temporary conclusion of the rate of return on equity. Indeed solvency & contingency bankruptcy subject to many functional & also random dimensions owing to  generate necessity of approaches to multiple discriminant score analysis for considering company’s financial statement analysis in all its bearings. Besides rises question to suit others’ intellectual experiences into specific social-economical conditions of given countries, which have differences in human development index, GNI per capita & external debt indicators etc. Indicators & their calculation sum express in the balance sheet with historic cost value, therefore appears considerable requirement to convert cost value into market evaluation as for corresponding indicators in order to diagnose solvency for corporation by means of Altman’s Z index. Hence contents of financial statements are introducing administratively from above regardless of particular countries’ specific condition sometimes obfuscates financial troubles with extraneous information & misleads accountant-analysts into confusion. Obviously business entities of European countries, which has faced debt crisis, maybe they have complied with both of IFRS & audit standard, & also followed internally one’s domestic tax laws. In other hand CPAs couldn’t cope with their professional one’s own duties, review shows as in Mongolia above cited difficulty mainly connects with poor level of stepwise training courses aimed to grant a license for CPA. Title & of license for CPA render many socially security privilege for accountants to find profitable & promotable job for them at state owned entities, which raises unnatural demand for licenses of CPA. We think of that domestic specific of ongoing human development policy of each country more or less reflects on national tax policy, therefore happen temporary differences between financial statement income & taxable income. In connection with above mentioned decision makers realize progressive income tax & subject to personal income tax on savings aimed to declining differences between social groups on income distribution & support households with medium livelihood & earned income. Would be expedient, if could be inform relative data of calculating Jinni index for public issue as for Mongolia. News paper media informs that Jinni index equal to 0.36, but other sources advocate own data basis which is different on this rate of index. Actually that is unconvincing argument because of by 40% of population live at poverty & inequality distribution of social wealth has become quite plain. But it can’t demonstrate geographic, infrastructural, traditional specifics while conduct social-economical diagnosis suited to dwellers with different livelihood. Current period Mongolia classifies as lower middle income country with a GNI per capita of US $1,890 & ranked 110 out of 187 countries in terms of Human Development with a HDI of 0.647 in 2010. Also official source shows more than 30% of the population lives on less than US $1.25 a day. Hence recommendable to compute Theil’s T index inequality, which respects to territorial area & provincial towns with different livelihood & income sources. Continuous increase of inequality distribution on social wealth directly has connected with that Mongolian tax laws have protected one’s own interests of oligarchic groupings contrary to poverty reduction goals so far. Not only the rich but also the poor stand in a queue to get monthly 21,000MNT or by US $16 from Human Development Fund without distinction, & also personal income tax imposes on a par with 10% to their wage. Our tax authorities used to prefer copying foreign tax regulations without their proper harmonize to specific conditions of Mongolia & manage official activities in accordance with instructions of oversea tax consultants from highly developed countries. They consider copying information from internet links & conveying adviser’s recommendations as their suggested & introduced new ideas & innovations on tax. But however Mongolia has only 21 year’s experience of market-oriented economy, & impossible to past any oversea financial instruments to which automatically. Financial statements can’t allow conducting comprehensive analysis which always requires tremendous additional data from outside courses. Majority of international financial, banking, accounting & auditing projects & programs are introducing so far, which wasn’t achieved promised results as: poverty reduction, declining differences between social groups on income distribution, increase of work places, fighting against corruption, providing rational infrastructure over the country, but however debt burden rises year on year, as they have suggested mainly by means foreign partners’ pressure & respected their economical interests. Mongolian companies would fail at any time on account of they don’t conduct themselves financial statement analysis. There weren’t CPA who able to self-conduct chartered financial analysis & make proper diagnosis on solvency & bankruptcy for corresponding company. Accountants prepare both different copies of financial statements in order to evade taxes. I’m as ordinary accountant-researcher think of that should be generated chartered financial analysts (CFA) from composition of the CPAs. Mongolia has more than 3 thousand CPAs prepared via specialized Institutes of CPA, unfortunately who has poor prestige & his/ her professional license just likes as award at all. One-sided attitude of these institutions to raise income of training courses & increase the number of possessors of CPA’ license at any possible way reflects on knowledge & skills for CPAs properly. No changeable & congealed properties of financial statements sometimes form unmotivated temperament to CPAs. Obviously financial statements are flexible & manageable instrument, which should be innovated & renewed in accordance with social-economical reform & its continuous development. Therefore possible to adopt & enforce temporary methodology of financial analysis & also form & indicators of financial statements appropriated to enterprises, which engages business activities in case of incoming contingency crisis. Also should be include into contents of financial statements feasible physical indicators in addition to established money terms, which would be caused no difficulties to compute some useful indicators for conducting cost & management accounting relied on applied mathematics, trend analysis with statistical properties & econometrics reviews etc. By the way possible to rectify some troubles by means of taking corrective measures on restrictive information capacity of financial statements & extending the assortment & number of financial statements’ indicators. Preferable develop accounting renewal rather faster than its subject matter.

How to raise reputation of accounting profession?

