Durham University Impression Management

SUMMATIVE ASSIGNMENT Overall Word Limit 2,000

· 案例展示

Impression Management

从Carillion的年报里找出公司用Impression Management的地方(约五处)

What should be in the report? What is a professional report?

Think about the audience of the report - audit teams - so focus the report on proving to them how it would or wouldnot help

Format will look something like this:

Contents Page

Introduction that contextualises the report - what was it that the reports failed to show / that the directors did / information that was not clear that allowed the problems with carillion to go unnoticed by shareholders / market ( or the Govt )

Discussion of theory around voluntary disclosure and problems with aspects of this plus an overview of impression management or other ideas of problems in the unaudited sections of the accounts - this depends on which aspect of the reports you are going to look at.

Analysis Approach

Justification of the analysis approach you are undertaking - this is the links into the Brennan paper etc BUT you need to justify whether you are looking at all of the non audited material for evidence of one or more aspects of impression management or whether you are looking at one specific aspect of the disclosure ( chairmans statement / CEO report/ Strategic report/ KPI / Risk reports etc. etc. and exploring that for all types of manipulation. This means you are using the section in the introduction to show why there might be impression management of whatever type you are exploring in the section you are exploring it in

Analysis and Discussion

Exploration of the evidence that you show in the appendix to see whether there is impression management and what sort you see and why that might be there - and if it isnt there why is it surprising and what does that imply


Is there evidence of - Significant / Some/ Little /No impression management

Does this explain why the brewing problems were missed by Govt and the market?

Therefore is it potentially a useful tool (yes or no) and why



Tables summarising findings

Examples of detailed coding of sections of the Carillion Plc Accounts

Do I have to do one year or many years of Carillion or do I have to compare it with other companies?

Depending on what aspect of impression management you choose to look at you might want to show comparisons to prior years or to other companies in the sector as that might show it was specific to the development of the problems - or you might have enough just doing the one year - that is up to you to decide

SUMMATIVE ASSIGNMENT Overall Word Limit 2,000


You are working for a large international accounting firm which is evaluating the quality of the voluntary disclosure that accompanies the audited financial statements of its clients.

Below are extracts from the conclusions of the Report of the Joint Select Committee into the collapse of Carillion plc. These highlight serious concerns in the conduct of the accounting profession in discharging its duty to ensure that information provided in the audited financial statements shows a true and fair view.

Your firm is aware of the concerns that have been raised by regulators including the Financial Reporting Council (FRC) in the UK about narrative disclosure. You have been asked to explore whether the quality of the communication in the narrative element of the corporate reports failed to alert readers about the state of affairs at Carillion plc. From this, you are to conclude whether there are indicators in such disclosure which your firm could use to signal risks to the objectivity of client annual reports.

Carillion Plc

1.Carillion’s business model was an unsustainable dash for cash. The mystery is not that it collapsed, but how it kept going for so long. Carillion’s acquisitions lacked a coherent strategy beyond removing competitors from the market yet failed to generate higher margins. Purchases were funded through rising debt and stored up pension problems for the future. Similarly, expansions into overseas markets were driven by optimism rather than any strategic expertise. Carillion’s directors blamed a few rogue contracts in alien business environments, such as with Msheireb Properties in Qatar, for the company’s demise. But if they had had their way, they would have won 13 contracts in that country. The truth is that, in acquisitions, debt and international expansion, Carillion became increasingly reckless in the pursuit of growth. In doing so, it had scant regard for long-term sustainability or the impact on employees, pensioners and suppliers.

14. Carillion used aggressive accounting policies to present a rosy picture to the markets. Maintaining stated contract margins in the face of evidence that showed they were optimistic, and accounting for revenue for work that not even been agreed, enabled it to maintain apparently healthy revenue flows. It used its early payment facility for suppliers as a credit card but did not account for it as borrowing. The only cash supporting its profits was that banked by denying money to suppliers. Whether or not all this was within the letter of accountancy law, it was intended to deceive lenders and investors. It was also entirely unsustainable: eventually, Carillion would

need to get the cash in.

20. Major investors in Carillion were unable to exercise sufficient influence on the board to change its direction of travel. For this the board itself must shoulder most

responsibility. They failed to publish the trustworthy information necessary for investors who relied on public statements to assess the strength of the company. Investors who sought to discuss their concerns about management failings with the board were met with unconvincing and incompetent responses. Investors were left

with little option other than to divest.

21. It is not surprising that the board failed to attract the large injection of capital required from investors; we are aware of only one who even considered this possibility. In the absence of strong incentives to intervene, institutional investors acted in a rational manner, based on the information they had available to them. Resistance to an increase in bonus opportunities, regrettably, did not extend to direct challenges to board members. Carillion may have held on to investors temporarily by presenting its financial situation in an unrealistically rosy hue; had it been more receptive to the advice of key investors at an earlier stage it may have been able to avert the darkening clouds that subsequently presaged its collapse. (Paragraph 114)

22. KPMG audited Carillion for 19 years, pocketing £29 million in the process. Not once during that time did they qualify their audit opinion on the financial statements, instead signing off the figures put in front of them by the company’s directors. Yet, had KPMG been prepared to challenge management, the warning signs were there in highly questionable assumptions about construction contract revenue and the intangible asset of goodwill accumulated in historic acquisitions. These assumptions were fundamental to the picture of corporate health presented in audited annual accounts. In failing to exercise—and voice—professional scepticism towards Carillion’s aggressive accounting judgements, KPMG was complicit in them. It should take its own share of responsibility for the consequences. (Paragraph 124)

23.Deloitte were responsible for advising Carillion’s board on risk management and financial controls, failings in the business that proved terminal. Deloitte were either unable to identify effectively to the board the risks associated with their business practices, unwilling to do so, or too readily ignored them. (Paragraph 125)

24.Carillion’s directors were supported by an array of illustrious advisory firms. Names such as Slaughter and May, Lazard, Morgan Stanley and EY were brandished by the board as a badge of credibility. But the appearance of prominent advisors proves nothing other than the willingness of the board to throw money at a problem and the willingness of advisory firms to accept generous fees.


You must present a professional report for your firm with supporting references from academic research and professional sources.

With respect to Carillion plc, critically explore whether there is evidence of impression management being used by Carillion plc in its corporate reporting. Explore the possible contribution of such behaviour to hiding the crisis within the company. From this analysis conclude whether there are indicators which your firm could use to suggest increased risk.



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