ACCG927 Current Issues in Accounting and Corporate Governance : Essay
Added on 2020-05-11
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Running Head: ACCOUNTING AND CORPORATE GOVERNANCE 1Current Issues in Accounting and Corporate Governance<Student ID><Student Name><University Name>
ACCOUNTING AND CORPORATE GOVERNANCE 2IntroductionThis essay covers the corporate turnaround of the Bellamy’s Australia Limited which isdriving maker and wholesaler of Australian fabricated infant items. Bellamy's Australia Ltd is anorganic infant formula and a producer and distributor of baby food. It is the completely ownedsubsidiary of Bellamy’s Australia. There are many factors that led to the downturn of a welloperational company (Armstrong, et al., 2015). Moreover, the disorientation of the company inregards to the compliance with ASX Corporate Governance Principles is considered as a matterof study in this essay (Bell, Filatotchev & Aguilera, 2014). Major IssuesThe major issues that the company has been facing are regarding the drastic decrease inits sales which was most predominant in China. It was further observed that the online sales ofthe company were also restricted in New Zealand and Australia. Berger, Imbierowicz & Rauch,2016 said that it has been directly associated with the limited stocks of the company which haddirect implications on the sales (Berger, Imbierowicz & Rauch, 2016). The company had penetrated in China and was planning to go further into South-EastAsia. As per Bushee, Carter & Gerakos, 2013, the share price was shockingly decreased whichalso had major implications on the revenue. Moreover, the regulatory changes in the China hadmade the matter worse as compared to the company’s anticipation of an oversupply of the infantproducts and the expected sales (Bushee, Carter & Gerakos, 2013). Regulatory Point Of ViewForm the regulatory point of view, the misinterpretation of the market done by Bellamy’sis supposed to be the most likely method of reasoning behind the usage of the administrativechanges of the legislature of China (Agrawal & Cooper, 2017). The company is also considered to have missed understanding the set of new regulationswhich caused it to make incorrect evaluations regarding its sales and revenue especially in themarket of China. According to Filatotchev & Nakajima, 2014, the company also failed to pay amuch required amount of attention to the purchasing preference of the customers in China.Bellamy’s failed to have establishments of enough traction and awareness through the promotion
ACCOUNTING AND CORPORATE GOVERNANCE 3and marketing prior to the entry in the market that would have assisted in getting aware of thefeasibility (Filatotchev & Nakajima, 2014). Corporate governanceThe effectiveness of the most plausible solutions in regards to a dress the issues that thecompany has faced in terms of downfall in the shares and stock prices along with the declines inboth the deals and stocks would start with the suggestions as per ASX Recommendation 4.1 thatexpresses that means Bellamy's Board to build up the Audit, Finance and Risk advisory group inthe nation like China with key reason to help the Board in directing the outer review, moneyrelated announcing and frameworks for the administration of dangers alongside the control of theinterior structure of the business that was led in China (Ginena, 2014). The organization ought toinclude a Committee having controls and recognition on the Audit, Risk, and Finance operations.This committee should consist of three directors of non-executive nature along with theChairman heading the committee (ArAs, 2016). This would have controlled the utilization of thefinancial and other aspects in regards to the advancement of the Bellamy’s in the form ofbusiness expansion in a country like China. It needs to comply with ASX Recommendation 4.2which would include the farming of the financial statements for a particular time period from theCEO and COF (Joseph, Ocasio & McDonnell, 2014).Effective Risk Management FrameworkIn order to identify and manage the risk in a much better way, the company needsBellamy's Australian Limited needs to establish an effective risk management framework withinthe business in the other market where it is intended to have its business expansion. For thisrespect, it has to comply with the ASX Recommendation 7.1 which refers to the formation of theboard to have for overseeing the risks. As per Larcker & Tayan, 2015, the board will have aminimum of 3 members, a major part of which would be comprised of independent directors andwould be chaired by an independent director (Larcker & Tayan, 2015). The ASXRecommendations 7.1 should be gathered by Bellamy's Australian Limited and ought to unveilthe contract of the board alongside the individuals from the board. The organization should alsomention the number of times the board had meetings throughout at regular intervals andattendance of the individuals associated with risk management (Mason & Simmons, 2014).
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