The article regards 7-Eleven, a convenience store, and its decision to close stores after a wage scandal. The decision to relinquish leases in Chapel Street has been blamed on underperformance in the outlets. In defense of the decision, the spokesperson argues that it is normal for the company to open and close stores. Although the company is adamant that the decision is normal, it has been blamed on the recent wage scandal (Johanson, 2016). The overhaul of wage arrangements was however not a voluntary step and was forcefully implemented after revelations that the company underpaid its employees. The underperformance in the selected stores is quite interesting coming at the backdrop of a boom in convenience outlets in the country. The decision is further compounded by the fact that the company is one of the leading convenience stores in Australia.

Relation to the unit (ACC3700)

The article is linked to the unit and especially the accounting concepts of financial accounting theory taught in class. The opportunistic perspective is perhaps most evident as the company underpaid its workers to improve its performance. This is against standard accounting procedures where managers must include all the costs (Holthausen, 1990). However, pressure to perform could have resulted in self interests among the managers to exceed expectations. Consequently, the managers are likely to have adjusted the wages of employees to achieve a desired financial outcome. Whereas the profits were realized in the short term, the company suffers negative effects in the long term. In addition, the company’s reputation was also damaged because of the use of creative accounting techniques to attain desired outcomes (Amat et al, 1998). The chapter on Positive Accounting Theory was taught in the eighth week.

References

Johanson, S. (2016, August 10). 7-Eleven closes stores in wake of wages scandal. Retrieved October 11, 2016, from http://www.smh.com.au/business/property/7eleven-closes-stores-in-wake-of-wages-scandal-20161010-grysix.html

Amat, O., Blake, J., & Dowds, J. (1998). The ethics of creative accounting.

Holthausen, R. W. (1990). Accounting method choice: Opportunistic behavior, efficient contracting, and information perspectives. Journal of accounting and economics, 12(1-3), 207-218.

 
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