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ACC701 : Financial Accounting (assignment)

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Added on  2019-10-30

ACC701 : Financial Accounting (assignment)

   Added on 2019-10-30

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Accounting Financial Analysis Report 1Accounting Financial Analysis ReportBy NameCourse TitleInstructor’s nameName of InstitutionName of Department
ACC701 : Financial Accounting  (assignment)_1
Accounting Financial Analysis Report 2Table of contentExecutive Summary.......................................................................................3Introduction.................................................................................................3Role of ethical governance in financial stress companies............................................3The fall of ABC Learning Institution...................................................................3Role of ethics and governance in ABC Learning Center.............................................4The fall of HIH Insurance Company....................................................................4Ethics and governance role in HIH Insurance Company collapse..................................5The fall of One Tel Phone Company....................................................................5Ethics and governance role in One Tel Phone Company.............................................6Conclusion and recommendation........................................................................6Bibliography................................................................................................7
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Accounting Financial Analysis Report 3Executive SummaryThis particular report highlights the process of liquidation. The study focusses on the liquidation of ABC Learning Company, One Tel Phone Company and HIH Insurance Company that were highly affected by this aspect. The report also attempts to investigate the main causes that these particular companies led up to liquidation (Ashley and Daniel, 2008). The report also attempts to discuss the aspect of ethics and governance in explaining the company’s financial stress that hit these companies in their entire operations. The report also heightens that the aspect of liability is considered to be a major factor that led to the companies’ liquidation among other diverse factors such as poor ethics and governance among its management. IntroductionLiquidation can be defined as an orderly process that is meant to shut down the company operations. It is basically a process of winding up a company operation because the company is considered to be unable to pay off its debt when due. The case arises when a particular company is unable to survive in the competitive market, and the owners or the shareholders decide to go for liquidation (Biondi, and Lapsley, 2014). In this case, after the company has gone into liquidation, all the assets and properties that the company owned are sold and the funds compensated to creditors, and if there are some surplus, the shareholders are entitled to the share. Liquidation can be classified into three types; creditors voluntarily, member voluntarily and through court. When a particular creditor seeks court direction to liquidate the company, the court may grant the creditor right to initiate the process of liquidation for the company (Owen, 2003). A creditor voluntary winding up is considered to be the liquidation process in which the company by itself decides to wind up its business operations while a voluntary member liquidation is the winding up the process when members of the company feel that there is no reason for the company to continue in its operations because of certain circumstances. Role of ethical governance in financial stress companiesAccording to CPA Australia, ethics and governance are considered to be a core element of the skills and knowledge based on the contemporary professional accountants (Mills, and Marjoribanks, 2011). Diverse professional accountants should basically contain the required skills and knowledge of the content of regulatory regimes and how the governance tool is being applied. In accounting, it is significantly vital for accountants to ensure that they are performing their activities in accordance with the set rules and ethics. CPA Australia (2012), suggests that when individuals combine the social ethics and moral norms with the standard and principles of business, this aspect can be referred to as Ethics in Financial Accounting. Furthermore, Clarke, Dean, and Oliver (2003 pp. 30) emphasize the significance of governance and ethics by providing examples of World Com and Enron companies which areoften important in the day to day company operations. The fall of ABC Learning InstitutionABC Learning is considered to be an institution that offers early childhood education servicesin Brisbane, Australia and was established in 1988. The learning institution grew up steadily in its first twelve years of business then after the child care benefit introduction in FY2000, the basic demand for the child care blew up (ABC Learning Centers, 2016). During the same year, the institution grew up to be the largest health care provider in the whole of Australia and the world. The company share price increased by 300% in the market price and the company made a profit of AU$50 Million in the financial period of 2004-2005. In FY2001, the company stocks were floated on the Australia Stock Exchange at AU$2, and by 2006, its shares had a significant increase to AU$8.60. This aspect was chiefly because of
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