Corporate Governance and Ethics: Critical Evaluation of Liquidation Events of Aluminium Boats Australia, HIH Insurance and Stellar Homes

Accounting Financial ACC701

Table of Contents
Introduction......................................................................................................................................4
Events that led to liquidation...........................................................................................................4
Aluminium Boats Australia.........................................................................................................4
HIH Insurance..............................................................................................................................4
Stellar Homes...............................................................................................................................5
APES 110 Code of Ethics for Professional Accountants................................................................5
Corporate governance issues that have contributed to the collapse of each company....................6
Aluminium Boats Australia.........................................................................................................6
HIH Insurance..............................................................................................................................7
Stellar Homes...............................................................................................................................7
Type of liquidation..........................................................................................................................7
Aluminium Boats Australia.........................................................................................................7
HIH Insurance..............................................................................................................................7
Stellar Homes...............................................................................................................................8
Liabilities as a contributing factor for downfall..............................................................................8
Aluminium Boats Australia.........................................................................................................8
HIH Insurance..............................................................................................................................8
Stellar Homes...............................................................................................................................8
Conclusion.......................................................................................................................................8

References......................................................................................................................................10

INTRODUCTION
Ethics play a significant role in any field of business. The business role in society has been in
debate within the economy for a longer period. Further, the businesses are liable to the society
ethics in a legal and commercial manner. Corporate governance is considered as a serious issue
of international importance, it plays a great role in various internal and external business
members (Müller and et.al, 2016). The present study is based on the critical evaluation of events
that led to liquidation of following companies; Aluminium Boats Australia, HIH Insurance and
Stellar Homes. The study will also discuss about APES 110 Code of Ethics for Professional
Accountants, while highlighting corporate governance issues that contributed to each company’s
collapse. Along with this the study will also cover the type of liquidation, while evaluating
whether liabilities were a major contributing factor that led to their downfall of each company.
EVENTS THAT LED TO LIQUIDATION
Aluminium Boats Australia
The Aluminium Boats Australia is engaged in providing high performance commercial, lavish
and defence vessels. The fire event damaged the company wholly and was the means for the
downfall of the company. The fire devastated $54 million and blame has been put on Australian
Navy patrol boat for the company’s demise (KIRSTEN, R., 2014). Due to this event, the
corporate lost its contract held for the Australian Navy vessels servicing and maintenance, and
aftermath of same they were forced to cut off 90 jobs. In addition, the 15-year-old business has
used 160 staff prior to Fire; however 90 staff members were let go when the navy ship faced the
flames. Along with this, the industry was also experiencing higher pressures, in terms of cheap
exports that challenged the vessels which were made in Australia.
HIH Insurance
The events that led to the liquidation of HIH Insurance were as following; the company had a
poor corporate governance structure, plus the company considered issues different times as per
the provisions of accounts, and it reflected profits in earlier years, while it used to produce more
outflows from the market which thereby reduced its profitability and increased its expenses
(French, Vital and Minot, 2015). The company also conducted inappropriate and insufficient
valuations of assets, which means it reflected the assets at a higher value than their actual value.