      We know accountant is as a person having special knowledge of financial inspection & of bookkeeping in business, commerce & other social-economical or governmental sectors, one of ancient profession has got highest prestige among other economical professions, but however which is losing its previous reputation. Accountant, who owns profession of accountants, has been proud in his profession, he was promoting in his position, & it became legal & credible guarantee for his well-being. By the way contents of journal-order system & corresponding financial statements, which had been conducted in the socialistic management was more appropriated to carrying out financial analysis without referring to another analytical data basis. In that time both of general ledger & financial statements had provided favorable opportunities for carrying out detailed analysis of human resource management, comprehensive calculations of product costs per unit, separating & clustering expenses into fixed & variable parts, supply & sufficiency of current assets complexly etc. Also codification of accounts ranged from 1 up to 99 detailed with sub-accounts had been gave tremendous possibilities to classify, group, allocate, cluster, accumulate, accumulate, summarize all data basis in any collaborated versions by means of leaning on applied mathematical approaches & statistical-mathematical tools. Proper conducting quarterly financial statement analysis was obligatory commitment both of director & chief accountant for state owned every entity in that time. But I would like to emphasize a lot of new understandings & progress resulted by market-oriented economy as: stock, shareholders capital, securities, bond, money time value, leasing, bankruptcy & solvency etc extended & enriched our economical scope of knowledge. Indeed hadn’t made tangible steps in innovation & improving of the methodology & rising of academic level on accountancy for last 40-50 years. Comparable review shows that majority contents & writing style of university textbooks on accountancy have long-winded explanation, bored learners, lack of new ideas & nor differences as for pith of the nature from other. Random sample expresses that people more respect tax inspectors than ordinary accountants & SPA owing to last one possesses less reputation as on skills & on academic knowledge among staffs, who has similar profession & engages the same job. For instance employers haven’t got assumption about necessity of accounting documentation, bookkeeping, financial statement analysis, & their economical profitability, therefore who welcomes tax inspectors & social insurance inspectors respectfully & obeys their advices. In some cases CPA training becomes as distribution of certificates in order to collect money for financing office building for corresponding institutions. Daily monotonous frequency in accounting procedure makes accountant’s job nonproductive & dreary, also computerized accountancy converts accountant into robot, whose activities similar to computer operator without free innovative thinking. Indeed accountants follow accounting guide, they couldn’t get free from standardized obsolescence & limited thinking, & they don’t motivate to initiate new ideas. Explain, why aren’t give  expected results & can’t realize numerous government & foreign supported projects & programs in the field of social–economics, including poverty reduction, smokeless felt ger districts, improving finance & accountancy, maybe these questions mainly were decided beyond a curtain through influential, wealthy or friends connections without participation of targeted groups, oppositions & representatives from civil society organizations. A lot of organs & institutions manage financial & accounting activities as: Ministry of finance, institute of certified public accountants, institute of managerial accountants, & also many specialized academies, which mainly engages translating an overseas manuals, international accounting & auditing standards, granting & distributing CPA certificates, organizing profitable workshops for them, traveling to overseas training, & at the end of each year bosses elevate each others to a honor rank, & doctor’s or professor’s academic degrees.  We don’t see practicable textbook, affordable methodology, rendered professional assistance, public discussion, which introduced in line of above cited organizations for last decade. Let’s explain, what is mean innovation in accountancy, it’s a new creative or improved method, idea in thinking of financial inspection & bookkeeping, which gives the initiator who first introduces it an advantage over his competitors that may amount to a temporary monopoly. I think as independent researcher, abstracts of accountancy should be innovated, improved & renewed with new ideas in accordance dynamic social-economical development on the same level & time. At present many accountants, who familiar with old accounting system conducts & organizes accountancy in combination with market-oriented preparing of financial statements. Accounting standards with wooden change led accountants to spoon–fed thinking, who doesn’t create elementary accounting questions himself/herself due to they used to rely on handouts directives from above. Accountancy without internal motivation & nor stimulation reflects on development & improving of accounting methods in future badly. Some observations illustrate that doctors mainly had been defended science-degree on thesis of accounting history or introducing oversea financial & accounting practices into mother country’s business etc. Our researching group prefers lecturing which really based on ourselves research results & textbooks written by us, actually we don’t like copying others' papers without additional developments & creating. Hence we have published about 10 textbooks & researching brochures with which 200 printer’s sheets, including rather than 40 modern new ideas related to financial accounting, cost & managerial accounting, financial statement analyzing based on linear algebra, differential transformation, derivative, logarithmic conversion, plane analytical geometry, stepwise elimination of variables, multiple correlation equations, discriminate analysis & theory probability (Bayes׳ theorem) etc. The social–economical events mainly appear via statistical dependence associated with random, which requires an application of mathematical tools in wide ranges. For instance, recommendable to possess understanding of multiple discriminant score analysis, if researchers want to identify solvency & bankruptcy risk of corporations by using Edward I Altman’s Zeta score or methodology of multiple regression analysis. Herein practicable to calculate similar parameters of Zeta score appropriated to specific development conditions of economics sectors in Mongolia. We consider that one of perspective directions in innovations is accounting outsourcing. We are as initiator & forerunner willing to share our researching achievements with others through providing knowledge outsourcing service in addition to that we have composed of intelligent, skilled & motivated team, which differs from others with created & developed ourselves unique & interesting methods on financial analyzing & accounting modeling. Undoubtedly, our researching group has blazed new trails for future innovation of financial analyzing & accounting modeling based on integrated knowledge. We as pioneers on new development direction of modern accountancy really want to renew & restore established understanding of traditional financial analyzing, labor-consuming &  unproductive accountancy. Should take a leaf out of renowned & well-known Google communication’s book, indeed its extraordinary searching system is great & unique benchmark in dynamic intellectual innovation. But however commenced initiative in the field of accounting outsourcing from below can’t proper support from higher organs of power so far. Meanwhile we observed that leavers of high school, who has collected low scores at entrance exams in basic subjects: mathematics, physics, chemistry, biology, native language, foreign languages & optional skills etc make one’s choice of a calling from following vocation: as humanitarian, linguistic, accountancy, finance, & law in order to enroll at the private owned higher education establishments. In fact this badly condition has connected with poor prestige of financial & accounting leadership organizations over the country. Enrolling to the state owned universities or their local branches are the paradise’s dream for all leavers of high school, indeed they are very difficult mountain pass as for parents, who live at poor or low life standard. As parents as well as school leavers think of pull wires to assist getting an invitation to study at accredited state universities in accordance with their desired vocation. Finally, out of college practical training for graduates worries everybody as lack of experience & long period on probation for trainees to get skills themselves cause dissatisfaction among the employers’ organizations. Hence rational combination of pragmatic training with knowledge-based education is becoming one of key pending issue in the dynamic renewing of accountancy.  

