Thinking outside the box in your Business

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What does this term mean? It refers to the approach to a certain aspect, or in this case, your business. This term can also be clarified by referring to it as creative thinking, unconventional thinking or an approach from a new perspective. By thinking outside the box and questioning the norm, you will constantly be considering how you could improve a service, product or an experience. This ensures continuous growth and can lead to intelligent and forward-thinking decisions in business. More opportunities and possibilities suddenly appear when an outside-the-box approach is adopted. With this approach in your business, you enable yourself to be adaptable to your industry, which is of utmost importance as the business environment experiences changes as we speak. Without being adaptable to the constant changes, you will stagnate.

The following three “W’s” can come in handy to help you to constantly think outside of the box and seek growth:

  1. Where

This is an important question to ask yourself throughout the whole lifespan of your business. It is not a once off thing to tick and go on. With a constantly changing business environment, you need to assess your position in relation to your competitors on a regular basis to ensure that you are still moving forward and not backwards. There are various models to help with this very important step.

  1. What

As soon as you know where your business is in the market, you need to clearly determine what the future goals are and what is needed to get there. The steps to get there may adjust as time goes on, but it is important to work towards the business goal.

  1. When

This is one of the most important aspects of growth for any business. Time – without this, it is impossible to evaluate the growth strategy and whether targets are met. Each target needs to be linked to a timeframe in which it needs to be met and evaluated to ensure that the process is on track and whether there are any adjustments needed.

To ensure that the business, as a whole, is constantly thinking outside of the box, the following characteristics needs to be taught to your employees:

  1. Intuitiveness;
  2. Consciousness;
  3. Reflectiveness;
  4. Creativity and open-mindedness;
  5. Timeous;
  6. Resourcefulness;
  7. Independence; and
  8. Positivity.

To conclude, think about the following – when standing still while the rest of your competitors are growing, you are actually moving backwards, which is the wrong direction for any business.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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EMP501-rekonsiliasies

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Die aanvangsdatum van die 2019-seisoen vir indiening van die jaarlikse EMP501-rekonsiliasies is deur die Suid-Afrikaanse Inkomstediens (SAID) uitgestel vanaf 1 April na 17 April 2019. Die rede vir hierdie verandering word toegeskryf aan opdaterings deur die SAID aan hul bestaande stelsels.

Die sperdatum vir indiening van bostaande rekonsiliasie, sowel as die Opgawe van Verdienste (“Return of Earnings”) (W.As 8) is 31 Mei 2019. Die boetes vir laat indiening is as volg:

• die nie-indiening of laat indiening van die EMP501-rekonsiliasie kan lei tot ’n 10% boete    van die belastingjaar se werknemersbelastingaanspreeklikheid; en
• die laat indiening van die W.As 8 2018 Opgawe van Verdienste by die Departement van    Arbeid kan 10% van die aanslag bedrag beloop.

Daar word voorgestel om gebruik te maak van elektroniese salarisregisters wat jou in staat stel om onderliggende waardes van doeltreffendheid en betroubaarheid behoorlik te handhaaf en sodoende te verseker dat akkurate inligting aan die SAID en die Departement van Arbeid betyds voorsien word om enige boetes te vermy.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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The audit process

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To get a better understanding of the audit process, we can take a look at the definition of an audit. Audit – “an official inspection of an organisation’s accounts, typically by an independent body”. An efficient audit is one that reduces the audit risk to the targeted level, ensures that there are no material errors contained in the financial statements and gives the stakeholders an independent reassurance that their interests are taken care of.

The audit process can be split up into what auditors do and why they do it.

What auditors do Why they do it
Compile the engagement letter The engagement letter sets out the terms and responsibilities of both the client and the auditor to give a clear understanding of what is required of both parties.
Audit planning To get a better understanding of the company being audited, the environment they operate in, the internal control systems in place and inherent risks of the company.
Risk assessment procedures After a better understanding of the inherent and control risks are established, the auditor will be able to determine the number and type of procedures to perform.
Perform the risk response procedures The auditor performs the procedures as determined during the planning stage to give reassurance that the accounting work is free from material misstatements and that other legislation has been complied with.
Compile a management report Give management feedback on findings from the procedures performed and make recommendations where required.
Give an independent and objective opinion (the audit report) Give stakeholders, for example, shareholders, the bank, etc. an objective opinion that the financial information as presented by management is free from material misstatement and can be trusted.
Going concern conclusion, Reassurance that the business is a going concern, in other words, the business is in a financial position to continue operating in the near future.

