Causes of the Collapse of Allco Corporate collapse of Allco occurred like many other collapses but reasons of other collapses had been different than with Allco, which collapsed due to duality of the positions of the chairman and the CEO, the two topmost positions in the company, i.e., one of the chairman and the other of the chief executive were managed by the same person, by late David Coe. Media identified Coe as the executive chairman although later Bob Mansfield was the chairman and David Clarke, the chief executive (Walters, 2013). Financial environment worldwide was particularly not conducive otherwise but Allco suffered from the deficiency in corporate mechanism as board of corporate governance behaved like a private company. Criticality of Board Independence Board independence is very critical factor in the scheme of corporate things. The Australian Securities Exchange (ASX) has very clearly advised not to lead the two roles of chairman and chief executive officer by the ditto person. There has never been any ambiguity over this recommendation. Freedom of the board has been from the very beginning the leading principle of good corporate governance, as defined in the preamble of ASX. This issue is linked to the sound health of the capital markets, which has been central to the Australian economy. Take for example the case of Enron where the positions of the CEO and the chairman were managed by Kenneth Lay. Enron collapsed because of cheating and corruption of 18 years in securities (Walters, 2013). The same cannot be said about Allco that it cheated and practised corrupt practices but members of the board were found to be in compromising positions when it came to the issue of loan to one of its associate companies, the Allco Principles Trust (APT). Corporate Mechanism at Allco Former chief executive of Allco, David Clarke revealed the complicated corporate mechanism of the Company, which at one time had a market value of $5 billion and in 2008 it came rolling down to owing above $1 billion, affecting 50 related companies, facing settlement. The fall back in structured finance reduced the share price to almost half in late 2007. An associate company APT was given a loan of $50 million to ensure that margin calls do not bring down Allco share price. The leading shareholders of APT were holding senior executive level positions in Allco with Allco shares as capital (Lannin, 2010). Connection between Stock Prices and Earnings The relation between stock prices and earnings inspire managers to practice earning management. Generally, it is observed that public firms show increased discretionary accruals. Managers are additionally inspired to fulfil the stock market expectations of shareholders. They are motivated to leverage income before listing in stock market, for securing investors’ interests and outcomes of earning management can reflect on the capital market (Soffer et al., 2000). Functions of Allco Board A company’s board caters to the stakes of its shareholders, as executives are too busy in day-to-day management of the company. It is the responsibility of the chairperson to ensure that shareholders’ funds are invested to earn nice dividends. In the present condition, shareholders felt very unrelated and ignorant where their funds were invested and what role their super funds were playing in corporate governance (Walters, 2013).
Critically evaluate the role of accounting in the collapse or failure of Allco. Introduction The last decade of the 20th century and the beginning of 21st century has seen a number of corporate accounting scandals in Europe and the U.S., including Enron, HealthSouth, Parmalat, Tyco, WorldCom and Xerox…
They need to address the societal thoughts while developing strategic plans. But this implementation of new ideas is not easy as it is not just a single new constraint, in fact a whole lot of new constraints, restricting companies to stop doing a lot of things which they are used to in a global competitive market.
FSAs Role towards the Collapse of Global Financial Services Industry Introduction The collapse of the global financial services industry in 2007 is also known as global financial crisis. By mid 2007, the financial disorder with its rigorous liquidity and credit crunch seemed to detain to financial markets and institutions.
However, the trend has now changed making the bank collapse. While there are many questions that linger regarding the causes of this collapse, it is apparent that accounting practices, both legal and illegal played a major role in making the Bank collapse.
According to the author, management accounting has failed in the application of qualitative features of management as well as the strategic thinking in management. As a result of the failure of management accounting, strategic management has been introduced in the profession of accounting hoping it will be effective in areas of management.
Managerial Accounting and the Role of Experiments A fundamental purpose of managerial accounting is aimed at enhancing the firm values through effective utility of scarce resources. This means that managerial accounting systems are supposed to provide information that improves the employee’s ability to make organizations have desirable decisions.
Like every other professional field, professional accounting is governed by a set of principles which guide the accountant in the performance of his/her task(s). These principles are inscribed in the context of a code of ethics which rules the behavior of the professional and sets up a code of conduct which regulates behavior in the field.
The International Accounting Standard number 10 ‘Events after balance sheet date’ provides two types of events. The events that provide evidence of conditions that existed before the balance sheet date (adjusting events) and the events that indicate conditions that arose
The paper starts with a strong thesis statement as the author of the book and other materials bring forward. Secondly, the paper will critically discuss the reasons as to why the societies collapsed and then, the paper will provide
it is financially and economically strong to compete with other leading organizations and to makes sure whether it is making the right progress to attain a sustainable position as compared to other companies.
Management accounting has to make note of various objects that are
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