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Avoid the Hustle

Financial Accounting Theory

Category: Accounting

The following assessment involves Work Integrated Learning (WIL) activities. The focus of RMIT’s WIL policy is for you to ‘learn by doing in context and with feedback’ in realistic contexts. This assessed WIL experience makes a significant contribution to the development of your work-readiness capabilities by deepening your knowledge of, and skills at, core accountancy practices concerning the practical application of contemporary financial accounting theories and regulation in the workplace.
Background Information and Reporting Task
You are the company spokesperson and chief communications officer for Goanna Ltd. You work very closely with the chief accountant, and report directly to the Chief Executive Officer (CEO).
Goanna Ltd is a leading manufacturer of men’s and women’s clothing, including denim jeans and jackets, with substantial markets in Australia and New Zealand. While some of Goanna Ltd’s manufacturing operations are located in Australia, a considerable proportion is located in Bangladesh. Following the collapse of the Rana Plaza garment factory in Dhaka which killed over 1,100 Bangladeshi workers, Goanna Ltd was criticised for its policy of sourcing denim clothing from Bangladesh. Goanna Ltd has since joined the ‘Alliance for Bangladesh Worker Safety’ and has publicised this safety initiative on the company’s website.
It is 12:30 pm on a Thursday and you are enjoying lunch at a coffee-shop near to your office when you notice a noisy street demonstration. Protestors are marching down Swanston St, demanding that Goanna Ltd abandon its practice of sourcing denim clothing from Bangladesh. Many of the protestors are chanting slogans and carrying banners depicting garment industry workers suffering from silicosis attributable to the “sandblasting” process used in the manufacture of denim garments. News crews from commercial television and radio stations are recording the demonstration. On your Facebook and Twitter accounts, many of your friends are commenting extensively on the demonstration and the issue of “sandblasting denim”.
Upon your return to the office, you read an email sent only a few minutes ago by a friend from your RMIT University days who is now a journalist with The Age newspaper. Your friend advises in her email that she is writing a story on Goanna Ltd criticising the company’s outsourcing practices and questioning why the company has not yet signed the Bangladesh Fire and Building Safety Accord. Her story will be published in The Age on Saturday.
Shortly after reading this email, you receive a phone call from Goanna Ltd’s CEO to say that he has called a press conference for 5:00 pm today where you will issue a statement on behalf of the company, addressing the demonstrators’ concerns.
Required: Use Legitimacy Theory and the Managerial Branch of Stakeholder Theory to:
(a) Analyse the current situation from the perspective of Goanna Ltd. You should consider the potential negative consequences for Goanna Ltd arising out of this situation.
(b) Devise a strategy for Goanna Ltd to respond to the situation. You should discuss actions to be taken by Goanna Ltd, as well as reporting strategies to manage perceptions of the situation (including your 5:00 pm press conference).