Week 12 - Part A: Answer the below questions from chapter 15: 1. Describe the differences between statistical and non-statistical sampling in terms of (1) the sample selection methods used‚ and (2) quantification of sampling risk. Ans: Nonstatistical sampling differs from statistical sampling in that non-probabilistic sampling can be used for the former but not the latter. In addition‚ sampling risk can be quantified when using statistical sampling but not when using nonstatistical sampling
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Unit 11639 Assessment Apply Consumer legislation to a given fact situation Navi Student ID: Due Date: 5th Aug 2013 Assessment Part 1: Apply selected provisions of the Fair Trading Act 1986 to a given fact situation. 1a) The fair trading act in 1986 defend consumers by prohibiting dishonest or deceptive conduct in trade. It requires that all trading activities are based on right and true information. In this case‚ under the defences available in the act‚ he was not
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Unit 5 GEL Assignment – The Scientific Method Refer to Chapter 11 of the textbook‚ Objective Question 11-38. Assume that fraud has been discovered in the “Possible Errors and Fraud” list‚ shown as A through O in the problem. Select two of the fraud items from the list and note them here: Fraud Item #1 Invoices for goods sold are posted to incorrect customer accounts. Fraud Item #2 Invoices are sent for shipped goods and are recorded in the sales journal‚ but are not posted to any customer
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obligations. If the company performed poorly‚ the investors may hesitate to do business with Enron. 3 - In your own words‚ summarize how Enron used SPEs to hide large amounts of company debt. Enron created SPE’s (usually other LLP’s) in order to create cash inflow but did not record the investments and related liabilities (the loans used to create the SPE). Enron used outside investors to secure the new SPE’s. The new investors would bear the risk of the investment and Enron used its company stock
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1. What did Arthur Anderson contribute to the Enron disaster? Arthur Andersen (AA) contributed to the Enron disaster when AA consulting became its own separate entity‚ named Accenture. Revenues from consulting services surpassed revenue from auditing services. A natural competitiveness grew between the two rivals and this is where the problems began to start. Management held maximinizing revenues as their primary focus of success and promotions/bonuses were based on this factor. The CEO of AA‚ Joe
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disaster is the approval of the structure of Special Purpose Entities (SPEs) that were used to generate false profits‚ hide losses and keep any unfavourable information out of Enron’s consolidated financial statements. 2) Which Arthur Andersen decisions were faulty? During auditing of Enron’s documents‚ AA has made many decisions which led to their downfall. AA has approved for the structure of Special Purpose Entities (SPEs) which generate
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I THE RED FLAGS and the Allegations by the SEC -1996‚ Ruttenberge family sold a large chunk of stocks for $49.6m on the second public offering while the financial statements continuously showed positive trends - The financial statements analysis - Cash flows were negative while profit was reported. Early 1999‚ liqutity problem arised‚ sold $200M of high-yield or Junk bonds in mid 1999. - Justice Department: Adam Gilburne: guilty to conspriracy to commit wire and securities fraud to inflate
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References: * Bob Lyke.CRS Report RS21120‚ Auditing and its Regulators: Proposals for Reform After Enron. * JOINT COMMITTEE ON TAXATION‚ 2003 Report of investigation of Enron corporation and related entities regarding federal tax and compensation issues‚ and policy recommendations * McLean‚ Bethany
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1. The Enron executive team including Kenneth Lay‚ Jeffrey Skilling‚ Andrew Fastow and other executives‚ were the key players in the crisis. The business practices they used when creating hundreds of SPE’s and diverting large amounts of liabilities to those off-balance sheet entities. Enron was aware of the minimal accounting guidelines for SPE’s and used them to their advantage. To create such a complex “paper” structure‚ the executives had to have coordinate their plans with the accountants
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and the board of directors of Enron. d. The Regulatory agencies and accounting groups: The SEC and the FASB provided little in the way of formal guidance for companies to follow in accounting and reporting for SPEs. The gaping loophole in accounting practice allowed companies to create SPEs which had controversial exception. This exception worked in favor of Enron. The lack of PCAOB to oversee the rule
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