ASSIGNMENT: FINANCIAL ACCOUNTING THEORY
This is a group assignment of maximum 3 students.
Questions must me answered from the perspective of the theories discussed in the subject. Providing a summary of the case without any discussion of the theory will not fetch marks.
The assignment must be provided with a cover paper mentioning the name and student numbers of the group members
Assignment is to submitted on Moodle.Only one students submits the assignment in Moodle which must include the cover page
Case Study Question 1 (20 marks)(500 words)
Read headline“Health rates as top social issue”.Would youexpect management to worry about attitudinal surveys, such as the one described in Headline below. Explain you answer, as well explaining how such surveys might impact on the disclosure policies of an organisation.
CANBERRA: Health has taken over from crime as the most important social issue seen to be facing Australia, figures showed yesterday.
The survey of people’s views of environmental issues found the environment rated fifth in importance—–even though three in four Australians had at least one environment concern.
The Australian Bureau of Statistics (ABS) figures showed 29% of respondents believed health was the most important social issue.
This was followed by crime (24%) education and unemployment (both 16%) and environmental problems (16 %).
In 1996, crime was seen as the most important social issue, followed by health, education, unemployment, the environment.
In the latest survey, dated March 1998, health was the most important issue to older people and least important to people aged 35-44.
In general, younger people were more concerned about long-term environmental problems although 19-24 year olds, as well as 45-54 year olds were most concerned about unemployment.
But the survey said 71% of Australians were concerned with at least one specific environmental problem.
The figure was up from 68% in 1996 but down from 75% in 1992.
People living in ACT were most concerned while Tasmanians were the least concerned about environmental problems.
Air pollution continued to be the problem of greatest worry for Australians, with 32% reporting it as their major concern.
Case Study Question 2 (20 marks)500 words
Read headline“Think before you spend”and then, drawing on material covered in this subject, Accounting Theory, identify some ways in which you think corporations would respond to such allegations.
Here are some of the products “The Rough Guide to Ethical Shopping” believes we should think about before buying:
Beverages: Maxwell House. One of the thousands of familiar brands —-Bird’s, Jacobs, Ritz and Toblerone are others— owned by tobacco giant Philip Morris of Marlboro cigarette fame, which recently changed its name to Altria.
It denies to this day that smoking is addictive, was fined for failing to disclose political donations and was one of George Bush’s largest corporate campaign contributors.
Clothing: Nike trainers. Nike is said to have petitioned the Indonesia government for exemption from the minimum wage and has been accused of lying about labour conditions at its contractor factories.
According to Sweatshop Watch, an average Nike worker would need to put in 72,000 years of work to receive what Tiger Woods gets for one five-year contract to publicise the brand.
Food: Tiger prawns. Hugely popular nowadays in restaurants and supermarkets, tiger prawns are mostly raised in man-made pools in Bangladesh and the Philippines.
It takes 50,000 litres of water to produce a kilogram of prawn meat and the chemical additives to promote rapid growth ends up polluting the surrounding farming land.
People are routinely displaced to make way for these farms. Rape and murder have been reported in some cases.
Sport: Snooker cues. Thousands of snooker cues are made every year using wood from the Indonesian ramin tree. The ramin, which is also used for furniture and window blinds, is a rare and endangered tree listed under the Convention on International Trade in Endangered Species, but continues to be logged illegally at an alarming rate.
(Irish Independent, 1 December 2004, Independent Newspapers Ireland Ltd)
CASE STUDY QUESTION 3 (20 MARKS) 500 words
Read headline “Lay off Big Macs, radio boss tells staff”and using Legitimacy Theory as the basis of your argument, explain why a company such as McDonald’s would not want a radio station to make adverse comments about it. If the station does make adverse statements, how might McDonald’s react from a corporate disclosure perspective?
Top management at radio 2UE ordered the station’s broadcaster not to make derogatory comments about McDonald’s on air or the station would lose its $170,000 advertising account with the fast-food chain, according to a leaked in internal memo.
The memo from program director John Brennan in February reveals for the first time that the practice of tailoring editorial comment to suit 2UE’s advertisers in an internal part of the top-rating radio station’s culture.
‘It’s going to be a tough year for revenue and we need all the help we can get from everyone concerned’ the management memo says.
‘It is obviously imperative that no derogatory comments about McDonald’s are made be any broadcaster on the station. Any such comment would see an immediate cancellation of the contract’
The memo will be investigated by the Australian Authority’s inquiry into the radio station next month.
Mr Brennan’s directive appears to contravene the Commercial Radio Code of Practice, under which a radio must promote accuracy and fairness in news and current affairs programs. The code may be reviewed by the ABA in separate public hearings and may result in moves away from self-regulation.
The memo contradicts statements by 2UE chief John Conde this week about the role of station management in the scandal involving John Laws and the now defunct $1.2 million deal with Australian Bankers’ Association.
The banks’ deal with Laws also involved refraining from negative comments about the client on air.
McDonald’s spokesman John Blyth said the company was unaware the 2UE directive had issued and would never make its advertising contracts conditional on editorial comment.
The memo was addressed to Alan Jones, John Laws, John Stanley, Mike Carlton, Peter Bosly, Ray Hadly, Stan Zemanek and eight other on-air presenters.
Senior management was also party to the directive.
In a letter to the Australian yesterday, Mr Conde confirmed Mr Brennan wrote the memo, which had ‘reflected (his) exuberance’. He said Mr Brennan had promptly clarified the memo, telling staff he only intended to avoid any announcer ‘sending up’ the McDonald’s ads. ‘It was made plain 2UE was not seeking to curtail editorial comment’
In a separate statement, Mr Conde said 2UE and its affiliates were to receive $707,000 from?the
Bank deal. Laws says his share was $303,000.
Amanda Meade (Australian, 22 July 1999 p.1)