It has been said of Allco Finance Group Limited that essentially, Allco borrowed too much to fund its expansion, which included assets like trains, planes and property (Lannin, 2010). Allco Finance Group Limited shares plummeted in 2008 during the global financial crisis. A trigger event (or review event) occurred on 17 November 2008, which made it virtually impossible for the company to continue. In December 2010 Australian Securities & Investments Commission (ASIC) found that ASIC Allcos financial report for the financial year 1 July 2006 to 30 June 2007 contained a misclassification of interest bearing loans (IBLs) as a non-current liability rather than a current liability, in the amount of $1,877,706,000. ASIC accepted an enforceable undertaking from the KPMG auditor of the financial statements (see http://www.asic.gov.au/asic/asic.nsf/byheadline/10259AD+ASIC+accepts+enforceable+undertaking+from+auditor+of+failed+Allco+Financial+Group+Limited?openDocument ) The company has now been wound up and delisted. (http://www.delisted.com.au/Company/10428) Required: (a) Research the details of Allcos trigger (review) event. What was it and why was it significant for the company? (3 marks) What was it? (1 mark) Why was it significant for the company? (2 marks) (b) Access Allcos 2006-2007 Annual Report (available on Blackboard) and answer the following, providing page references to the report: (i) Calculate the debt to assets ratio of the consolidated entity at 30 June 2007 and explain what it means. (3 marks) (ii) Calculate the % of total Interest-bearing loans and borrowings that were classified as current. (2 marks) (iii) Calculate the % of Interest-bearing loans that should have been classified as current, according to the ASIC finding. (4 marks) (iv) What difference do you think it would have made to the users of Allcos 2007 Financial statements, to know that current liabilities for Interest-bearing loans were much higher than reported? (2 marks) (v) Examine Allcos 2006-2007 Balance Sheet and comment on the way assets and liabilities have been classified. Is this acceptable according to Australian accounting standards? (2 marks) (vi) Locate the Independent Auditors Report in the Annual Report. Identify the four specific assurances given by the auditor in his Opinion. In the light of subsequent events, were all these valid assurances? (2 marks)