Tasks:
Part (1) Corporation Law
You are the financial accountant at Blackhill Holdings Limited and are keen to demonstrate your new skills as a recent Monash Uni graduate. To prepare for an important upcoming Board meeting, the CFO has come to seek your advice. The CFO has asked you to prepare two separate emails to him that answer the following questions.
First email
(i) Identify and clearly outline who is a related entity (both corporations as well as individuals) for the purpose of the Corporations Act (2001) Cth. Support your response by citing the relevant section reference. Please note that this request is general in nature and is not in response to a specific transaction.
Second email
(ii) On the basis that Blackhill Holdings Limited is considering listing on the ASX, what are the most relevant annual reporting requirements (at least three points) and Director responsibilities (at least three points) that the CFO should be concerned about. Your advice may consider other requirements of an ASX listed company and not just those imposed by the Corporation Law. Please explain why you consider these to be the most relevant and should be at the top of the list for Blackhill's CFO to be aware of.
(Note: Format of part (i) and (ii) are email)
Part (2) Auditing
(i) Compare and analyse the quality of auditor independence pre and post September 2013.
(ii) Identify and discuss an incentive and an opportunity for manipulation (or fraud) of accounts by Blackhill Resources (or decision by its board of directors).
Part (3) Ethics
The following excerpt is taken from Kitchen Best (Harvard Business Case, HKU948, page 6):
"Kitchen Best had no clear guidelines or vetting procedures for expenses incurred from wining and dining or entertainment provided to suppliers and customers. In fact, Ma regularly used kickbacks, entertainment and gift-giving to open and maintain accounts, and expenses for such activities were reimbursed to Ma through fake invoices booked as "entertainment expenses".
(i) Based on professional ethics and integrity, comment whether or not Ma's conduct of wining and dining is acceptable.
(ii) Suggest three recommendations to Henry Chan in terms of internal control procedures and policies to deal with the above situation.