Title: ABC Learning: accounting lessons never learned?

Authors: Phil Ross; Aida Sy; Tony Tinker

Addresses: School of Accounting, University of Western Sydney, Locked Bag 1797, Penrith South DC, NSW 1797, Australia. ' Division of Management Studies, Accounting Faculty, Marist College, Poughkeepsie, NY 12601, USA. ' Department of Accountancy, Baruch College at the City University of New York, Box B12:225, One Bernard Baruch Way, New York, NY 10010, USA

Abstract: The collapse of ABC Learning (ABC) is replete with lessons for accountants, auditors, executives and regulators. From its early beginnings, ABC's intervention into child care provision, gave plenty of red flags for anyone paying attention. Unfortunately, the euphoria, championed by Australian's new charismatic boy wonder (ABC's Eddie Groves) led a 'free market' mergers-and-acquisition incursion into child care. The chorus of cheer-leaders drowned-out the naysayers. No-one wanted to be branded as a non-believer. As with many high-growth entities that expand by merger and acquisition, they are heavily leveraged bubbles. Eventually, bubbles burst on margin calls. ABC Learning, stretching over several continents, collapsed and the Australian state, who gave generous subsidies to fund their poster boy, Eddie Groves, was left to pick up the pieces by underwriting the rescue package.

Keywords: ABC Learning; Edmund Stuart Groves; Eddy Groves; Australia; New Zealand; state subsidies; fraud; business collapses; accountants; auditors; company executives; regulators; child care provision; free markets; mergers; acquisitions; high-growth entities; heavily leveraged bubbles; margin calls; underwriting; rescue packages; regulatory bodies; government regulation; critical accounting.

DOI: 10.1504/IJCA.2012.045779

International Journal of Critical Accounting, 2012 Vol.4 No.1, pp.21 - 29

Published online: 07 Aug 2014 *

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