BUACC5937 Semester 1 2018 Assignment 1: Caltex and Compaq Report

This report analyzes the accounting systems, corporate governance, and strategic decisions of two companies, Caltex and Compaq. The report begins with an examination of traditional accounting systems, their advantages, and disadvantages, and suggests options for a business to transition to computerized accounting, specifically exploring XERO and Wave accounting software. The analysis of Caltex covers its corporate governance policies, including diversity, code of conduct, financial reporting integrity, and communication with shareholders. The report also details IT governance policies for shareholders and stakeholders. The Compaq section analyzes the company's failures, including premium pricing, poor acquisitions, and management issues, and proposes strategies to avoid similar failures, such as efficient acquisition strategies, effective management, and efficient resource utilization. References are provided to support the findings.

CALTEX AND COMPAQ
BUACC5937 SEMESTER 1 2018
NAME: Priya Sharma STUDENT ID: 30333925
NAME: Megha Arora STUDENT ID: 30334804

Priya Sharma ID-30333925 BUACC5937 SEM1 2018
Megha Arora ID-30334804 Assignment 1
Table of Contents
TASK 1............................................................................................................................................4
1.1 Traditional accounting systems..............................................................................................4
Advantages..................................................................................................................................4
Easier to set up.........................................................................................................................4
Applicable to all business........................................................................................................4
Cheap.......................................................................................................................................4
Disadvantages..............................................................................................................................4
The human error......................................................................................................................4
Time-consuming......................................................................................................................4
susceptible to perils..................................................................................................................4
inefficient recovery plans........................................................................................................4
1.2 Options for Smith Brothers........................................................................................................4
1.3 Accounting software packages..................................................................................................5
XERO accounting software.........................................................................................................5
Wave accounting software...........................................................................................................5
1.4 Excel or Databases.....................................................................................................................6
Task 2 – CALTEX...........................................................................................................................6
2.1 Summary corporate governance Policy.................................................................................6
2.2 IT Governance Policy to shareholders...................................................................................7
2.3 IT Governance Policy to stakeholders.......................................................................................8
2.4 IT governance and the corporate governance statement............................................................9
Task 3 – COMPAQ.......................................................................................................................10
3.1 Failure of controls....................................................................................................................10
Premium pricing strategy.......................................................................................................10
poor acquisition strategy and mergers...................................................................................10
poor management...................................................................................................................10
dot-com burst.........................................................................................................................10
3.2 Avoidance of Failures..............................................................................................................11
Efficient acquisition strategy.................................................................................................11
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Priya Sharma ID-30333925 BUACC5937 SEM1 2018
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Effective management...........................................................................................................11
Efficient utilization of resources............................................................................................11
Effective market strategy.......................................................................................................11
Elimination of middle men-...................................................................................................11
4.0 Reference.................................................................................................................................12
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TASK 1
1.1 Traditional accounting systems
The traditional accounting system is basically the manual or paper-based recording of the daily
transactions such as prices, sales, the stock of a business or an organization (Bruno & Lapsley,
2018). Efficient accounting process are essential to the successful growth and development of
any business and organization, however, traditional accounting systems have their advantages
and disadvantages in the long run they include (Schreiner, 2016)
Advantages
Easier to set up-traditional accounting system are easy to set up since it requires limited