How to innovate contents of financial statements?

           We are as independent researchers have suggested some new ideas created & developed by us, which targeted changing established forms & indicators in financial statements, namely income statement & statements of cash flows & of retained earnings; actually they are one of key subjects on the accounting innovation. Dominating of the rote in accounting methodology still was bridling an innovation’s thinking & new ideas created & motivated from below. Today’s methodology & schedules of financial statements mainly introduced directive from above weren’t rendering proper opportunities in financial analyzing, forecasting, controlling & their forward looking innovations except ratio analyzing methods. Obviously the international standard of financial statements aren’t unshakeable perfection adopted from laboratory experiment, it’s only the declaration introduced by higher organs of power & which would be considered in chronicle order of social-economical evolution in future. The laggardness & wait-and-see accountancy policy bring to coming last in development of economics science, & staying behind after movement & development of their research objects. Obsolescence thinking in accountancy reflects on stagnant state of textbook’s innovation at higher education establishment for economics. Actually decision makers on accountancy don’t have perfect understanding of innovation in the field of financial analyzing & accounting modeling, maybe they think of that new ideas exist & relate only to materials production sector. You see that analysts at every turn face various uncertainty, symptoms of coming insolvency, pending solutions, efforts of  multiple variable factors & statistical dimensions, which requires working out new methodologies on financial analysis & accounting modeling based on applied mathematics & theory of probabilities. Indeed accountancy has developed less than other field of economics science, which initially had been based on mathematics approaches, herein should recall that Luca Pacioli has established basic of modern accounting practice but however it exhausts all one’s internal potential to perfect oneself on future independently, as any science branch in its development process seeps through another or diversifies into separate parts. Meanwhile the science of statistics has developed & became one of key branches on mathematics, also diversified into several independent science fields as mathematical statistics, theory of probabilities, econometrics, business, social & life sciences statistics etc. The contents of financial statements & their indicators aren’t appropriating to proper needs of proceeding modern cost & managerial accounting & in order to realize corresponding analysis happen to collect mainly statistical or another various analytical information. By the way both statements as of cash flows & of retained earnings have fewer necessities to carry out financial analysis with contents & schedules needed today. Customers prefer to prepare tax statements on given time & properly rather than preparing financial statements due to last one isn’t practicable & less understandable etc. Used computer application programs for financial bookkeeping & preparing financial statements widely, but however cost & managerial accounting implements only by hand method due to programmers have poor knowledge both in economics & mathematical modeling. As we know ratio analysis based on financial statement’s indicators provides that one-sided results owing to some financial indicators increase, while others drop, in these case analysts face difficulties, connected with multiple changes of resulting indicators. In connection with above mentioned situations generates the necessary of applications on multiple regression score equations as Altman’s Zeta index, discriminate score analysis based multiple correlation relationship between variables denoted as y = f (ax1+bx2+cx3+…+ zxn) & theory of probabilities etc. Here should emphasize that preferring in usage of computer calculation programs SPSS & e-views without investigating thoroughly into essence of finance & accountancy would be led to copying thinking & spoon-fed education for learners. The accounting practice requires nonstandard thinking on innovations & developments of accountancy & it requires that necessary of educating learners in both of hand & computer calculation methods in parallel, herein we as researchers advocate an empirical teaching based on junction of integrated knowledge, first of all as on applied mathematics, mathematical statistics & econometrics approaches etc. Difficulties face while allocate manufacturing overhead expenses or operation expenses (marketing & general administrative) between many cost centers which classifies into fixed & variable expenses. Indeed not seems rationally innovation & development on creating & usage of indirect cost allocation methods in International accounting standard & other ruling materials. Instead of traditional technological stepwise process costing method, preferable application of ABC “Activity based cost” gives rather favorable opportunity for detailed distribution of management & marketing costs, but however ABC method has deficiency due to which leans on statistical mean & random sample, weighted percentage & classifications expenses into separate components by intuition. Taking into accounting these troubles we have thoughtfully studied the used in practice methods of indirect cost allocation & defining its variance influences (under applied & over applied overhead cost) which found remarkable application in economics university training of my mother country. I really believe in that the new ideas developed in some aspects of cost & management accounting with me & my family members will be able to find interesting in overseas countries with pleasure. Our researching area covers very wide range of topics on business statistics, financing, banking, accounting, analyzing fields in their combined form associated with economical engineering as well as separately for each one. In addition to that we have placed some of them at Google.com communication links under searching titles tyondon-researcher, & also tyondon_@yahoo.com, of course many extremely interesting & unique researching results were remained in author’s disposal expecting relative decisions of publishing. Obviously operation income describes by using both absorption & variable costing. Herein variable costing method applies for internal management for company. In compliance with general accounting rule income statement for company prepares on basic of absorption operation costing. Operating income of variable costing differs from absorption costing with fixed efficiency variance on manufacturing overhead by denoting yx = aoo(xo-x1). For both methods controllable variance of manufacturing overhead expenses apply to quarterly cost of product sold. But takes place of troubles connected with variance analysis of operation expenses which causes difficulties at university training & accounting practice, particularly in internal forecasting, budgeting, analyzing, modeling, engineering & controlling at entity’s level. The financial statements & their contents, indexes couldn’t play the role of effective tool in making analytical & rational decision based on retrospective & empirical accounting data basis in scope of company. Taking this situation into consideration we have put into practice in first ” Application of mathematical methods in calculation of variances on income statements prepared by using both variable & absorption costing”[1] which published in textbook “ Financial statement analysis & modeling in forecasting” written by co-authors, Prof. T. Yondon along with his family members in 2009. By the way this new methodology based on new idea of analyzing effects of variances on factory overhead expenses, its full contents had been appeared in researching papers completed with us & published in 2004, than we have extended researching scope by allocation methods of both kind of indirect expenses as: manufacturing & operation (marketing & general administrative) expenses via using extraordinary unique & so interesting mathematical transformations in 3-5 alternative versions[2]. Actually we have created & developed more than 40 new ideas only by means of our long time self-work from without assistance in accountancy firstly. First of all we have considered income statement prepared with three respective conditions using concepts of linear algebra & differential transformation: (1). Income statement prepared under absorption costing only differ with fixed efficiency variance on manufacturing overhead expenses. (2). Income statement prepared under absorption costing only differ with fixed efficiency variance on controllable manufacturing overhead expenses & operation expenses, direct material  &  direct labor. (3). Quarterly income statement prepared under absorption costing & variable costing in beginning & ending inventory etc. Our researching group has full confidence in feasibility & practicalities  of created & developed with us new ideas & innovations in the field of financial analyzing & accounting modeling, which is integrating & diversifying by means of globalization accountancy & its outsourcing  knowledge.

