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There are two main issues, involving the general public, hounding the surety-bond industry. First is the proliferation of fake bonds. Second is the presence of delinquent bonding companies. With respect to fake bonds, it is usually government offices that fall victim to this nefarious activity. A number of administrative circulars have been issued by the Insurance Commission (IC) to counter this practice. At present, the principal regulation is Insurance Memorandum Circular (IMC) 1-77, dated March 1, 1977, which provides for the rules and regulations governing the issuance of bonds in the Philippines. The circular provides for the following measures: a) to set in place a system of verification, bond forms must be issued in duplicate and they must be consecutively and serially prenumbered (with serial numbers); b) a bond-registry book must be maintained, which may be inspected by the public and by the IC. Every bond issued by an insurance company shall be entered and recorded in numerical and chronological order. Other data are required to be indicated; c) issuance of signed blank bond forms are prohibited; and d) nine liability registers corresponding to the general classification of bonds shall be maintained; Another precautionary measure that government offices are required to take was provided for by Circular Letter (CL) dated February 21, 1973, implementing Memorandum Circular 622 of the Office of the President of the Philippines. This provides that government agencies dealing with insurance companies must furnish the IC with reports of their transactions within three days from their consummation indicating a number of information. Conversely, surety companies were required to submit monthly reports of bonds issued in favor of the government in CL 2015-04, dated January 22, 2015. Having been victimized by fake bonds so often, the Supreme Court (SC), through its administrator, issued a memorandum dated September 10, 1993, for which the IC issued a counterpart CL 8-2000 to regulate the issuance of judicial bonds. Under this circular, surety companies issuing judicial bonds shall confirm every first 10 days of the following month the bonds it had issued to a particular court copy furnished the SC and the IC. The surety company is sanctioned for failing to submit the list of judicial bonds it has issued for a particular month. Under the memorandum dated September 10, 1993, the Clerk of Court is tasked to determine the authenticity of every judicial bond and to submit to the court administrator a quarterly report. The second problem plaguing the surety-bond industry is presence of delinquent bonding companies. Under Administrative Order 96, dated June 4, 1964, (Amendment to Authority Granted to Insurance and Surety Companies to Become Sureties Upon Official Recognizances, Stipulations, Bonds and Undertakings), “The moment a surety company becomes indebted to any government instrumentality or political subdivision thereof, or to any government-owned or -controlled corporation in the total amount of P50,000 accruing from the issuance of bonds, the same having been due and demandable, the insurance company must voluntarily desist from writing or issuing all kinds of bonds until the outstanding liabilities in government bonds shall have been fully paid or settled”. Under CL 7-2000, dated June 5, 2000, the settlement of customs bond liabilities may be made a requirement for the renewal of the Certificate of Authority of nonlife-insurance companies. However, in Department of Justice Opinion 287, dated October 21, 1954, it was opined that a head of government agency may not unilaterally refuse to accept surety bonds issued by a surety company that has a pending obligation with the said government office. The power to deal with delinquent insurers and bonding companies is a prerogative of the IC and not of the unpaid government agencies. http://www.businessmirror.com.ph/issues-plaguing-the-surety-bond-industry/

Many professionals in the financial and real estate industries undergo their licensing procedure via the National Multistate Licensing System and Registry (NMLS). The NMLS handles the licensing data of numerous types of specialists such as mortgage brokers, originators and lenders, money transmitters, and collection agencies, among others. While the licensing bodies for different states and trades varies, all documents enter the NMLS databases. The electronic surety bond (ESB) was introduced in 2016 as a method to streamline the collection of licensing information in the system. The electronic submission of surety bonds aims to make the collection, storage and scrutiny of the NMLS surety bond requirements easier and smoother. State licensing bodies in nine states adopted the electronic surety bonds in 2016. In January 2017, 11 more states joined them. One more will follow in April 2017. Let’s take a look at the professionals in different states who are now required to use the electronic surety bond. The first phases of adopting electronic surety bonds The volume of licensing information that the NMLS needs to handle is considerable. The choice to move to electronic surety bonds thus is a part of its efforts to better manage the data. The electronic submission aims to make the process faster and more secure and it does not affect the surety bond costs of licensees. In 2016, the first nine states adopted the ESB system. They are Texas, Indiana, Wisconsin, Washington, Iowa, Vermont, Massachusetts, Wyoming and Idaho. In each state, a different set of professionals had to comply with the new rule and the change had different deadlines. As of January 23, 2017, 11 more states moved to electronic surety bonds: Alaska, Montana, Illinois, North Dakota, South Dakota, Minnesota, Mississippi, Georgia, North Carolina, Rhode Island and Indiana (partially). Any new licensee after that date needs to submit the bond electronically. Businesses that currently hold a license in these states need to move to ESBs by the end of 2017. Additionally, Oregon is about to join the new system as of April 15, 2017. Who needs to submit an ESB today? In each of the states that have adopted NMLS surety bond requirements, a different set of professionals have to comply with them. Below you can find a list of the 21 states and the various types of specialists who have to post ESBs in each. Alaska – mortgage brokers, mortgage lenders and registered depository institutions Georgia – money transmitters, mortgage brokers, mortgage processors, mortgage lenders and sellers of payment instruments Idaho – collection agencies Illinois – residential mortgage brokers and exempt companies Indiana – debt managers, exempt companies, first lien mortgage lenders, money transmitters, subordinate lien mortgage lenders and loan brokers Iowa – closing agents, debt managers, exempt companies, money servicers, money bankers and mortgage brokers Louisiana – pawnbrokers with main in-state and out-of-state offices, residential mortgage brokers, sellers of checks and money transmitters Massachusetts – check sellers, debt collectors, foreign transmittal agencies, mortgage brokers, mortgage lenders and exempt companies Minnesota – accelerated mortgage payment providers, credit services organizations, currency exchange agents, electronic financial terminal providers, money transmitters, residential mortgage originators and residential mortgage servicers Mississippi – mortgage brokers and mortgage lenders Montana – deferred deposit lenders, escrow businesses, independent contractor lenders, mortgage brokers, mortgage lenders and mortgage servicers North Carolina – money transmitters North Dakota – collection agencies, debt settlement service providers, exempt companies, money brokers and money transmitters Oregon – collection agencies, consumer finance servicers, debt management service providers, exempt companies, mortgage lenders and money transmitters Rhode Island – check cashier and debt management servicers, electronic money transmitters, lenders, loan brokers, sellers of checks, small loan lenders and third party loan servicers South Dakota – exempt mortgage company registration, mortgage brokers and mortgage lenders Texas – money transmitters Vermont – debt adjusters, lenders, loan servicers, mortgage brokers, money transmitters and litigation funders Washington – mortgage brokers and consumer loan companies Wisconsin – mortgage brokers and mortgage bankers Wyoming – exempt companies, money transmitters, mortgage brokers, mortgage lenders and supervised lenders You can also consult the State Adoption of ESBs Table by the NMLS to see the exact adoption dates for each state and specialist type. http://realtybiznews.com/more-states-are-adopting-electronic-surety-bonds/98739676/

