Financial Accounting - HIH, One Tel, ABC Company Study

Added on - Nov 2019

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Running head: FINANCIAL ACCOUNTINGFinancial AccountingName of the StudentName of the UniversityAuthor’s Note
1FINANCIAL ACCOUNTINGExecutive SummaryThe main aim of this report is to investigate into the reasons behind the collapse of three of themajor Australian companies; they are ABC Learning,HIH Insurance and One Tel. Variousstages of the report shows the reasons behind the collapse and corporate governance failure ofthese three companies. In addition, the ethical issues are also discussed behind the collapse ofthese three companies.
2FINANCIAL ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................3Overview of the Companies............................................................................................................3HIH Insurance..............................................................................................................................3One Tel........................................................................................................................................3ABC Learning..............................................................................................................................4Reasons for Winding up and Failure of Corporate Governance......................................................4HIH Insurance..............................................................................................................................4One Tel........................................................................................................................................4ABC Learning..............................................................................................................................5Ethical Issues...................................................................................................................................5HIH Insurance..............................................................................................................................5One Tel........................................................................................................................................6ABC Learning..............................................................................................................................6Conclusion.......................................................................................................................................6Recommendations............................................................................................................................6
3FINANCIAL ACCOUNTINGIntroductionMost of the people all over the world know the process of liquidations as another name ofwinding up of businesses. Liquidations refer to the process to wind up all the operations of thebusinesses (Hanrahan, Ramsay and Stapledon, 2013). In this process, liquidators recognize theassets and liabilities of the companies; and the obligations of the creditors wither fully settled orthey are adjusted against assts of the companies. It can be seen that the board of directors are themain operators of the businesses as they are the central part of the company’s governing body.They have the power to take major business decisions and they take all the business decisions byconsidering the interest of all the stakeholders of the companies like shareholders, customers,employees, investors and others. Effective decision-making process ensures the growth alongwith the long run of the companies (Singh, 2015).There is a positive connection between effective business operations and corporategovernance of the companies. In every organization, some principles, guidelines and provisionsensure the performance effectiveness of the business organizations. It is the failure of thebusiness organizations in the field of corporate governance in case they fail to comply with theguiding principles of the companies (Xavier 2012). This particular report takes an honest attemptto discover the major reasons of the winding up of the business operations of three of the majorAustralian companies; they are ABC Learning, HIH Insurance and One Tel. The major financial,corporate governance and ethical reasons are discussed below:Overview of the CompaniesHIH InsuranceIn the initial years, HIH Insurance was one of the major insurance companies when theystarted their business operations. From the period to 1997 to 1998, HIH Winterthur acquiredlarge numbers of companies all over Australia and all over the world. HIH Insurance got ASX(Australian Stock Exchange) listed in the financial year 1992. In 1995, an insurance company ofSwitzerland bought all the stake of HIH Winterthur and the name of the company changed toHIH Insurance. This particular deal included the business operations of Colonial Ltd GeneralInsurance in Australia and New Zealand. As per the estimations of the liquidators, the totalamount of loss of HIH Insurance was $5.3 billion. Due to the investigation of the cause of thecollapse of HIH Insurance, many of the management employees of the company were convictedand imprisoned based on different kinds of fraudulent charges. The collapse of HIH Insurance isseen as the biggest corporate collapse of Australia (Corkery and Taylor 2012).One TelSoon after the deregulation of the telecommunication industry of Australia, the inceptionof One Tel can be seen in the year of 1995 as one of the major telecommunication companies inAustralia. Due to the process of deregulation, most of the Australian telecommunicationcompanies are under the management of liquidators. The major goal as well as objective of OneTel was to deliver better service and quality products in order to cater to the demands of thecustomers. For a short period, One Tel became the fourth largest telecommunication company inAustralia. The main initiative of the company was to develop a simple mobile phone companythat would be easy understandable to the customers. One Tel put major focus on the Australian
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