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Introduction:Nowadays any business or aperson wants success in his any kind of work than they need a proper planning.Without follows these principal’s they never get good results. There are lot ofexamples in the world that huge companies was liquidated only because theydidn’t follows that rules, and they also didn’t make proper planning to run hisbusiness.

The main examples in Australia are the three big companies these areABC Learning, HIH Insurance and One Tel. All these companies were very wellestablished and they had very huge capital with very good market reputation.But unfortunately all the three companies were liquidated because they didn’tfollow the ethical rules and also the governance of these companies was notgood.

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Another main reason was that they didn’t maintain fair balance betweenthere asset and liabilities and as a results these companies were becomeinsolvent. The three main rules such as Ethics, Governance and liabilities nowdiscus one by one which are as follows. Ethics:Ethicsmeans that rules and regulations are set by the professionals who help togeneral public to run any kind of business and organization. “Business ethicsare the principals that guide the peoples that how they run their business, Italso make people able to take decisions in favor of the business and alsoprovide a guide line to distinguished between what is right and what is wrongfor the business”(Anglo American case study). Ethics make enable the businessto make proper rules and policies which the business in any issue use toresolve these issues.

Our universal system is running by follow a proper systemwhich is very big example of ethics. If this system does not follow that systemthan all the universal system will destroyed. Similarly to run a successfulbusiness application of ethical rules are very important. But unfortunately thebig companies ABC Learning HIH Insurance and One tell didn’t follow the ethicalrule which was the reason for liquidation. Business ethics guide us to run abusiness to make profit not to cheat the people in a society.

If the purpose ofa business to cheat the people and make money by a wrong way that action willbe against the ethical way of business, in the end the business will lose hisgood will and as result that business will liquidate same like the three bigcompanies HIH Insurance, ABC Learning and One tell.    Governance: Governance means to run andcontrol the business or any group of people in productive way. If the result ofthe business or a company in form of profit than it can be say that thegovernance in the company is very good.

In good governance the representativeneed to make good policies, rules and regulations to run any society or abusiness in well manners. Governance in any business is very important andcompulsory because it will make the team work very efficient and productive. What is governanceframework?”A good governance frameworkis an organized structure and a set off rules that guide the people how theyorganized and controlled the group of people and a business. Good governanceinclude to create well organized structure in an organization, create strategicand business plan”(Vanessa McBrideI,Isabelle Reinecke 2012).   Liabilities:Liability is a presentobligation that is payable by a business entity by a past events, thesettlement of which is expected to result in an outflow from the enterprise ofresources embodying economic benefits, (IASB Framework). There are many typesof  liabilities in a business for examplewages payable, loan payable, rent payable, interest payable Etc.

For a businesspoint of view it is very important for every business to recognized and showthe liability in balance sheet. It is against the accounting rules if abusiness steel his liability to show in balance sheet to increase hisreputation in market. If a business wants to run his business successfully thenhe should have maintain a balance between the assets and liabilities. If theliabilities are more than the assets than business cannot abele to meet hisdebts. It is the responsibility of an auditor that he should disclose thefinancial position of a business in his audit report.

The reason is that inmarket shareholders totally depend on the audit report of a business when theyinvest in business. Banks also consider the audit report of company when theyissue the loan to the business.  HIHInsurance:History”HIH Insurance was establishedin 1968 by two person Ray Williams and Michael Payne and it was working assmall insurance company. After three years in 1971 the company became known asa CE Health pty ltd and working as a third party accident insurance provider.In 1992 company was registered in Australian Stock Exchange and became thelisted company. This company expanded very quickly and in 1998 it known as aname of HIH Insurance” (Mirshekary, Yaftian & Cross).  HIH and Audit Independence:It is a fundamental rule andmarket requirement that auditor should be independent and should be providedall information which required for audit purpose. Auditor should not beinfluenced by the company management and he must provide fair view about thecompany position in his audit report.