According to Markel International, brokers have been asking for it – and now they’re going to get it. The company followed up on its announcement that it will enter the surety market last month by declaring earlier today that it is starting to write surety business after making two key appointments – with the business to initially focus on the UK, Ireland and Europe before expanding to other regions outside North America. In coming are Damian Manning, who will lead the team, and David Chandler, as senior underwriter. Manning has more than 19 years of experience in the credit and surety business, beginning his career as a broker at Aon Trade Credit and moving to Aon Surety and Guarantee in 2002. For the last six years he has worked as London markets surety manager for Aviva and immediately prior to that as surety manager for the UK and Ireland at Coface. Meanwhile, Chandler joined the industry as claims handler with Euler Hermes in 2006, moving to Coface as credit risk underwriter in 2007. Here, he joined the surety operation in 2010 and most recently worked as risk director- bonding for Euler Hermes UK. Speaking about the new arrivals and prospects for the business going forward, Ewa Rose, managing director of the trade credit, political risk and surety business at Markel International, noted that both are highly respected and will lead the firm in a new line that brokers have been calling for. “The addition of surety is a natural extension to our offering and provides a full range of complementary products across our portfolio,” she explained. “The new launch is in response to high broker and client demand and we look forward to providing much needed capacity to the market. It also increases our ability to design new and exciting products by combining the skillsets and experience across our underwriting team.” http://www.insurancebusinessmag.com/uk/news/breaking-news/markel-international-to-start-writing-surety-business-62355.aspx

Work-in-process, or WIP, is an account on the balance sheet where all the costs referring to a product or asset in production are recorded. It covers costs related to direct labor, direct materials, and MOH (applied manufacturing overhead). The “WIP” account is debited (increased) by direct materials used in production, direct labor involved in production, and by the amount calculated for MOH. When an asset goes through all the stages of the production process, it becomes a finished good that can be sold. When this happens, the amount associated with the respective product is credited to “WIP” and debited to “finished goods”. Needless to say, any errors in calculating WIP will mess up the entire balance sheet, so it is important to pay attention to every step and number in the calculation process. The following steps should ensure an accurate WIP calculation. How to Calculate WIP in 5 Steps 1. Find out the direct materials amount issued for production within the reported period. It is recorded as a debit to “WIP” and credit to “direct materials”. To calculate used direct materials, take the initial direct materials balance, add material purchases, and subtract the resulting balance in “direct materials”. 2. Find out the direct labor amount involved in the production process within the reported period. It is recorded as a debit to “WIP” and as a credit to “salaries/wages payable”. The salary/wage expenses related to the production within the reported period represent the direct labor amount. 3. Calculate the MOH amount for the reported period. It is an estimate used for calculating WIP. A cost driver is used to apply MOH. To calculate the overhead rate, take the overhead costs budgeted, and divide them by the estimated cost driver (e.g. machine or labor). Multiply the resulted overhead rate by the cost driver referring to actual production units. You will obtain the MOH amount that needs to be debited to “WIP” and credited to “overhead”. 4. Debit the MOH amount obtained at the previous step to the “WIP” account. The actual MOH costs cover indirect materials and labor, as well as other costs indirectly related to the production process. These are debited directly to “MOH”. In theory, the applied MOH credit will match the actual costs debited, and the amounts corresponding to applied and actual overhead will be the same. If a debit balance remains after you debit actual costs to “MOH”, it means overhead was under-applied. A remaining credit balance suggests that you over-applied the overhead. Adjustments become necessary when the amount corresponding to over/under-applied MOH has a material impact on the WIP balance and will impact further use of the information as well. 5. Calculate the ending balance in the WIP report on the balance sheet. Add the initial WIP balance to the amounts obtained at the first three steps. Subtract the finished goods inventory (debited to “finished goods” and credited to “WIP”). The result should be the final balance of the WIP account, and it should coincide with the reported amount on the balance sheet. http://cabbage.upwith.net/blog/58ab134abe6f810004dc02be