[1] All rights reserved for so-authors

[2] All rights reserved for so-authors

Was Mongolia infected with Dutch disease?

            Have appeared some symptoms of Dutch disease which with already have infected Mongolian economics. In addition to we should take account into commenced troubles which similarly to a crisis incurred since early 2008 & consequences of which disappeared. Indeed global economic crisis, which pulled all social-economics fields, that is proceeding in uncertain form still now & the chaos factors dominate to giving an economics decisions. Waiting for overheating & bubble growth of economics based as on the export of one & two raw materials as: coal & copper to burst, in the other side country holds election’s promising prospects for 4 years frequency in future. Economics bubble growth at 20 & 26% per annum fuelled by foreign investment inflows are stimulating chaos & financial risks in economics management. The GDP growth reached 20.8% in 3rd quarter of 2011. Herein the fiscal balance should be connected with material resources properly, otherwise if the prices of mineral resources as coal & copper drop these would be faced difficulties in huge budgetary expenditure & meet cash handouts promises. Despite the promise oriented overheated economics growth citizens livelihoods have not stepped forward & the poverty rate was up if compare to 1990, some promises on social security remained only on papers. Somebody says that politicians are producing by of regular election inflation on cash handouts promises. The prices of copper fluctuates under global economic outlook, financial uncertainty climate, namely copper demand in China, which accounts for about 40% of global copper demand are affecting the economical stability of our country. Indeed some researchers concern that if the European debt crisis would move to Asia, what we should do because of our economy is quite vulnerable as it depends on exports & imports of neighboring both countries. Here are cited few examples belong to boost in mining exploitation & its huge export which creates economic conditions hurting all other manufacturing sectors & these would be led to Dutch disease, & its economical property have  been  appeared: (1). Continuously raising deficit of consolidated budget expected as for 2012 is 483,7 billion MNT or -3.0% of DNP, (2). Uncontrollable growth of external debt & credit, which nearly has totaled US $ 9,0 billion or its percentage amounts 78.1% of planned GDP for 2012, (3). Official data source shows more than 30% of the population lives on less than US $1.25 a day. It conforms via researcher’s survey in which by 40% of population or 2,754,600*0.4 = 1,101,840 people live on poverty. If compute daily income per capita of households the given indicator amounts US $3.21 in other words that only just higher than in poor African countries, namely Congo & Niger etc. News paper’s review expresses approximately 130,000 poverty households or 130,000:720,000*100=18.1% of total household lives without a means/course of livelihood instead of 21,000MNT, which grants from Human development fund, & its activities will terminate on June, 2012. (4). The foreign investment inflow[1] has tremendously been increasing & as if of 3rd quarter of 2011 since 1990 cumulative volume of foreign direct investment registered in Mongolia has reached 5,8 billion US $. Have been revised current account deficit forecast of Mongolia in 2011 to 28.6% of GDP, from 17.3% previously, with the deficit coming in at 27.8% in 2012[2]. The investment in mining sector increases too fast making real economic an overheating, & particularly spreading Dutch disease, which bridles developments in other non- mining industries. (5). Obviously has rose foreign trade turnover, if refer to that external trade balance[3] showed a deficit of 1,563,7 million US $ in the first 10 months of 2011, increased by 1,305,7 million US $ or 6.1 times compared to the same period of the previous year. Also total external trade turnover increased by 4,331.2 million US $ or 90.0% compared to the same period of the 2010, of which imports up by 2,818,4 million  US $ or 2.1 times, and exports up by 1,512,7 million US $ or 66.5%. Here should emphasize that above mentioned deficit mainly was generated due to the increase of heavy machinery, equipment, transport vehicles, electric appliances & their technical spare parts etc.                                                                                                                                           Table2