resources such as paper for recording transactions and other business activities
Applicable to all business-this accounting system is universal in the sense that any business can
use to perform crucial business activities
Cheap-the traditional accounting system is cheaper in comparison with the computerized system,
it requires far more resources which are easier to access and maintain
Disadvantages
The human error-traditional accounting system is prone to human error recordings that may be
futile to the business growth and development
Time-consuming- it takes a lot of time in recording and performing business transactions such as
generation of reports and crucial documents (Guinea, 2017)
susceptible to perils-records may be damaged easily by perils such as fire and water, losing
crucial information
inefficient recovery plans-its hard and expensive to implement recovery strategies since it
involves duplication of the same record manually and maybe causing more errors
1.2 Options for Smith Brothers
The Smith brothers have an efficient option of switching from traditional accounting system to
the computerized system, which means the use of accounting software. Accounting software
allows businesses to balance the books, reconcile their accounts, and actually understand where
their money is going. Not only is this important for making informed business decisions, but it’s
also key for filing taxes correctly at the end of each year. Accounting software allows businesses
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Priya Sharma ID-30333925 BUACC5937 SEM1 2018
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to balance the books, reconcile their accounts, and actually understand where their money is
going. In addition to the fact that this is critical for settling on informed business choices, but on
the other hand, it's key for recording charges effectively towards the end of a fiscal year. The
business requires a good accounting software will provide a chart of accounts, double-entry
accounting, bank reconciliation, and reporting so you can balance the books and manage your
finances correctly. Most software packages offer business administration instruments like
invoicing, time following, and undertaking administration. Furthermore, the most elite toss in
great client assets that show you how to comprehend bookkeeping and effectively manage the
finances at the business (Nias Ahmad, et al, 2016)
1.3 Accounting software packages
XERO accounting software
this software was initially among the few accounting software’s to be cloud-based accounting;
however, its local functionalities are still available Xero is also huge on integrations, with more
than 600 integrations to help business owners manage invoicing, multicurrency support,
inventory, payroll and much more. Smith brothers require access to PC ($300) printers ($150)
and scanners and printers ($250) according to Amazon office products (2018). It offers a
monthly subscription of $180. The Smith brothers will be in a position to record their
transactions to a database both locally and cloud-based and even send documents to their clients
and employees online.
Xero software allows businesses to balance the books, reconcile their accounts, and actually
understand where their money is going. In addition to the fact that this is critical for settling on
informed business choices, but on the other hand, it's key for recording charges effectively
towards the end of a fiscal year. The Smith brothers will benefit from this since they will be in a
position of performing their business transactions more efficiently and faster than ever before
moreover they will manage their finances and be in a position to respond effectively
(Krause,2018)
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Priya Sharma ID-30333925 BUACC5937 SEM1 2018
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Wave accounting software
This accounting software comes with an easy to use interface, plenty of features and a
compelling price, Wave is a free accounting software that doesn’t sacrifice quality for
affordability. Wave also boasts great customer service. Phone and chat support are only available
for payroll and credit card processing, but Eave’s customer service team responds to email
messages very quickly. Wave accounting software allows businesses to balance the books,
reconcile their accounts, and actually understand where their money is going. In addition to the
fact that this is critical for settling on informed business choices, but on the other hand, it's key
for recording charges effectively towards the end of a fiscal year (Guinea, 2017).
Its cost and implementation as discussed early free, however the Smith brothers require access
to PC ($300) printers ($150) and scanners and printers ($250) according to Amazon office
products (2018), therefore its cost and implementations is fairly low but it is lacking in
integrations platforms which are fewer compared to Xero accounting software.The Smith
brothers will benefit from this since they will be in a position of performing their business
transactions more efficiently and faster than ever before moreover they will manage their
finances and be in a position to respond effectively (Krause,2018)
1.4 Excel or Databases
No other database or excel based solutions cannot be implemented since the two-accounting
software’s discussed above have efficient and suitable resources that will handle all activities in
the Smith Brothers business, they are independent accountings solution firms. Moreover, it
would bring inefficiency while trying to implement other solutions into the business prompting
confusion and errors in the long run (Averinà, Kolesnik, & Makarova, 2016).
Task 2 – CALTEX
2.1 Summary corporate governance Policy
Caltex Australia Limited (Caltex) is listed on the Australian Securities Exchange (ASX). Its
corporate governance arrangements are set by the Caltex Board having regard to the particular
circumstances of business and operations and the best interests of the firm's shareholders and
other stakeholders. Corporate governance alludes to the arrangement of standards and systems by
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which an organization is represented. These principles give rules and guidelines by which the
organization is run with the ends goal of growth and development of the firms while catering the
need and interest of the shareholders and stakeholders , according to Caltex annual report (2017).
