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Creative Accounting, Fraud and International Accounting Scandals by Michael John Jones

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Chapter 8

Accounting Scandals in Australia since the Late 1980s

Garry D. Carnegie and Brendan T. O’Connell

8.1 INTRODUCTION

Corporate failures and accounting scandals are often interrelated. History has repeatedly shown that accounting failure is frequently a determinant of unexpected corporate collapses. As sharply illustrated in the early 2000s with Enron and WorldCom in the United States and with HIH Insurance in Australia, such a phenomenon is not ancient or quaint. In response to instances of accounting failure, legislative and other reforms are typically adopted to ensure that such instances do not arise again in future. Notwithstanding these reforms, corporate failures are perennial, especially during periods of economic downturn, and typically leave the accounting profession defending itself, repeatedly, leading to yet further governance reforms that are intended to ensure, as far as possible, that errors, misjudgements and negligence of the past do not recur.

Corporate scandals up to the time of writing in Australia have not been unusual in the sense that such failures reflect the excesses of human behaviour, specifically in the commercial/corporate world, where greed and hubris can assume prominence, especially during periods of rapid economic development or transformation or extended economic growth. Such conditions are exacerbated during times when there is little or no effective company regulation, especially when the accounting and audit provisions of relevant company ...

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