(6). Continuously weakens exchange rate of NMT against US dollar & its exchange rate shows 1,426 MNT= US $1(as of 6th January, 2011), in fact it’s the same coefficient as of period of great recession started since 2008-2009. By the way Mongol bank (The State Bank) couldn’t cope with managing of rational means on bridling inflation boast & making of which understandable interpretation publicly so far, though it has professional, analytical department that responsible for steering of money policy & therefore foreign currency resources in its disposal have exceeded US $ 3,0 billion. By the way ordinary researchers, tutors, & practical staffs of accounting ask whatever methodological materials from authorities of higher organs of power, who has privilege opportunities to hearing  new ideas & innovations in the field of economics, finance, & accounting by taking parts in as overseas as well as domestic workshops, discussions, courses & conferences etc. (7). Haven’t yet appeared perceptible positive steps in development of South Gobi area with vast mineral resources & in means/course of livelihood for local area residents, where have started huge construction by Ivanhoe Mines a long period ago, which possess a 66% stake in project. However authorities of Ivanhoe Mines has informed that construction at its Oyu Tolgoi copper & gold project will be 70% complete by the end of 2011, but which hasn’t yet started construction of a power plant & it has requested a permission to import energy from China, that suffers energy deficiency at an equal pace as for South Gobi area. Meanwhile the reputation of foreign investment mining companies is so lower among local area residents owing to the investors prefer only communicating with higher authorities of power, excavating more earth by all means & exporting natural resources as quickly as possible priory to build proper infrastructure as: electric power base, motor road, railway, dwelling housing, school, rural hospital, kindergarten etc, which seriously affects a deterioration of livestock pastures, increasing a soil erosion, air dust, shortening livelihood sources for cattle-breeders & growing poverty index etc.

[1] www.investmongolia.com

[2] www.marketresearch.com

[3] The UB post, edition 103(948), November 25,2011, In association with frontier securities

Are you ready to coming economics crisis?

         We are receiving very updated & abundant information by watching TV & traveling through internet. Herein majority of people used to hear such news without any reactions, sometimes authorities hide relative information, statistical data, summaries from their consumers, also they purposely manipulate which in accordance with own interests. Recall huge economic crisis commenced since the end 2008. Indeed many international monetarily & financial organizations, also independent researchers had been warned beforehand leaders of banking, financial & infrastructure organizations about probably crisis. Actually its consequences continuous until now, everywhere possible to see uncompleted many dwelling building, disputes between liquidated commercial banks & their depositors about caused losses, an employee’s unpaid social insurances by entities covered with act of tax remit, losses of compensation caused by savings & credit cooperatives for their clients. Economics relative & steady development of China & its market-oriented economy with rational state regulation positively has effected on weakening of crisis shock in neighboring countries. The copper-molybdenum ore concentration combination “Erdenet” has played key role in buffering of crisis chock, as which has produced more than 40% of export for that time as 10th biggest producer with estimated reserves & exploitations.   By credit rating of the report on 29 November, 2011of Standard & Poor’s Mongolia has foreign rate BB with stable outlook & the country has included into 10 countries in order of economic freedoms as with most favored status for foreign investors.  But however a number of poor & low income people rises continuously, wasn’t gave designed effects a lot of projects carried out by government & international organizations, which resulted increasing of poverty level to 40% of total population & amounts 2,754,7*0.4=1,101,9 thousand persons. Herein by 60% of this data comprises of rural population owing to natural disaster resulting from excessive snow, drought, desertification, rising of no renewed mining sites, & shortage of grassland pastures for livestock.  The State bank couldn’t control foreign exchange rate, though which has sufficient resources of convertible currencies. Statistical average foreign exchange rate was 1,350MNT/US $1  last year, but it obviously has been fluctuated, in the first quarter, 2011, MNT/US$ toughen up to 1,290 than situation gradually worsened at the early of 2012, MNT/US$ has reached 1,450-1,480. The border price continuously changes under as: price behavior of raw oil at world market & economics stabilization of country, which supplied a fuel. As for Mongolia imports by 90% of fuel supply, & the border price of which continuously changes, besides domestic market of many kind of consumes directly depends on China. The country imports all construction materials except sand, pit gravel, appreciable quantity of cement & ferrous-concrete reinforcement. Indeed our market couldn’t withstand the trouble situation if close the border with conterminous both states for rather long term. Now the domestic market provides as for wheat & potatoes needs at 100%, & for potherbs by 62.8%. The necessity of growing of reserve meat for urban dwellers rises. Representatives of some fuel suppliers state that the structure of fuel border wholesale price in US $ as following: by 86%-the border cost, 9%-an excuse tax, & only 5%-the retained income in disposal for company respectively. The computation table of the structure of retail price for 1 liter petrol of AИ-92 at domestic market in MNT

Also fuel retail price in local provinces consists of several additional components as of fuel border price in US $, holding & ordering expenses of fuel & plus transportation expenses etc.                                                                                     

           After writing off enormous external debt accumulated in the time of socialism again has rose hard currency debt burden rapidly. If refer to press review the total external debt & credit in arrears amounts by US $ 9,0 billion. It means that the external debt & credit in arrears per capita of population accounted US $3,267, herein should recall that the total external debt stocks reported US $ 2,444,1 million in 2010, according to a World Bank report released in 2011. Meanwhile should compare above cited data with an annual family income amounted by US $4,400 from all sources as of November, 2011. By 70% of total external debt & credit or 9,0*0.7 = US $ 6,3 billion applies to legal entities & individuals, they mainly have put up licenses of natural resources as collateral for borrowing a loan from abroad. Recommendable take proper account into growth of external debt & credit, which is giving by independent researchers. The percentage of external debt & credit applied to GDP roughly calculates as following: 9,0:(16,133,500,0:1,400)11,527 ≈ 0.781 or 78.1% of planned GDP for 2012. The increasing external debt & credit burden would be became preliminary negative cause for probable economical stagnation in the future.

