Assessing Corporate Governance and its Significance: A Case Study Analysis
Overview:
Accounting irregularities have cost investors millions of dollars and, most importantly, adversely impacted their confidence in the financial system. While there have been remarkable improvements in regulatory supervision, auditing framework and reporting transparency, young graduates must assess major corporate collapses in Australia to fully understand the significance of ethics and corporate governance in the context of accounting and business practices.
Below is the list of the five most infamous corporate collapses in Australian history:
| Company | Brief Overview |
| HIH Insurance | One of the biggest corporate collapses in Australian history, HIH Insurance collapsed in 2001 with over $5 billion in debts. An investigation found that the company’s directors had engaged in fraudulent and deceptive conduct, including misrepresenting the company’s financial position. |
| One.Tel | One.Tel, a telecommunications company founded by Australian businessman Jodee Rich and British entrepreneur Mark Silbermann, filed for bankruptcy in 2001 with over $600 million in debts. An investigation found that the company had engaged in accounting irregularities and aggressive revenue recognition practices. |
| ABC Learning | ABC Learning: ABC Learning, a childcare provider that once operated over 1,000 centres in Australia and overseas, went into administration in 2008 with over $1 billion in debts. An investigation found that the company had engaged in aggressive accounting practices, including inflating revenue and understating expenses. |
| Arrium | Arrium, a mining and materials company, went into voluntary administration in 2016 with debts of over $2 billion. An investigation found that the company had engaged in questionable accounting practices, including delaying write-downs of its assets and inflating its earnings. |
| Dick Smith | Dick Smith, an electronics retailer, entered receivership in 2016 after a series of accounting irregularities and inventory management issues. An investigation found that the company had engaged in aggressive revenue recognition practices and had overstated its profits. |
Task Description
In a group of 3-4, students are required to explore ethical and corporate governance issues in a company allocated to them by their lecturer. Each group must assess accounting practices, corporate governance, or financial reporting issues in the assessment and critically evaluate the implications for the parties involved and the broader Australian market.
The assessment task has two parts. First, the students will submit a written report of 2,500 words (± 10%). The structure of the report should follow the below format:
- Introduction: Provide an overview of the selected case study and its relevance to accounting practices, corporate governance, or financial reporting (approximately 200 words).
- Background and context of the case study: Provide a brief summary of the company and the events that led to the ethical issues (approximately 400 words).
- Analysis of the ethical issues: Identify and describe the ethical issues in the case study and analyse them using relevant ethical principles and theories (approximately 800 words).
- Critical evaluation of the implications: critically evaluate the implications of the ethical issues for the parties involved, including the company, stakeholders, and regulators, and assess the potential impact on financial markets and the broader Australian economy (approximately 800 words).
- Conclusion: Summarise the key findings of your analysis and evaluation, and provide recommendations for how similar ethical issues can be prevented or addressed in the future (approximately 300 words).
- References: Your report should include at least ten credible sources, which should be cited using the Harvard referencing system[1].
The second part of the assessment will require each group to make a 15-minute video presentation summarising their report to the class.
Please refer to the marking rubric on pages 3-5 for information on the grading criteria.
Note: All group members will receive similar grades (except where students are required to demonstrate individual skills) unless there are any specific complaints substantiated by evidence concerning non-participation by a member. Students are encouraged to maintain a record of their communication and contribution to protect their interests.
[1] Referencing is a critical component of the Australian curriculum. Your lecturer will guide you during the tutorial hour in Week 5 to ensure you are familiar with various tools to produce references correctly.
