Abc Learning Collapse Now A Global Case Study

12 February, 2010

ABC Learning collapse now a global case study

The collapse of ABC Learning, once the world's largest child care provider, is the subject of a case study to be examined by students globally following the public release of a new DVD by Australia's peak accounting body today.

CPA Australia today launched The ABC of a corporate collapse to an audience of academics and business educators in the accounting field in Sydney.

"ABC Learning's rise and spectacular fall is an example of what happens when a company ignores the fundamentals of sound accounting," CPA Australia's CEO Alex Malley said at the launch today.

"At the end of 2006, ABC Learning was trading on the share market at around $8.60 and operated around one in five child care centres in Australia. Less than two years later shares were worth around 54 cents and the company was placed in the hands of administrators. Debt, a crisis of liquidity and inflated asset values all spelt the end for ABC Learning."

The DVD presenter and TV personality David Koch officially launched the new teaching resource alongside a panel of experts including senior lecturer at Swinburne University Dr Mary Dunkley and equities analyst Roger Montgomery.

The video, which is now publicly available on YouTube, follows the successful release of a similar educational video by CPA Australia which examined the collapse of telecommunications company One.Tel.

"Finance and business leaders must ensure their organisations maintain sound accounting practices and uphold their ethical responsibilities. CPA Australia has produced a video that examines a familiar case study that students will relate to and can learn from," Malley said.

"There is immense value in this story being brought to life for accounting and business students. The video not only covers the fundamental flaws in the company's accounting but the ethical and corporate governance issues that contributed to its demise. It shows what can happen if these go unchecked."

The DVD will be distributed to accounting educators across Australia and the Asia-Pacific.

Editor's note: Alex Malley, CPA Australia's CEO, is available for interviews on request. Background information on the collapse of ABC Learning and a photo from the launch is also available. YouTube link: http://www.youtube.com/watch?v=YYF6JW9vJKo

Media contact: Rebecca Kington, External Affairs Adviser, CPA Australia, 0402 101 643, (02) 9375 6223, [email protected] or Rosie Whittam, External Affairs Adviser, CPA Australia on 0400 730 790.

SOURCE: CPA Australia