1. a) What is the purpose of an entity?
b) What are the rights of the stakeholders of an entity?
2. a) Outline the legal duties that directors have to their company (in Australia)
b) Provide an example of a director that has not fully complied with these legal duties. What were the penalties involved? (Ensure you provide evidence via appropriate references you have obtained to support your answer).
3. One Tel Ltd and ABC Learning Centres Ltd were Australian companies that entered financial distress and were subsequently delisted from the ASX. Watch the CPA Australia videos found athttps://www.cpaaustralia.com.au/cps/rde/xchg/cpa-site/hs.xsl/knowledge-auditing-toolkit.html (the video is at the right hand side of the screen) andhttps://www.youtube.com/watch?v=YYF6JW9vJKo which discuss the downfall of these companies and then answer the following questions.
(a)For both One Tel Ltd and ABC Learning Centres Ltd, outline three warning signals that the financial statements and/or notes to the accounts revealed that would have indicated the company was at risk of financial distress? (your answer must explain which statement or note provides this information).