However, the board members at Caltex develop and drive their corporates government policies
so as to ensure the firms meets the legal obligations and international standards of their industry
moreover their structre and roles in the firms are guided here too. The corporate governance of
Caltex addresses key universal element as stipulated by international standards that keeps the
firm on the right track (Tricker,2015).
Diversity-Caltex is bolstered in embracing diversity in its external and internal work
environment despite the different individual’s backgrounds related to education, religion, sexual
orientation, gender and so on. It ensures and equal opportunity for each individual to contribute
their potential which meets that international standards and regulations
Code of conduct- Caltex code of conduct applies to the association's chiefs, senior official, and
all staff individuals and gives a system to basic leadership and business conduct which construct
and manages the association's corporate respectability, notoriety, and achievement. The set of
principles recognizes duties regarding examining breaks for the set of principles and related
detailing of ruptures to the board or senior administration as suitable. The board gets yearly
reports from the general supervisor and the HR in relations to organization fo, and compliance
with the code of conduct
Integrity in financial reporting- Preceding the endorsement of Caltex's entire year monetary
articulations, the Board gets a signed declaration from the Managing Director and CEO and the
Chief Financial Officer, compliant with segment 295A of the Corporations Act 2001 (Cth)
(Corporations Act) which is done annual at the end of every fiscal year according to Caltex
annual report (2017).
Communicating with Shareholders- Caltex is focused on Issuing their stakeholders and
investors opportune, adjusted and justifiable data about on the firm's progress including the use
of their websites. The Caltex site contains, among other things an overview of the business,
history, and values and a financial specialist focus which. contains ASX declarations, a corporate
administration page, yearly reports and introductions, investor data and our registry and key
contact details (Caltex,2017).
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2.2 IT Governance Policy to shareholders
Information technology is an integral part of the success and growth of business and
organizations. As the component supporting payment frameworks, communication,
bookkeeping, business forms, data storage, correspondence and that's just the beginning, it
presents critical opportunities for, and dangers to, the accomplishment of objectives and
strategies. The Caltex board perceives that keeping up great IT governance policies and practices
is a progressing and consistent process. The Board embraced IT governance guidelines which
mirror its responsibility regarding checking the adequacy of approach and basic leadership at the
board and administration level guaranteeing strict adherence to IT governance standards, with
the objective of improving the value to the shareholders (Caltex ,2017). Therefore, shareholders
are not merely interested in IT governance policies at Caltex since they depend and trust the
board of directors who they elected to represent their interest in increasing the value of the share
through interest and dividends. Moreover, shareholders are not involved in the day to day
operational activities of the firm such as the employees who also represent their interests as well.
Therefore, IT governance policies are made and modified to increase the value of the firm which
is the core importance of the shareholders (Ayuso,,et al 2014).
2.3 IT Governance Policy to stakeholders
It isn't sufficient for Caltex to have IT frameworks and anticipate that them will convey key an
incentive to them. Rather, there should be a component set up to control, screen, and administer
the esteem creation endeavors of the IT frameworks. This administration instrument of IT
frameworks manages the execution and hazard administration of those IT frameworks in a way
that would make an incentive for the associations and guarantee that the proposed arrangement
of the IT and business goals is on track. Subsequently, IT administration manages identification,
foundation, and connecting of the instruments of the IT frameworks to both oversee dangers and
in the meantime guarantee that their execution is tuned in to the expressed destinations (Du
Plessis, Hargovan, & Harris, 2018).