        Obviously the chaos play a definite role in economics management, in otherwise owners of trading & manufacturing companies prefer following homo economics doctrine of Adam Smith, who used the term “the invisible hand”, they ignore proper control on retail price as of fuel other goods necessity as from state, public institutions & trade union. Besides they advocate equilibrium concept supply & demand as joint determinations of price & quantity in market equilibrium, which effects an allocation of output & the distribution of income. In proportion as raising border fuel price generates uncontrolled inflationary boom at domestic market. Funny, in return dropping of fuel price doesn’t affect on slowing down of inflation. Exhausted & impoverished public, activists of trade unions, & also government authorities hold Keynesian-ism which advocates a mixed economy-predominantly private sector, but with a government’s moderate role & private owned entity’s participation. Tight monetary policy conducting by State bank positively effects on weakening consequences of global financial crisis incurred since 2008, in which Keynesian thought caused resurgence in economic animations. But should emphasize the government agencies unable to affect on dropping of fuel retail prices set by suppliers administratively. Also consumers the same as government couldn’t disrupt private owned gasoline station’s services because of in state disposal haven’t got sufficient oil reserves. The sample review shows gasoline stations hold permanently fuel reserves which would be met 15 day’s demands for consumers.

            Although the leaders engage activities in market-oriented economy but they hold tightly with utopia socialistic thought, also they don’t get free from priory election’s empty promise about distribution of cash money among citizen still. Priory election’s money promise effect both the inflation of consumer prices & the spreading a spoon-fed way of life for people. Decision makers custom to include public financing into state budget up to 3,0 billion MNT or by US $ 2,1 million, its amount  has been rose over last 3 elections period from 0,5 million MNT to 3,0 billion MNT or rose 6 times. Precursory symptom of upcoming economic crisis is appearing in some occasions. Mongolia has foreign trade relationship with 127 countries, & foreign trade turnover totaled US $ 11,307,2 million previously, but its sharply deficit  increased 6 times & amounted US $ 1,746,6 in 2011 as compared with previous year.  Foreign trade deficit amounted US $ 96,6 as of January, 2012, which has rose more 45% compared to a given period of previous year. The pre-election promise of money distribution of 1,500,000MNT per everyone or around US $ 1,077.4 expressed in joint government’s platform is causing troubles to state budget for 2012, its total amount is 1,500,000*2,754,685 = 4,132,0 billion MNT or 1,077.4*2,754,685 = US $ 2,967,897,6 thousand as referred to  population census’s results of 2011. Meanwhile 500,000MNT of that promise are granting from Human Development Fund in the form of 21,000MNT every month. Also the government has decided to grant to everyone 1,000 common shares for Erdenes-Tavan molgoi LLC at nominal price of 1000MNT within February 1st, 2012. Herein should be remember, the consolidated budget of Mongolia for 2012 has adopted in total revenue 5,825,6 billion MNT, if consider here are 1,400MNT/US $1. The  government suggests both versions as distributions  of shares & as well as granting cash, but however people, who lives at poor & lower standard of life probably would be requested cash or 1,077.4*2,754,685*0.4 = US $1,187,159,0 thousand. In addition civil society organizations has commenced street demonstrations in leadership of trade union’s activities, who requires a realization of pre-election promise on money distribution comparatively earlier, probably which has connected with upcoming next Parliament election. Meanwhile obviously were increased number of social security-oriented decisions adopted by authorities of higher organs of power, namely shall grant a scholarship for every student at higher education establishment, which would be made do with 70,200*10*151,000 = 106,002,000,000MNT & plus a stimulus for academic achievement & incentive at 106,002,000,000*0.25 = 26,500,500,000MNT in accordance with pre-election promises at budget expenses since January 1st, 2012. By the way students & tutors of school of economics at Mongolian National University have made a speech on declining to accept above cited decisions & came out in favor of a proposal with investing that money to development & construction measurements. In addition has started a discussion on drafts of state allowance to mothers of many children & rising a wages for state servants. The consumer spending is raising faster than an accumulation in productive investment, this situation affects on external debt & credit burden of Mongolia negatively. For instance has been inventoried more than 350,000 motor vehicles over the country & by 60% of which counted in capital city, however 80,000 motor vehicles imports every year. Here the people prefer buying any expensive car , sometimes a second hand car instead of engaging personal business which shall render numbers of operation’s positions.

     Although innumerable projects are carrying out by initiatives of foreign organizations but they haven’t achieved real results, particularly the measurements on poverty reduction, which was continued by 20 years, since 1990. The reputation of foreign investment mining companies is lower among local dwellers owing to the investors prefer excavating more earth by all means & exporting natural resources as quickly as possible priory to build proper infrastructure as: electric power base, motor road, railway, dwelling housing, school, rural hospital, kindergarten etc, which seriously grows hard currency outflow & affects a deficit of foreign trade balance. The local citizens anxious about soil erosion, dryness, shortage of livestock pastures, & a morality disregards from side of foreign investors. Some experts speak one’s mind & warn about probable coming Dutch disease of natural resource exploitations, which incurred in African countries, herein scholars suggest & Keynesian-ism & advocate a teaching of economics development based on knowledge in the future. At present an increase in huge exploitation of natural resources by mining industry is making the manufacturing sector less competitive & influences a weakening national currency compared to others.    

