Prie puit uver Tyco, as Ahold go global, they run into countless national regula
ID: 362625 • Letter: P
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Prie puit uver Tyco, as Ahold go global, they run into countless national regulators and past year or so: KPMG over d Deloitte over Adelphia, for example. As and it is the and it is the weakest link that is always most likely to prove their (and companies su visors rs) undoing. The right response is to adopt the strongest, not the laxest their investors') r inv egime possible. This means both enforcement of international accounting andards and tough regulation of auditors. Questions xplains the occurrence of the Ahold scandal? 2 Should the Ahold case be 1The US$500 million overstatement was due primarily to Ahold's US subsidiar- seen as a failure of the (Dutch) two-tier board system? Please explain your opinion of this issue. ies. Would you, therefore, argue that Ahold is less a European problem than yet another US accounting failure? 4 Would the Ahold scandal occur typically in 'global' corporations or could a similar situation arise in companies operating in only one nation? 6.6 Conclusions ysis of corporate governance systems and of their institutional-cultu lu hur alsn for building an understanding of t mparative analExplanation / Answer
1)Ahold scandal occur mainly because of lack of corporate governance ,fraudulent accounting activities in us food service and lack of accounting transparency.
*Another most important reason of problem rising due to tendency of European ah old company not to adopt changes and aggrrssive growth strategy expansion of business in us and global region caused many unexpected problem.cultural differences becomes the reason to manage world wide.policies tha was succesful in Netherland get failed in us and other countries.
2) Two tier board system is composed of two board subsidiary board and management board.
*subsidiary board take long term decison,supervise the management where as management board take care of tactical issues.
Reasons for dual tier system was to get more monitoring ,more transparency,accounting correct ness and less aggresive towards target but ahold scandl proved dual tier system a big failue because all these occur in ahold scandal,so i don't think there is any use of dual tier system if scandals still can occur in presence of two board.
3)yes probelm arises due to accounting issues in us and us misrepresentation of thier financial statement and accounting for all allowances prior to its actual period,lack of internal control ,no proper mangement also becomes reason of scandal but its also europeon failure because European company fails to understand global changes ,and alteration in policies.company follows the same rigrous performance standards that is follow for domestic operation.
4)Ahold scandal can occur in any company if there will be no proper internal control,timely accounting audit and proper management.
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