Answer To: Subject Title Business Law and Governance Subject Code MGT809 Lecturer / Tutor Karen-Anne Nathan &...
Hartirath answered on Mar 26 2021
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Contents
Introduction 2
Body 2
Provide the summary of the case and who was responsible 2
Summary of what occurred 5
Who was responsible? 6
Identify legal, governance, and ethical issues arising from the collapse 7
Analyze the implication of collapse to the organizational stakeholders 10
Why and how as a company director avoid this situation 11
Recommendations 12
Conclusion 12
References 14
Introduction
It was a "Harris scarf" company that manufactures products such as company management, boots, kitchen utensils, clothing for men, clothing for women, and other electrical control products. The following collapse cases selected were also accompanied by mismanagement of the company, as was the case with the Commission. As a result of the previous depression, it is not surprising that the supervisor gets most of the attention. There are many issues related to the scholarship/supervisor, such as internal control, scholarship committee, scientific research, and legal responsibilities of the scholarship, which are arranged to find out where the injustice originated. By focusing on the case of a squirrel scarf that collapsed in 2001, this treatise also argued between the loss of the enterprise and the role of the squirrel. I'm squirreling about the relationship.
Body
Provide the summary of the case and who was responsible
The company scandal in Australia in 2000 shook public self-assurance or trust in the accounting as well as auditing business. As a result, the audit business decided to test all policies and procedures to know the root causes of such scandals, namely the occurrence of breaches because of weak audit committees, internal control, ethical issues, absences, etc. The following discussion uses the Harris Scarfe case in 2001 to explore the meaning of corporate failure.
Harris Scarfe Limited did not suffer a severe refusal only, however also had a bad impact on the auditing and accounting industries. But, before discussing the root causes or measures taken; let us initially discuss the issues behind this collapse (Böhm et al., 2016). The company's March stock positions in the market caused conflict. The main causes for its decline are the default settings of the business records and the portrayal of fraudulent expressions to its stakeholders. The main question is why the association has never been involved in some financial issues, but suddenly announced a voluntary statement in 2001 because of cash flow issues. The conflicting statement to explain this is that Hodgson has done some things that have been recorded, which has driven up its stock price and caused profits to roll over (Lennox & Park, 2007). However, when the transaction did not proceed, he began to make larger inputs, and this continuity caused cash flow problems. The company allegedly fraudulently represented higher profits. Therefore, we want to know those duties that lack ethical standards and professionalism. Nevertheless, our discussion needs audit problems associated with such crashes (Melnik & Vabyshchevich, 2020). Therefore, let us use such a company scandal to discuss audit issues:
1. Audit Committee: The audit committee is answerable for helping the BOD in handling the financial data disclosed in the economic reports, preparing and introducing some financial information, as well as supervising and helping the audit group in its work. They are liable for advising the board of directors to fulfill their responsibilities to shareholders by providing the board of directors with all important information about the company in which they invest, whether it is financial or trust, and both (Neal & Short, 2018). It is mainly liable for making decisions, for instance, the nomination of auditors, the scope of responsibility of management, etc. It meets regularly with a team of external auditors to review its progress, discover and resolve their conflicts and doubts with management. The basic need for an audit team is to have three to five independent directors.
Harris Scarfe Limited has experienced Australia's biggest corporate failures, with approximate debts of $270 million. Undoubtedly, the outcomes of this fall down have harmed the accounting profession and auditing profession in Australia (Shyra, 2020). In Australia at the time, in the 2000s and early 2001, there were other crashes. For example, the failures of HIH Insurance, Ansett Australia, and OneTel all occurred repeatedly in a short time in the early 2000s. One of the main points in the recent debates about company failures and accounting scandals is that structures are needed to ensure that financial statements contain reliable decision-making information. The survey revealed that the main cause of the collapse was the gap in expectations. The term covers a huge variety of problems associated with corporate governance as well as the independence of auditors. The main concentration of this article is to provide a scope for research in this field by reviewing issues for instance audit committees, auditor independence, legal responsibilities, and ethics associated with Harris Scarf. Additionally, it will also discuss how regulators including the Australian Parliamentary Investigation, Ramsey Report, ASX and CLERP 9 can reduce the expectation gap moreover prevent any form of fraud (Suprianto et al., 2017). Finally, the revision and new implementation of the "Company Law Economic Reform Plan" will be explained. The company selected for the analysis of the cooperative bankruptcy or scandal is "Harris Scarf." Before entering the company's closed department, it is important to discuss the actual situation and operating conditions of the company. Mainly because managers missed management, leading to company or enterprise bankruptcy. When company managers do not perform their duties and tasks, the company will slowly lose money, and the company will fail over time.
The Harris scarf is a famous department store established in South Australia in 1849. The association’s headquarters are mainly in Australia. The business serves consumers with better products and standards (Urif, 2015). The company is a department store that mainly sells products such as kitchenware, electrical appliances, and other clothing. When the company started operations, the scale was small, but as time passed, the company developed and expanded its product line. Additionally, there were 54 Harris Krafts (two formats) at the time. These two stores are the "Department Store of Harris Scarf" and the other is the "Home of Harris Scarf". Through mergers and acquisitions, the company's business will face growth and development. In 2010, the company acquired another company that helped them grow (Wu et al., 2014). Also, the early history of the company shows that the company has more than 2,000 employees and owns many other products such as household goods, sports, and footwear, handbags, women's clothing, luggage, men's clothing, as well as several electronic products.
Summary of what occurred
The company faces various problems related to management responsibilities and control. Mainly, the downtime of the "Harris scarf" started when the top management checked the audit committee or internal control system. When the "Harris Scarf" business went bankrupt, other famous companies went bankrupt, for instance, OneTel, Ansett Australia, and HIH Insurance. The most significant thing in maintaining the...