Social  welfare distribution & poverty

       Current period Mongolia classifies as lower middle income country with a Gross National Income per capita of US $1,890 & ranked 110 out of 187 countries in terms of Human Development with a HDI of 0.647 in 2010. Also official source shows more than 30% of the population live on less than US $1.25 a day. It conforms via researcher’s survey in which by 40% of population or 2,754,600*0.4 = 1,101,840 people live on poverty. The country has 130,000 poor households, which amounts 18.2% in total sum. Hence family members per capita of poor households amounts to 1,101,840:130,000=8.5 persons, which is 2.2 times more than average level over the country. Monthly average family income is amounted to 513,000 MNT or US $ 366.4 from all sources as of November, 2010 which announced by National Statistical Office. Herein monthly real income per capita of households would be computed 366.4:3.8=US $96.4 if consider every family consists from 3.8 members according to population census. If compute daily income per capita of households the given indicator amounts 96.4:30= US $3.21 in other words that only just higher than in poor African countries, namely Congo & Niger etc. Also takes place declining tendency in birth-rate, less than 2 children apply to per capita of households according to census, on which likely affect as: shortage of family income, winter’s dangerous air pollution (smokescreen), seldom maternity homes in residential districts, poor social security aimed to family having many children & continuously increased purchasing price for private apartments etc. Never seem changes in standard of living for common citizen as before although highest authorities confirm that economic growth has exceeded 20% for last year & Gross National Income per capita in next few years expects by US $ 5,000. Poverty reduction measurement still remains as declaration as before. For last decade hadn’t observed declining of poverty as 40% of the population is still remained on poverty. Here should create the identical & understandable methodologies of population’s classification with socially poverty group in accordance with their income taking into account Mongolian specific condition. For instance everybody has to have clothes suitable for passing 4 seasons as Mongolia has severe continental climate. Its territorial location is never Ecuadorian geographical longitude. Everybody even if should have warmest outer clothing & boots for spring & autumn wear. Ulaanbaatar is high coldest capital city in the world. Indeed in Mongolia average temperature range reaches as 30 degrees below zero in winter & more than 30 degrees above zero in summer. Impossible to suffer hash winter by means of wearing Chinese rubber slipper & spending the snowy night in cardboard box at street bench, besides people must have calorie content foods to support vital activity with irreplaceable vitamins, protein, fat & dairy supplement etc.  Researcher’s review shows that more than 95 % of social welfare had accumulated in disposal of 2% of the population or 14,276 households with 55,100 family members, herein by results of census conducted at the end of 2010 total population amounted to 2,754,6 thousand which officially announced. So scanty part of population live at fresh area & in beautiful valley of a natural protected mountain, spend summer vacation in Hawaii Island along with their family members, & educate their children at foreign renowned universities at budget expenses. In fact during past 20 years total population has separated into diametrically opposed polarization of social population groups with standard of living & means of subsistence which has been connected with unfairness distribution as of social welfare, planning of local & united budgets, competition on participation of profitable projects, incorrect privatization, giving out licenses on mineral resources, tax evasion & making good career etc. Here should recall that in socialistic regime all citizen have lived without private properties, as land, manufacturing facilities & licenses on private business etc otherwise they had the same economics conditions to start open market. All people had acquainted vouchers of small & big privatizations in equivalent numbers & nominal value. Actually has set monthly salary 325,000MNT or US $232.1 for physician or teacher who engages at state owned organizations (sub district hospital or secondary school) with work length up to 25 years. For years grows labor exploitation which became reality & affects on living standard of wage works, namely in private sector no exist external public & governmental controls & trade union that responsible for protecting interests of workers. Here given following assumption of 50.5% of 200 accountants, who has been covered with random sample in which they demonstrated themselves opinion of tax burden affected on taxable income evasion & reasons of preparing double financial statements at entities. Let’s consider physician’s salary & any deductions & personal income tax for January, 2012.                              Payroll for January, 2012.

Takes place perceptible gap between nominal salary & net salary at hand, which described below with computing of tentative current expenses.                                                   Current expenses

