Case Study Analysis: MG Publishing Financial and Governance

This case study analysis examines the corporate governance, financial management, and financial reporting practices of MG Publishing. The analysis assesses the company's stakeholder management, including providers of finance, shareholders, customers, and employees, highlighting its ethical standards and adherence to corporate social responsibility. It evaluates the effectiveness of financial management, including working capital arrangements, profitability across magazine segments, and cash flow management. The study also reviews management accounting practices, assessing the allocation of fixed overheads and the consideration of costs and revenues. Furthermore, it analyzes the company's financial reporting, including adherence to IFRS, the presentation of significant matters, and the review of asset values. The case study also addresses the board composition and its compliance with ASX guidelines. The analysis concludes with recommendations to improve transparency and address allegations of misconduct.

Running Head: Case Study Analysis
CASE STUDY

Case Study Analysis 2
Ethics and Corporate Governance of Maxlook Group Publishing:
Corporate governance primarily involves balancing of interests of the different stakeholders
of the company. In the present case of MG Publishing, the company has various stakeholders
such as providers of finance such as banks and financial institutions, shareholders, customers,
competitors, employees and governmental regulators etc. From the case it is observed that
the company has a sound track record in regards to repayment of its debt obligations and
hence the providers of finance are more willing to provide them financial assistance. This
signifies that the company is concerned about protecting the interests of its finance providers.
Further, it has been observed that company is striving to strengthen the capital growth of its
shareholders by offering them excellent dividend opportunities. This fact clearly indicates
that the company is giving due regards in safeguarding the shareholder’s interest in the
company. MG Publishing ha also adopted the online business of magazines in accordance
with the recommendations of their customers and also to positively contribute to the
environmental protection by effectively recycling its paper. This shows that the company
pays equal regards to its corporate social responsibility as much as it pays to its financial
goals. Furthermore, it has been realised that the top management of the company is
effectively managing the employees of the company through the adoption of ethical standards
and providing them transparent and adequate leadership. However, the rival firms of the
industry have put allegations on the company for violating the rules and regulations by
entertaining bribery and copyright infringement practices but since the company has not
faced any legal interventions from the UK regulators particularly in these areas even after
such allegations. This shows that the MG Publishing is operating its business ethically. But
the investigation regarding financial misreporting indicates that the firm is not transparently
maintaining relations with its key shareholders. The company must make more efforts to
remove these allegations to maintain sound goodwill of its business in the market. Further,

Case Study Analysis 3
the proposed composition of board of the company in case shows that company is effectively
maintaining its board composition by appointing majority of directors who are non-executive
in nature. Also, the audit committees and nomination & remuneration committees are
properly constituted. But as per ASX guidelines, the company must appoint any member as
its non-executive director, who was in previous employment since last 3 years. While,
presently company has one such non-executive director which is not in line with ASX
guidelines (Lester & Yoon & Lovells, 2017).
Financial Management:
The company is effective enough in managing its working capital arrangements by managing
its current assets such as inventories and trade receivables. Also, the short term liabilities of
the company are also managed adequately which is indicated by its lower average payable
period. The average period within which the company is able to pay its trade payables into
cash is better than the industry standards. Also, the inventory of company is effectively
converted into sales. Furthermore, the company is also maintaining a cash reserve of
significant amount to meet its funding requirements in emergency situations (Van Horne
James, 2002). Also, the company was able to achieve profitability in all the different
magazine segments. Moreover, it is offering attractive discounts to its subscribers for the
advance payments to adequately manage its cash flows. This signifies that company has
sound financial management.
Management Accounting:
Since the fixed overheads are common costs of the company, they have been allocated on the
basis of estimation of staff time devoted to all the magazine segments. This basis seems to be
appropriate but the company can also allocate these overheads in the proportion of the
respective sales made by each segment to show more sophisticated results (Hansen, Mowen

Case Study Analysis 4
& Guan, 2007). Further, the company has not taken into consideration the costs relating to its
sales and distribution and also the advertising revenue. These costs and revenues are material
for the business and hence must be accounted for separately while preparing management
accounts so that the users can undertake effective decision making. Management accounts of
the company are therefore cannot be said to be appropriate enough.
Financial reporting:
The company has prepared its financial statements as per the requirements of IFRS. This
shows that the company has adopted sound financial reporting practices. Further, the
company has shown the significant matters relating to its business by way of notes to
accounts so as to enable the stakeholders to understand the impact of major or material events
on the financial performance of the company (Hoitash, Hoitash & Bedard, 2009). To prepare
the financial statements, MG Publishing has followed the practice of continuously reviewing
the residual values and fair values of its assets. The company is also in the practice of
revising the carrying amount of its assets on the basis of market conditions to account for any
impairment loss.

Case Study Analysis 5
References
Hansen, D., Mowen, M. and Guan, L. 2007. Cost management: accounting and control 6th
ed. U.S: Cengage Learning.
Hoitash, U., Hoitash, R., & Bedard, J. C. 2009. Corporate governance and internal control
over financial reporting: A comparison of regulatory regimes. The accounting review, 84(3),
839-867.
Lester, T., Yoon, J. & Lovells, H., 2017. Corporate governance and directors' duties in
Australia: overview. Available at: < https://uk.practicallaw.thomsonreuters.com/1-502-9743?
transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1>
Accessed on: 19.07.2018.
Van Horne James, C. 2002. Financial Management & Policy 12th ed. India: Pearson
Education