Due to the nature of testing (samples tested) and inherent limitations, an audit is not a 100% confirmation that the financial statements are free from all misstatements and that there is no fraud involved in the company. The objective of an audit is to give reassurance that the information provided to stakeholders by management are free from material misstatements. Due to the focus on specific areas of key legislation, the audit also does not guarantee that all legislation has been complied with even though during the audit fraud may be identified.

The goal for management is to get an unqualified audit report, meaning that the financial statements are free from material misstatements. There are no findings made by the auditor on the management report and the auditor identifies no material findings on non-compliance with legislation. To ensure an unqualified audit report, management is required to uphold high-quality governance, ethical leadership with appropriate policies and procedures in place and ensure financial and performance management of a high stand is maintained.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Need a second chance? Get your will in order today!

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Everybody deserves a second chance, the saying goes. With your will, you have unlimited “second chances” to correct any past mistakes or to change your mind. With so many chances, it is mind-boggling and tragic that court records are replete with disputes about deceased estates.

Contrary to popular belief, wills and estate planning are not more important for people with large estates.

Any parent of minor children should have a will, regardless of the size of their estate. A will is about more than possessions.

The three most compelling reasons for a parent to have a will, and to keep it up to date, are:

  • Guardianship of children;
  • Safe-guarding your surviving spouse; and
  • Ensuring that your child does not have to rely on government officials for their daily needs.

Guardianship

Apart from the practical needs of children to be cared for, children do not have contractual capacity. A major implication of this fact is that a child cannot sell a property, give instructions for an investment left by his or her parent, or perform a host of commercially necessary transactions to tend to his or her own needs.

In terms of the Children’s Act, any natural parent is automatically a guardian of the child. If one parent passes away, the other will still be able to perform his or her duties as a parent.

However, in instances where the last surviving parent dies, or where both parents die together, a vacuum may exist as to who the legal guardian of the child is. In those cases, it may become necessary to ask the High Court, as upper guardian of all children, to assign a guardian.

Section 27 of the Children’s Act explicitly grants parents the right to appoint someone else as the child’s guardian in the event of his or her death if there is no other surviving guardian in place. This may be stipulated in a will (s27(2)).

Don’t forget your surviving spouse

If someone dies without a valid will, the estate will be distributed in terms of the Intestate Succession Act.

The good news for children is that the Act makes provision for them. The bad news for a surviving spouse is that their  inheritance may not be what he/ she initially would have hoped for.

Section 1(1)(c) of the Intestate Succession Act stipulates how an estate will be divided where the deceased is survived by a spouse and children.

The surviving spouse cannot inherit more than a set amount, currently R250 000, or a child’s share in the estate, whichever is the greater. The children will inherit the rest in equal shares.

For example: Peter dies with an estate of R1.2 million, which includes a house. He had three children and a spouse, Maria. Each child’s share is calculated by dividing the value of the estate, being R1.2 million, by the number of children (three) plus one, being R300 000.

Maria will therefore inherit a child’s share (being the greater amount) of R300 000. The rest of the estate (R1.2 million – R300 000 = R900 000) will be divided equally between the three children and each child will get R300 000.

Not many people will choose to cut off their surviving spouse who has to care for their children, but this is exactly what the implication of intestate succession could be.

Estates often involve a fixed property where the surviving spouse and children live. As the children inherit a share in the house, the surviving spouse may be severely restricted in encumbering the property with a mortgage or selling the property.

Compounding the drama, the children cannot repudiate their inheritance without assistance from their guardian as they do not have contractual capacity. However, as the guardian stands to benefit from the repudiation of the inheritance, the guardian cannot assist the child to do this as he or she is conflicted.

Intestate succession causes a myriad of problems that can be avoided altogether through a valid and up-to-date will.

The schlepp nobody wants to cause their children

As mentioned above, children do not have contractual capacity. Even though they may inherit from a parent, there are severe restrictions on what they can and cannot do with their inheritance while still a minor.

