ACCG1001 Accounting and Governance
Assignment Questions:
Amanda Ltd is a manufacturing company operating in Parramatta, Sydney. The company has been successful since its inception in the early 1990 and has even won twice the “Best Corporate Citizen Award” presented by the City of Parramatta Council. The company has recently been facing multiple problems including declining profit, loss of inventory (through theft or spoilage) in the warehouse, and declining reputation from its stakeholders.
Coincidently, all these problems started when the head of Accounting Department, Sofia Bryant, voluntarily retired from her position recently. Her retirement was provoked by a sarcastic comment made by the Sales Manager during board meeting, that “Amanda Ltd can cut down its cost by shutting down Accounting Department. Afterall we will even be better off without this department”.
You are required to conduct research (i.e. reviewing relevant academic and professional journals, and/or texts) and write a business report by addressing the questions below. 
Note:
The total mark of this assignment is 50 (refer to detailed marking rubrics on page 3), then your marks will be converted to 20% towards your overall assessment.
Part A
1. Evaluate the statement, “Accounting is the Language of Business”.
Accounting is treated as the language of business due to its useful information that is shared among the internal and external users for decision-making. Accounting provides information about the financial position through the balance sheet and financial performance through income that must be communicated to the relevant stakeholders through the language that they understand (Islam & Sharif, 2017). As such, the leading role of accounting is to provide processed data to the stakeholder for decision making.
The management uses accounting information to make critical decisions that determine the future success of the organisation (Bloomfield, 2018). For example, as internal users, the manager will need accounting information to determine the projects that should be invested in to increase an organisation’s profitability. The investment decisions are linked to evaluating whether the company has sufficient resources, the costs involved, the need to obtain external financing and available cash. Similarly, external users of accounting information such as shareholders and potential investors use accounting information to assess the ability of the company in meeting the objective of wealth maximisation and determine whether they should contribute their resources in terms of investment. The suppliers and banks, on the other hand, use accounting information to assess the ability of the firm to repay loans or to meet debt obligations. The government also uses accounting information to evaluate whether the company is engaged in corporate social responsibilities.
2. Discuss how Accounting and Governance helped Amanda Ltd in winning the Best Corporate Citizen Award.
Accounting and corporate governance are equally interrelated since the success of the former are determined by the effectiveness of the latter. According to Jiang & Zhang (2018), accounting produces essential information that is used is used for effective and efficient governance. Corporate governance mechanism facilitates checks and balances that hold firms accountable for the actions towards stakeholders and environment (Gad, 2016). To carry out corporate governance effectively, companies need a performance metric; hence, a need for accounting.
In using accounting and governance, Amada Ltd was able to give justifiable explanations for its actions and judgements. The accounting information presents detailed information through figures and supportive notes on how the organisation arrived at certain decisions. The results of accounting process are also trusted because they are verified by the independent board of directors, internal controls, industry guidelines and particular codes and principles such as accounting reporting standards by AASB and IFRS (Shil, 2018). With the accounting department, Amanda accounting information presented the impact of the company on the stakeholders, and the results could be trusted because they were prepared independently, leading to winning the Best Corporate Citizen Award. The effectiveness of accounting on corporate governance is well-felt when Sofia Bryant resigns as the company has registered a decline in profits, loss of inventory and stakeholders’ dissatisfaction.
Part B
1. Why some firms might prefer a perpetual inventory system to a period inventory system?
2. Explain how using perpetual inventory system could help Amanda Ltd to minimise the loss of inventory.
3. How would the application of the principle of segregation of duties could prevent the loss of inventory at Amanda LTD?