Advance Business Communication Commodities and Services

Question: Describe about the Advance Business Communication for Commodities and Services. Answer: Case Study 1 Company Background Enron was an American company which was in the field of energy, commodities and services. The company was founded in the year of 1985 after the merger between Houston Natural Gas and InterNoth. The company used to be one of the major companies in the field of electricity, natural gas, communication and pulp and paper. However, the company was involved in a massive financial scandal and as a result, the company become bankrupt (Markham 2015). Analysis and Reason for Failure Enron become bankrupt due some major financial and accounting reasons. One of the reason for Enrons downfall was the revenue recognition process of the company. instead of using the Agent model for reporting revenues, the company used to report the entire vale of trades as revenue. This is the reason for which the revenues of the company tend to increase unexpectedly year by year (Abdel-Khalik 2016). The introduction of mark-to-market accounting was a mistake for the company. After the introduction of mark-to-market, the viability and costs of the contracts were difficult to estimate and the investors and stakeholders of the company were provided with false and misleading information. Corporate governance was another reason for the failure of the company. It was reported that the board of directors of the company was involved in illegal trade practices to gain a large amount of remuneration along with the auditors of the company (McLean and Elkind 2013). The auditors of the company w ere criticized and accused for the audit results. These are the main reasons for the collapse of Enron. However, there are other reasons behind the collapse like increase in the executive compensation, ethical and political issues and others (Jones and Stanton 2013). Conclusion and Recommendation From the above discussion, it can be observed that the main issue behind the collapse of Enron is the accounting and auditing reasons. Thus, it is recommended that the companies needs to maintain and prepare the financial report as per the guideline of the respective authority of the country. On the other hand, the auditors must remember that they should not collaborate with the board of directors for their personal interests. The auditors are here to save the public interest and they should do that as per the guidelines. These are the recommendation in respect to the Enron collapse. Case Study 1 Company Background ABC Learning was an Australian company which was the worlds largest provider of the early education for children. The company was founded in the year of 1988 and the headquarter of the company was at Brisbane, Australia. The company was involved in some massive scandals and as a result, ABC Learning was voluntary liquidated in the year of 2009. After that, the company was acquired by Goodstart Early Learning. Right now, it has more than 600 early learning centers all over Australia. It was a public company and was listed in the Australian Stock Exchange (Sumsion 2012). Analysis and Reason for Failure There were various issues behind the collapse of ABC Learning. The company was not able to repay its debts and as a result, it sold its entire United Kingdom subsidiary and sold 60% of its United States subsidiaries. The Stock price of the company fell to $0.54 from $8.62 (Ross, Sy and Tinker 2012). The company faced massive controversy over the accounting practices adopted by the company. The controversy was about the asset valuation method. There are two types of assets valuation methods; they are historical cost and fair value. The value cannot exceeds the value of recoverable assets. However, the value of assets exceeded the value of recoverable assets (Christakis and Christakis 2012). There are other reason behind the collapse like the over complexity, poor decision making process by the management of the company and others. The corporate governance process of the company was not effective. On the other hand, the confidential data and information were disclosed for personal purp oses. The board of directors and the top level managers of the company misused the power given to them. Aggressive growth strategy was another reason contributed to the collapse of the company (Galloway 2016). Conclusion and Recommendation As per the above study, some of the recommendations are provided. First of all, it is recommended that the recognition process of the revenues must be proper and effective. It is recommended that the companies need to focus on the core activities of the organization in order to gain the desired growth of the organization. The financial position of the company is the health of the company and this is why the financials of the company need to be recorded in a proper way. It is recommended that the companies need to implement effective corporate governance strategies in order to establish coordination in the organization. References Abdel-Khalik, A.R., 2016. How Enron Used Accounting for Prepaid Commodity Swaps to Delay Bankruptcy for One Decade: The Untold Story.Available at SSRN 2747119. Christakis, E. and Christakis, N.A., 2012. Harvard Cheating Scandal: Is Academic Dishonesty on the Rise?.Time ideas,4. Galloway, C., 2016. Crisis Communication Research in Australia.The Handbook of International Crisis Communication Research,43, p.337. Jones, M.J. and Stanton, P., 2013. Enron Cartoons: Accounting in the Spotlight. In K. Kokubu, N.N. Sawabe and M. Sakaue eds.,,Seventh Asia Pacific Interdisciplinary Research in Accounting Conference(p. 136). Kobe: The APIRA Conference Committee. Markham, J.W., 2015.A Financial History of the United States: From Enron-Era Scandals to the Subprime Crisis (2004-2006); From the Subprime Crisis to the Great Recession (2006-2009). Routledge. McLean, B. and Elkind, P., 2013.The smartest guys in the room: The amazing rise and scandalous fall of Enron. Penguin. Ross, P., Sy, A. and Tinker, T., 2012. ABC Learning: accounting lessons never learned?.International Journal of Critical Accounting,4(1), pp.21-29. Sumsion, J., 2012. ABC Learning and Australian early education and care: a retrospective ethical audit of a radical experiment.Childcare markets local and global: can they deliver an equitable service, pp.209-225.