The Administration of Deceased Estates Act stipulates that children may have immovable assets registered in their names.

However, moveable assets and cash may only be received if a guardian accepts it on a child’s behalf. If there is no guardian, the assets will be held by the Guardian’s Fund on behalf of the child until he or she turns 18.

The Guardian’s Fund is administered by government officials in the office of the Master of the High Court.

Again, a child has no contractual capacity and cannot claim funds from the Guardian’s Fund for his or her needs without assistance of a guardian. It could take months to years to get a court-appointed guardian or tutor for the child who will be able to claim for maintenance from the Guardian’s Fund after following detailed procedures.

Parents must consider all these potential difficulties their surviving children and spouses may face due to their failure to update and maintain a valid will.   It is the one mistake which cannot be rectified from the grave.

https://www.vdt.co.za/NewsResources/NewsArticle/tabid/30444/ArticleID/2796/Default.aspx

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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THE PSYCHOLOGY OF ETHICAL BEHAVIOUR

In a country where unethical behaviour and blatant corruption by political and business leaders seem to be the norm, more and more people are asking what causes it and how it can be prevented.

Dr Renate Scherrer-01

Dr Renate Scherrer

What it means to be an ethical organisation

If the leaders of an organisation have a strategy, vision and promise that is inspiring, and financial returns are actually positioned as a consequence of the company’s purpose, and not the reason for its existence, the call for principled action resonates throughout the organisation.

The causes of unethical behaviour

The factors that contribute to the level of ethical behaviour in the organisation are environmental-, organisational- and individual-level factors.

  • Environmental

Factors in the macro environment to the organisation often sets the tone of what is seen as acceptable and the norm. When corruption is promoted and rationalised in the environment, organisations have to work hard at creating a climate where acting in an ethical way becomes “the way we do things”. Everybody must have a clear understanding of the rules and the underlying values which dictate what the organisation will do and what it will not do.

  • Organisational

The manager’s own behaviour is one of the key variables impacting subordinates when it comes to acceptable and unacceptable behaviour. Policies and procedures will either facilitate ethical behaviour or it may actually promote unethical behaviour. If people are expected to achieve certain targets, yet they do not have the proper resources to do so or reward systems are unfair, they will become resentful and may start acting in a self-serving manner. Even more so, unethical behaviour will increase when employees feel that their peers will not condemn their actions.

  • Individual

It is simple, yet complicated: make informed decisions about the people you appoint. Screen and analyse them to understand: what drives them; their attitude towards risk; whether they will manipulate others for personal gain; if they believe ethical choices are driven by circumstance.

It starts at the top
Leaders need to model good behaviour. Their unethical or self-serving actions will authorise others to do the same.

Ethical leadership is not about what is said, but about what is done, every day, in the big and small moments. As they say: “A leader leads by example, whether he intends to or not.”

The ethical disablers
If the only goals are profit and shareholder returns the company may be opening the door to behaviour that will ensure success, no matter the cost.

The way organisations reward their employees have a major impact on their behaviour. When there is no regard for the economic environment the business finds itself in and managers insist on targets that are unattainable, people will take shortcuts in a desperate attempt to meet the targets.

The ethical enablers
HR policies and procedures must embody the values of the organisation and reward good behaviour. Transgressions must carry real consequences. It is also important to have effective whistle-blowing mechanisms in place.

Leaders and managers need to have the necessary tough conversations with employees who only do what is best for themselves.

When the top sales performer in the company is engaged in any form of unethical conduct or his behaviour is toxic in the workplace, this needs to be addressed. By not acting the message is that money is more important than being ethical or acting in the best interest of all stakeholders.

Prepare the soil
Benjamin Franklin said: “An ounce of prevention is better than a pound of cure.”.

Organisations have to continuously prepare and nurture the soil to produce healthy ethical behaviour. It becomes almost impossible to get rid of weeds when it has started to overtake the garden.

