What is an Internal Audit? An internal audit is performed by companies to evaluate and provide objective assurance that an organization’s internal controls, corporate governance, and accounting processes are operating effectively. They provide an introspective look into the current state of things and analyze what can be done better or what lessons can be learned…
What is an Interest-Only Mortgage? An interest-only mortgage is a unique type of mortgage that only requires the borrower to make regular interest payments on a mortgage without paying any of the principal amount. The payment terms usually last for a specified period, with a principal to be paid off at a later date in…
What is a Qualified Annuity? A qualified annuity refers to a retirement savings plan that is funded with pre-tax dollars, with tax-deferred features, and is approved by the Internal Revenue Service (IRS). IRS insists that all qualified plans must satisfy the Internal Revenue Code in form and operation. All funds deposited into a qualified annuity…
What are Interest Rate Derivatives (IRD)? Interest rate derivatives (IRD) are a derivative product that is based on a benchmark interest rate or group of interest rates. They are used by traders and borrowers to hedge their positions or speculate on movements in the market. Interest rate derivatives are often called IRDs and are subclassified…
What was the Savings and Loan Crisis? The savings and loan crisis refers to the collapse of 1,043 out of 3,234 savings and loan associations (S&Ls) in the United States during the 1980s and 1990s. The S&L crisis was considered to be one of the most devastating failures of the banking industry in the United…
What are Scrips? Scrips refer to any object that is used as an alternative or substitute to legal tender. They were a popular alternative to wages and were used as a means to exploit workers. Today, scrips are used in the form of gift cards, tokens, certificates, and rewards points. History of Scrips Scrips can…
What is Quarter on Quarter (QOQ)? Quarter on quarter (QOQ) is the rate of change between quarterly fiscal data. It is a commonly used metric in determining a company’s quarterly growth or, alternatively, used broadly to evaluate macroeconomic performance (such as GDP). QOQ is used synonymously with quarter over quarter (Q/Q). Understanding Quarter on Quarter…
What is a Non-Qualified Plan? A non-qualified plan is an employer-sponsored, tax-deferred retirement savings plan that falls outside the Employment Retirement Income Security Act (ERISA). Unlike qualified plans, non-qualified plans are exempt from the regulations and testing that apply to qualified plans. Non-qualified plans are used as a recruitment and retention tool for key executives…
What is Non-Qualified Deferred Compensation (NQDC)? A non-qualified deferred compensation (NQDC) plan is a type of non-qualifying plan that falls outside the Employment Retirement Security Income Act (ERISA). NQDC plans are also known as 409 (a) plans and golden handcuffs. Employers use such plans to attract and retain key executives and valuable employees. As the…
What is a Non-Purpose Loan? A non-purpose loan is a type of loan that involves complex structuring and uses investment securities as collateral. Borrowers do not need to liquidate their securities and can continue to receive the interest and dividend income from their securities. How Does a Non-Purpose Loan Work? Financial institutions and brokerages offer…