     Hence her net salary amounts by 59.6% of nominal salary (193,550:325,000)100 = 59.6%. Actually policy of tax exemption & its reduction for taxpayers couldn’t affect on poverty reduction. High education institutions in disposal of richest persons by 20 years were exempted from all kind of tax, which receive subsidiary on current expenses applied to per capita of learners, in addition to that get scholarship of 500,000 MNT per every learner from Human Development Fund every year & plus differences in training payments between planned sum & above cited scholarship. In return even nursing baby pay value added tax (VAT) on account of that baby’s mother buy milk at price into which putted VAT of 10%. For instance, 1 liter cattle milk costs 1,100 MNT into which included 10% of VAT or 1,100:1.1-1,000=100MNT. Main component of Mongolian’s meal are meat, flour, rice, vegetable oil also a cookie fried in butter etc. But price for all kind of meats is sharply rising, especially 1 kilogram beef costs 7,000 MNT or US $4.9. Actually it is highest price for agriculture country because of that by census of livestock as of end, 2011 its number amounted to 36,005,8 thousand, hence livestock per capita of cattle-householders calculates 36,005,8:130,0 = 277. One household could be bought through allowance from Human Development Fund only 3.8*20,650:[(5,000+7,000):2]=13 kilogram meat which would be met its poor demand of supper for 26 days. Retail price of meat rose at 12% within last month, National Statistical Office conformed. Authorities of tax administration say that in country tax level is lowest over the world. But this argument doesn’t accord to continuing for long time’s measurement of poverty reduction which wasn’t achieved desirable efficiency. Nor seems declining on number of homeless & wanderer people over the country, they live in holes & tunnels of heating pipe-lines in the winter, in corridor, door-way space under stairs & overnight visitors at railway station. If refer to census country has 713,780 households, of which 8,064 dwell in non-purpose homes, otherwise 8,064*3.8= 30,643 homeless people, including 8,064*2 = 16,128 children. Breeding livestock is main livelihood for herdsmen. Job searchers who separated from livestock due to continued natural disaster as drought, dzud-abundant snowfall which causes grassless, extending desert area, shortage of livestock pasture, cattle disease, lack of infrastructure (internet, wholesale, surfaced road, central heating system, medical diagnostic center), namely shortage of school facilities & skilled teachers. Some province parents have came to towns with main goals aimed to giving good education to their children. Review shows by 61,0 thousand job hunters are searching operator’s positions actively. Job hunters continuously move to capital city from provinces, they survive many troubles as, find shelter, registering & obtaining civil passport of capital city, purchasing countryside land to place felt ger, enrolling children in school or kindergarten, getting permission to use electricity etc. Although everybody has right to own 0.5-0.7 hectare a land free of charge according to legislation but common citizen had have to buy a land at money only. It connects with that a land distribution is authority’s disposal & competence of 6 districts of city. Meanwhile acquiring felt ger is only dream for poor job searchers owing to they haven’t got income except monthly benefit from Human Development Fund of 21,000MNT or US $14.7, but however complex ger costs 2,363,600 MNT or US $1,657.5. Continuously weakens exchange rate of NMT against US dollar & its exchange rate shows 1,426 MNT= US $1(as of 6^th January, 2011), in fact it’s the same coefficient as period of great recession started since 2008-2009.  By the way Mongol bank (The State Bank) couldn’t cope with managing of rational means on bridling inflation boast & making of which understandable interpretation publicly so far, though it has professional, analytical department that responsible for steering of money policy & therefore foreign currency resources in its disposal have exceeded US $3,0 billion. Funny, the management of floating exchange rate still exists in disposal of currency black market. The State Bank couldn’t control both flows of convertible currencies properly: outflows as revenue, net income, dividend, wage & bonus transmitted from foreign investment companies, inflows as their payables & money transfers etc. Fuel price roughly grew at 260-300 MNT within first weak as of January, 2012 which compared to end of last year. Meanwhile over 90% of country’s fuel demand meets by means of supplies from neighboring Russia. Changing in fuel price from overseas suppliers sensitively reflects on price raising all of domestic productions & services as basic price. But however country has huge resources of coking coal & vast steppe-area of oil prospecting & exploitation, they export to China at extremely lowest price than world coal price. Besides incomprehensible that authorities couldn’t deal with establishment of oil-refinery properly so far, which counts one rational way to solve countries shortage in fuel & keep basic prices under state control. Transportation service price of city taxi per every kilometer rose at 30-50% or increased from 600 MNT up to 1000 MNT within 1 day. Review confirms by 1,400 women & children surfer any violence. Sampling review expresses around 30,000 children engage physical labor, who undertakes feeding & maintaining their members of households, including parents, sometimes happen some of them are drinkers. Mongolia is the biggest consumer of alcohols & cigarettes, which negatively affects on family divorces, income shortage for households & worsening of crime situations. Mongolian’s alcohol consume per capita during past decade has doubled & reached 9.2 liter in 2009. Labor children earn scanty money at food & goods bazaar as porters by leasing cart or watching after motor vehicles, loading goods, washing floor, breeding & watering livestock, also majority of them collect secondary raw materials at refuse collection points along with parents etc. Some of homeless persons by chance find operator’s position as entrance man/woman on duty, who watch after dwellers & spend night in little space under stairs with spacious by of 2.0*1.5=3.0 cubic meter without washing tap & toilet. Should take into account official minimum of labor wage, which was set at 144,400MNT or US $.101.3, but however exchange rate against foreign currencies is dropping & inflation index is rising everyday & even every hours. 107,140 capable of working people live abroad for more than one year in order to collect money for buying various types of houses & meet consumer’s demand. Indeed it connected with labor exploitation, especially at private sector doesn’t establish trade union, which responsible to protect interests of employees. For instance some solvency entities weren’t paid social insurance applied to employee’s wage, which covered with law of tax annulment, including mining enterprises. Passed for long time when owners of private sectors press new employees to work without salary or set up for them probation wage at the minimum of labor wage. The owners became establish monthly nominal wage for employees at 15% of earned revenue per month by him/her. Some foreign investment companies don’t respect & follow labor & social laws of country. Recently has been raised quarrel between operators & headquarters of foreign investment company “South Gobi Sand”, which engages exploitation of mineral resources & had cut positions for 45 operators illegally. Has failed pledge of coalition government to construct housings devoted to100,000 households. Ulaanbaatar counted as highest pollution city in the world under review of international researching groups. Toxic substances per capita of Ulaanbaatar dwellers are 243.6 kilogram, reports Air Pollution Control Office. Researchers confirmed that dangerously were polluted air & land in area of ger district as with open hole toilet, shortage of natural grass-plot, trees, heating oven of coal burning, air dust, toxic gas (carbon dioxide) isolated from vehicular motor etc. They seriously affect on sickness of citizen & spreading of infection among them, namely dysentery, tuberculosis & hepatitis etc. If refer to barilga.mn WEB site 1 room’s & 2 room’s apartments cost US $30,000 & US $45,000 respectively. Moreover the benchmark interest rate for last year was reported at 12.25%. Recall that monthly real income per capita of households would be computed 366.4:3.8=US $96.4 if consider every family consists from 3.8 members according to population census. Obviously lower result of any measurements, including poverty reduction projects may connected with which poor organization activities, as weak project team, insufficient methodology of collecting & processing empiric data, correction of researching results in accordance with leadership’s instruction, shortage of required financial sources & duration period, poor legislation environment & bureaucracy in its improvements etc. We think of that should be conducted tender of any measurement (especially it belongs to project) faithfully & openly, team members could be possessed modern researching methods of applied mathematics, econometrics, & mathematical statistics, they must be motivated & able to themselves create, develop, distribute, export & outsource new ideas & innovations etc. Popular such troubles for project teams, first of all they search & copy any foreign economics models or computer application programs in order to put they into Mongolian conditions in despite of their specifics, collect financial instructions & than distribute standardized questionnaires among involved participants in sampling, demand final reports, researching empiric materials from functional departments & agencies, & finally summit hacked resume to the higher organs of power etc. Likely attaining through close friends right to conduct a lot of projects in parallel by one team seriously affects on quality of any projects within planned time. The term members should be preferred themselves creating feasible economics models, affordable researching questionnaires & methodologies suitable for Mongolian specific in despite of copying from abroad or from internet anything.