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the role of accounting in the collapse or failure of Allco
Finance & Accounting
Pages 7 (1757 words)
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.
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. ...
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