[12 Mar 2019 13:18]

https://www.bizcommunity.com/Article/196/511/188412.html

About the author2 Dr Renate Scherrer is the MD at JvR Consulting

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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SARS SCAMS

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Education and awareness around identity theft, phishing and other frauds have become part of life globally. If nothing else, scamsters are innovative and keep trying new avenues of defrauding businesses and individuals. In South Africa, this is no exception, and there has been a rise in the number of scams where persons pretend to be from the South African Revenue Service (SARS), to defraud honest taxpayers. This is a particularly useful method, since reactions to correspondence from revenue authorities are often quick and drives taxpayers into immediate action. Since June 2018, SARS has identified 15 new scams (in addition to a myriad of old scams still doing the rounds). Members of the public are randomly emailed with false “spoofed” emails made to look as if these emails were sent from SARS, but are actually fraudulent emails aimed at enticing unsuspecting taxpayers to part with personal information such as bank account details.

Some of the more pertinent scams recently have been:

  • Payments required for “residential tax clearance certificates”. This is particularly relevant, with all the media reports around the so-called “expat tax” due to come into operation in March 2020;
  • Receiving a “tax invoice” from SARS with a link that should be clicked on;
  • Notifications of a refund, requiring taxpayers to complete bank account and credit card details;
  • Letters of demand with threats of court summonses; and
  • Requests for verification of assessments, with links to malware.

SARS provides the following guidelines when dealing with correspondence that purports to be from them:

  • Do not open or respond to emails from unknown sources;
  • Beware of emails that ask for personal, tax, banking and eFiling details (login credentials, passwords, pins, credit/debit card information, );
  • SARS will never request your banking details in any communication that you receive via post, email, or SMS. However, for telephonic engagement and authentication purposes, SARS will verify your information. Importantly, SARS will not send you any hyperlinks to other websites – even those of banks;
  • Beware of false SMSs;
  • SARS does not send *.htm or *.html attachments; and
  • SARS will never ask for your credit card details.

SARS has also made a facility available where scams or phishing can be reported. Taxpayers can either email phishing@sars.gov.za or call the Fraud and Anti-Corruption Hotline on 0800 00 2870.

It is advisable that taxpayers are always aware of the status of their tax affairs and are in constant contact with their tax consultants, to ensure that they are not caught unaware by any of the scams.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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THINKING OF SELLING AN ASSET?

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What happens when you sell an asset?When you sell or dispose of an asset, you either realise a profit or a loss from the exchange. When you realise a profit, you are subject to pay capital gains tax (CGT) on that realised profit.

Are all assets subject to CGT?

Not all assets are subject to CGT. Capital assets that are purchased, with the intention to generate income, will be subject to CGT; whereas personal used assets are not subject to CGT.

How does CGT work?

Capital gains are calculated on the proceeds from disposal of an asset, less the base cost of the asset.

The proceeds are any form of remuneration that was received from the disposal or exchange for the asset. The base cost is the accumulation of expenses which were incurred for the asset. Costs that can be included are: purchase price, capitalised/ improvement costs, transfer costs, valuation costs, and installation costs.

If your base cost exceeds your proceeds, you realise a capital loss, but this will not reduce your taxable income and will be carried forward to the next year of assessment to reduce the aggregate capital gains of that year of assessment.

Once a natural person has calculated their aggregate capital gains, they are subject to a R40 000 exemption (R300 000 for a deceased estate) to reduce their assessed capital gain. Also note that the first R40 000 of this capital loss will not be carried forward but added back.

Only 40% (for natural persons and special trusts) of the total capital gains will be included in the taxable income, and the remaining amount will be excluded.

The inclusion rate for all other entities is 80%.

The primary residence exemption

The first R2 million of any capital gain or loss on the disposal of a primary residence of a natural person is excluded from CGT calculation.

Only one resident can qualify for the exemption and it must be the residence in which the person normally resides and can be any structure (boat, caravan, etc.).

What is a deemed disposal?

When a taxpayer emigrates or if the nature of the asset changes, the taxpayer is deemed to have disposed of the asset(s). All assets will be deemed as being disposed of at market value and will be subject to CGT.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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ESTABLISH WHO THE EXECUTOR OF THE ESTATE IS

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If the deceased had a will, they may have nominated an individual or a financial institution to perform the function of the executor of the estate. If no executor is nominated or the nominated executor is unable or refuses to accept the task, or if the person dies intestate, the master of the High Court will appoint an executor to the estate, this is called an Executor Dative.  Those who want to take on the role of the executor should apply to, and must convince the Master of the High Court why they should be appointed.  The Master generally prefers an executor who stands to inherit from the estate, and the primary beneficiary is preferable.  All beneficiaries of an estate are asked to consent to the new executor, if there is a dispute, the master may appoint joint executors.

