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Accounting Financial ACC701 - Assignment

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Added on  2019-11-19

Accounting Financial ACC701 - Assignment

   Added on 2019-11-19

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Advance Financial Accounting: Accounting Financial ACC701
Accounting Financial ACC701 - Assignment_1
Table of ContentsIntroduction............................................................................................................................................3Discuss the ethics and governance in explaining the company’s financial stress...................................3Factors which contributed to the liquidations............................................................................4Were liabilities a major factor contributing to the liquidation of the company?.....................................7References............................................................................................................................................10
Accounting Financial ACC701 - Assignment_2
IntroductionWhenever any business goes into financial trouble then it is important to look into the factsand get support as soon as possible. This would help the business to look into differentoptions that are available. The bankruptcy or liquidation has to be the last option. In case thebusiness struggles with the liabilities or debts then the business might feel that shutting downor bankruptcy is the single alternative available with it (Jones and Hensher, 2007). It isimportant that before doing anything, professional advice is sought and different approachesof repaying the debts are looked into. Bankruptcy is a kind of approach wherein the businesscan deal with debts which cannot be repaid (Australian Debt Solvers, 2017). However,bankruptcy is applicable only to individuals and liquidation is applicable to the companies. Ifany company is unable to repay its debts then it liquidates and stops its operations. Herein,the business assets are sold out so that the debts can be paid off.In past few years some of the companies have liquidated as they were unable to fulfil theirliabilities when they were due (Delisted.com.au, 2017). This report considers the givenexamples of ABC Learning, One.tel Phone Company and HIH insurance etc. to find out thereal cause of their liquidation.Discuss the ethics and governance in explaining the company’s financial stress. Three businesses have one thing in common which is the major corporate collapse. Thedownfall of One-Tel was in year 2001 and at that point of time it had been the biggesttelecommunication business in Australia with about 2 million clients and it was operating inaround eight nations. As per the quantitative and qualitative statistics, this downfall of thebusiness was classical case linked to the failed desires, in appropriate pricing strategies, un-sustained development and strategic errors (Beatty, Liao and Yu, 2013). In reality, the
Accounting Financial ACC701 - Assignment_3
downfall of the businesses has been linked to the critical deficiencies in the business'governance which involves the weaknesses of inner controls, fiscal reports, kind of audits,and communication of Management with the board, poor executive pay- to-performancerisks, and splendid scrutiny of the management.One more case of such liquidation is of ABC Learning, which are an Australian business andthe biggest provider of early childhood education. For HIH Insurance, the liquidation washeld in March 2001 when and it had a loss of around AU$5.3 billion. Factors which contributed to the liquidationsThe downfall ofthese big businessesin Australia was a shock to the corporate business.There have been studies with respect to the downfall of HIH Insurance and One-Tel.Looking atdifferentproof of the business statements, Newsarticlesand other documents, itcan be established thatthe causesof the staff all included weak ethical practices andcorporate governance with respect to inner control aspects, financial reporting,communication of management and quality of audits (Brown and Caylor, 2006).For the year 1998, the annual report of One-Telstated that therewereadequate number ofclients which are needed for maintaining the profitability and financial development. In spiteof this, the sales revenues of thebusiness showedthat there would be highly development andthe business would reach AU$653.4 million for the year 2000 which was around 10 times thesales of the year 1996 (Gaylord, 2017). This was based on the past experiences ofthe riseinthe sales revenue which was 127%, 40%, 57% and hundred percent in respective years from1997 to 2000. Even though the growth for so phenomenal, still this revenue could not betranslated to huge profits (Business.gov.au, 2017). This is where the analysis had to becarried out.Alsothe corporate governance had a huge role indownfallof this businessbecause itwasimportant for directors, non-executive members or executive members to ask the awkward
Accounting Financial ACC701 - Assignment_4

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