The plan and administration of the IT governance framework are assigned to the Divisional
Chief Information Officers at Caltex. Caltex follows a clear guideline on its IT governance
policy is presently accessible in another worldwide standard – ISO 38500, this standard depends
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on and supersedes AS8015 – the Australian Standard for Corporate Governance of Information
and Communications Technology (Caltex ,2017).Moreover it requires the participations of the
Stakeholders who represent a larger demographic than shareholders since consumers employees
and top executives at Caltex are all stakeholders, they are the reason that the firm continues to
exist and the development and implementation of suitable IT government policies will lead to the
growth and development of the firm which will benefit the stakeholder(i.e. staff members, senior
executives. Therefore, there will be much interest in the formulating and modification of IT
policies at Caltex as it will have a great impact on their future. Some stakeholders even
participate in the formulations of these policies and ensure that they are suitable for achieving
their goals and objectives and the wellbeing of the firm in general (Tricker, 2015).
2.4 IT governance and the corporate governance statement
Caltex is a large multinational oil merchandise firm that has branched out in over 60 nations,
basically it’s a large cooperation that requires rules and guidelines to keep it on the right track in
achieving its goals and objectives without undermining any regulations or international standards
set in the international market. This requires the development and incorporation of IT and
corporate governance statements that will guide Caltex in performing its daily business activities
in different its business environmental markets that are volatile. However, these two
governance statements may seem to vary in their functionalities but they all have similar goals
that all end up in benefiting the company by contributing to its growth and advancements (Du
Plessis, Hargovan, & Harris, 2018).
IT governance systems are based on improving and maintaining suitable IT frameworks and
policies to govern them ensuring productivity and delivery of services effectively to all parties
linked to Caltex both indirectly and directly (Pathak,Pathak, & Sidharth, 2016). However,
corporate governance statements allude to the arrangement of standards and systems by which
Caltex is represented. These standards are crucial to the success of the firms and its essential for
the firms and its linked parties to adhere to these guideline and policies. However, the IT
governance policy of a firm should be in the cooperate governance statement, moreover is a
subset discipline of Corporate Governance. It is severally mistaken to be a field of its own which
may have brought confusion in some instances, especially in annual reports, in general, IT
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Governance is actually a part of the overall Corporate Governance Strategy of an organization
(Caltex ,2017).
Task 3 – COMPAQ
3.1 Failure of controls
During the 1990s, Compaq was a major pc brand, it actually created the first effective and
successful IBM clone setting records as a mere startup and beating IBM in the pc market share
and acting as the standards for pcs and its appliances at the time today the glory of the firm had is
gone, it's only a trademark that HP possesses and doesn't utilize, but why did Compaq fail?
(Shukla, 2014).
Premium pricing strategy-Compaq was now an established pc brand after acquiring the market
from IBM which dominated the markets then, however increasing competition from upcoming
startups saw the change of course by increased innovation and targeting the premium market.
This saw the price increase due to the availability if middlemen who were given high targets.
consumers went for other firms that offered similar products at way lower prices (Farquhar,
2015)
poor acquisition strategy and mergers- Compaq acquired Digital Equipment Corp (DEC) which
was a thriving company the time, however, the company offered many services that Compaq did
not require. It made chips that were not even compatible with its PC, the ultimate goal was to
deprive it of buying chips from Intel which was not achieved until DEC additionally made
minicomputers. Compaq made its name by motivating individuals to purchase Intel-based
servers rather than minicomputers. DEC likewise made refrigerator-sized Unix frameworks.
Compaq pushed individuals to purchase Intel-based frameworks running Windows NT rather
than Unix (Shukla, 2014).
poor management. - A progression of scandals constrained different top officials out in 1999.
CFO Earl Mason unveiled financial results to a few investigators however not others, and he was
forced to resign. Chief Eckhard Pfeiffer soon took after. This further destabilized Compaq with
consumers turning to other brands (Farquhar, 2015).
dot-com burst-this was the sudden demise of internet startups hurt Compaq in two ways. These
startups were purchasing a lot of hardware and equipment as they spent their funding and IPO
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cash. Their end implied Compaq lost an expansive number of enormous clients. Their
liquidations additionally overflowed the market with a great deal of surplus hardware and
equipment, some of which had never been utilized. Compaq needed to contend with its own
particular item until the point when the market assimilated the excess. This had a huge impact in
its loses that led the business to be close to operational, however, it was later purchased by HP
which strategically boosted HP in the pc market (Smith, 2017).