If you have been nominated as the executor of an estate and you feel intimidated by all the legal processes you are advised to approach a professional, such as an accountant to assist you in administering the estate.

Executors fee’s are 3.5% of the gross value of the assets in the estate and 6% commission on interest which accrues after the date of the death.  If you are the nominated executor it is possible to negotiate this fee with accountants.  All legal fees, executors fees, Master’s fees, etc will be paid out of the estate.

Establish Who the Executor is

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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DOES THE BUDGET SPEECH AFFECT YOU OR YOUR BUSINESS?

On 20 February 2019, Tito Mboweni, Finance Minister delivered his 2019 Budget Speech.

In arguably the most uneventful budget in the past 25 years, hereby a short summary of the most significant proposals for the 2019 Budget as tabled by the Minister of Finance:

  • No changes to any corporate income tax and dividend tax rates.
  • A 1.1% increase in the primary, secondary and tertiary rebates for individuals, providing a small amount of relief for inflation. The change in the rebate will increase the tax-free threshold from R78 150
    to R79 000.
  • All individual tax brackets to remain unchanged.
  • Increase in sugar-tax to 2.21 cents per gram in excess of 4 grams of sugar per 100ml from 1 April 2019.
  • Increase in the fuel levy by 29c/litre, consisting of a 15c/litre increase in the general fuel levy, a 5c/litre increase in the Road Accident Fund (RAF) levy from 3 April 2019.
  • The introduction of a carbon tax on fuel of 9c/litre from 5 June 2019, against which no diesel refund can be claimed.
  • Increase in excise duties on alcohol and tobacco products by between 7.4 per cent and 9 per cent, well above inflation. Proposals to tax electronic cigarettes and tobacco heating products.
  • New items to be added to the VAT zero-rated list: white bread and cake flour and sanitary pads.
  • An import tax will be introduced on scrap metal.
  • There are no changes to the transfer duty fees.
  • General increase across all social grants.

It was also noted that a new, permanent SARS Commissioner to be appointed in the coming weeks.

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This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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FIXED AND REIMBURSIVE TRAVEL ALLOWANCES

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When determining the best remuneration package for travelling employees, South African employers and employees are continuously considering the benefits between a travel allowance, a reimbursive travel allowance or both. For this purpose, the employees’ tax (“PAYE’’) and income tax consequences of these two allowances are set out in more detail below.

A travel allowance is an allowance granted by the employer to the employee for the use of his or her private motor vehicle for the employer’s business purposes. This includes any fixed travel allowances, petrol, garage and maintenance cards.

A reimbursive travel allowance is any allowance which is based on the actual distance travelled for business purposes and is normally paid by the employer to the employee by multiplying the actual business kilometres travelled by a fixed rate per kilometre.

For PAYE purposes, 80% of the fixed travel allowance must be included in the employee’s remuneration. This percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes. Employees must keep a record of the actual distance travelled during the year for business purposes by way of a logbook. The full amount of the allowance is disclosed in the IRP5 under code 3701.

In respect of the reimbursive travel allowance, no PAYE is payable on an allowance paid by an employer to an employee up to the rate of 361 cents per kilometre, regardless of the value of the vehicle. The reimbursement does also not have to be substantiated by a logbook. But is only available to an employee if no other form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle. Any excess reimbursed portion (exceeding 361 cents per kilometre) is, however, subject to PAYE just like a fixed travel allowance. Disclosure of this allowance is under codes 3702, 3722 and 3703 on the IRP5.

For income tax purposes, the full (100%) of the fixed travel allowance, as well as the taxable reimbursive travel allowance, will be added together on assessment.

The employee will, however, be allowed to claim actual business travel expenses against the travel allowance (subject to certain limits) and the portion exceeding the claim will be taxable on assessment.

Where no actual costs are claimed, the South African Revenue Service provides a table which sets out fuel costs (per kilometre), maintenance costs (per kilometre) and a fixed cost which may be claimed against a travel allowance depending on the value of the vehicle. However, no fuel cost or maintenance cost may be claimed in instances where the employee has not borne the full fuel or maintenance cost.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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