But unfortunately this rule was notfollowed by the HIH auditor while doing the audit of HIH. The main reason isthat “Arthur Anderson was the auditor of HIH Insurance Company Since 1971 fromthe date of HIH was established until 2001 company’s liquidation date. It wasfounded that a good relationship became between the auditor and directors ofthe company” (Mirshekary, Yaftian & Cross).

Due to this relationship therewas a strong evidence that auditor was influenced by the companymanagement  and he madethe audit reportin favor of the business which is totally against the fundamental rule of CPAand ICAA.Ethics:Ethical standard means thatmake a choice between what is right and what is wrong. Auditor should be verycareful while doing the audit and he should be very ethical and provide theaudit report in favor of shareholders.

Ethical collapse also became the mainreason of HIH Insurance Company. Investigation shoe that there was a doubtbetween the facts and amount that show in the financial statement and actuallypaid to the auditor. It was also noticed that auditor also charged extra feeexcept the audit fee which made the case more doubtful (Mirshekary, Yaftian& Cross).  OneTell:In 2001 when One Tell wascollapsed it was the fourth largest telecommunication company is Australia andit had more than two million customers and operating in eight countries. Thecollapse of the One Tell was very shocking news foe the telecommunication worldin Australia (Australian Broadcasting Corporation 2001, Cooke 2001). In 90’sOne Tell expanded his business very quickly. Its customers were increasing dayby day.

In 1996-97 its expense was A$ 98.71 million and in 1999-2000 theexpenses was A$ 648.80.

Which show that his expense was increased more than 500% within four years (Barry 2002). Due to huge increase in expenses the operatingloss of One tell company was in big amount. Dramatically increased in expenseswas big example of lack of finance management in One Tell. In October 2000Merchant bank also issued a warning to the company that in future the companywill be faced shortage of cash.  Governance:Lack of corporate governancealso plays a role in liquidation of the company. When we examine thefundamental principles which are the make proper balance of authority betweenthe employees, communication of information between the boards of directors,Issue fair and understandable financial report every years, maintenance ofsound internal control system (O’ Shea 2005). When we applied these standard onOne Tell we find that many of these principles didn’t followed by the companywhich was the main reason of the liquidation of the company.

ABCLearning: ABC Learning was founded in1988 Edmund Eddy Groves and his wife Le Neve Groves in Brisbane, Queensland. InAustralia mostly the child care organizations are non-profit and run by thegovernment. In 1996 ABC Learning run’s 18 child care centers. ABC was expandedvery quickly and he increased his operation in Australia United State andUnited Kingdom. Documents show that ABC Learning earned very huge profit andits share value also increased every quickly, (Mak yuen teen). The first reasonfor the liquidation of ABC Learning was that he did not followed accountingstandards.

The recognition of assets was not according to the accounting rules.His accounting treatment related to assets, for example good will and childcarelicense was not according to the actual price, and also not according to theproper accounting calculation, (Mak yuen teen).   In 2005 the Australianinstitute carried a survey from the staff of the ABC Learning to check thequality of services that they provided to the children for all day. The resultof that survey was not good which suggests the need for investigation. Thissurvey also showed that the staff performance was also not good, only 29% ofthe staff was working on making a good relationship.

15 % respondent said thattheir center hired more staff than legally required. 37 % respondent said thatthey have enough equipment was provided to the children. Some respondent saidthat there were some systematic barriers on the provision of the quality work.Most of the staff specially the experienced cook was under paid, (Rush e,Downie, C).   Conclusion:The three companies ABCLearning, HIH Insurance and One tell were very big and with large amount ofinvestment. All the three companies were ranked in top 5 companies inAustralia.

But unfortunately all three was liquidated there are some reasons.Some people believe that for a successful business we only need hugeinvestment, these three companies are big example for them. All three companieshad huge investment large amount of working capital and all these was wellknown in the market. All these had good will and large amount of customers inthe market. The reason for the liquidation was that all three companies werenot following the system. They didn’t follow the all accounting standard andrules & regulations that imposed by the experts and the governmentauthorities. Another very important for successful business is that they shouldprovide true and fair financial statement to the general public.

The mostimportant principle is that the services that provide by the business should begood and better quality than business will be successful.      

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