3.2 Avoidance of Failures
Efficient acquisition strategy-Compaq would have initially conducted strong analysis and
research of the DEC company before acquiring it. This would have assisted the company in
prioritizing its market and strengthen it, however, DEC had many products and services that
Compaq did not want, the firm was later sold cheaply to its main competitor that prioritized on
its products and services (Nikolić et, al.2016)
Effective management. The firm had also poor management with the constant increase in
scandals from mismanagement by the top executives who were supposed to lead by example.
Compaq would have avoided failure here through proper screening of potential leaders who have
a good track record and strong leadership skills (Gibbs, & Humphries, 2015)
Efficient utilization of resources-Compaq acquired Digital Equipment Corp (DEC) which was a
thriving company the time, however, the company offered many services that Compaq did not
require. It made chips that were not even compatible with its PC, the ultimate goal was to
deprive it of buying chips from Intel which was not achieved until DEC additionally made
minicomputers. Compaq would have strategized a way that the apparent company acquired
would tailor it chips to be compatible with Compaq’s products and services, this would have
accumulated more revenue for the firm (Gibbs, and Humphries,2015).
Effective market strategy-Compaq history shows that its strategy was mainly focused on
mergers and acquisitions and giving little interest on other strategies such as consumer target,
preference and taste which would have played a major role in acquiring and retaining consumers
as most of its rivals such as Microsoft and Apple did (Barney,2014).
Elimination of middle men-middle men played a major role in the demise of the company. They
regulated their prices s as to gain profit which in the long run saw consumers looking for other
alternatives. The firm would have probably setup their own retails store strategically and in cases
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where middle men were required they would have set standard prices of their product, this would
have eradicated that problem easily (Barney,2014).
4.0 Reference
Amazon. (Ed.). (n.d.). Office Products | Shop Amazon.com. Retrieved May 31, 2018, from
https://www.amazon.com/s/ref=lp_172635_ex_n_1?
rh=n:1064954&bbn=1064954&ie=UTF8&qid=1527756826
Averinà, O. I., Kolesnik, N. F., & Makarova, L. M. (2016). The Integration of the Accounting
System for Implementing World Class Manufacturing (WCM) Principles. European
Research Studies, 19, 53.
Ayuso, S., Rodríguez, M. A., García-Castro, R., & Ariño, M. A. (2014). Maximizing
stakeholders’ interests: An empirical analysis of the stakeholder approach to corporate
governance. Business & society, 53(3), 414-439.
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher ed.
Bruno, A., & Lapsley, I. (2018). The emergence of an accounting practice: The fabrication of a
government accrual accounting system. Accounting, Auditing & Accountability Journal,
(just-accepted), 00-00.
Caltex , (2017). Caltex 2017 Annual Report. Retrieved from
Consumer advocate (2014, June 26). Retrieved from
Du Plessis, J. J., Hargovan, A., & Harris, J. (2018). Principles of contemporary corporate
governance. Cambridge University Press.
Farquhar, D. L. (2015, March). Why did Compaq fail? Retrieved from
https://dfarq.homeip.net/why-did-compaq-fail/
Gibbs, M. R., & Humphries, M. A. (2015). Enterprise Relationship Management: A Paradigm
for Alliance Success. Ashgate Publishing, Ltd..
Guinea, F. A. (2017). MANAGERIAL ACCOUNTING SYSTEM: UTILITY, PRACTICE,
MANIPULATION, NORMALIZATION. SEA: Practical Application of Science, 5(1).
http://microsites.caltex.com.au/annualreports/2017/
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