Contents EXECUTIVE SUMMARY 1 INTRODUCTION 3 CHANGES IN REGULATIONS 3 CHALLENGES AND RESPONSIBILITIES 4 RESPONDING TO THE CHANGES 4 Research Studies 4 Response to Surbanes-Oxley Act 5 Response to the European Commission’s proposals 6 Enron Failure 6 Arthur Andersen failure 6 Lehman Brothers failure 6 Ernst & Young failure 7 Detection of fraud 7 Going Concern 7 MINIMISING LITIGATION RISK 7 Obstruction of Justice 8 Consultancy service 8 Conservative Audit 8 Conclusion
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How could the ENRON scandal been avoided? The Enron scandal could have been avoided had they had an organizational culture of honesty‚ integrity and ethics 1. There should have been stronger management and better ethical oversight. Even employees should have had a sense of the expected ethical values and try to maintain a strong sense of organizational culture. 2. There should have been measures in place to oversee the activities of accounting firms (Arthur Andersen)‚ as they acted as both Enron’s
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How might theories of leadership and group identity help to explain the Enron collapse? Leadership means to motivate‚ influence and enable others to helps contribute towards the sucess of the organisation. The leadership of a company is one of the biggest reasons why a company will either fail or suceed. The leadership is the reason why Enron as a company failed‚ the leaders were inside trading with the companies stock shares for almost 10 years‚ which caused them to lose over 11 billion dollars
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Kenneth Lay founded Enron in 1985. Two years after its founding‚ the company becomes embroiled in scandal after two traders begin betting on the oil markets‚ resulting in suspiciously consistent profits. Enron’s CEO‚ Louis Borget‚ is also discovered to be diverting company money to offshore accounts. After auditors uncover their schemes‚ Lay encourages them to "keep making us millions". However‚ the traders are fired after it is revealed that they gambled away Enron’s reserves‚ nearly destroying
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Which segment of its operations got Enron into difficulties? The fall of Eron has understandably generated significant interest in the professional literature as well as in the popular press. The activities and events underlying Enron’s collapse are manifold‚ but several stand out as particularly noteworthy. One is the use of special purpose entities (SPEs). Although SPEs often serve legitimate economic purposes and are still in use today‚ Enron used several of them to hide debt and to overstate
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Ten Things You Can Do to Avoid Being the Next Enron May 29‚ 2009 Document Ten things your company can do to avoid being the next Enron: 1. Examine your ethical climate and put safeguards in place. Corporations are composed of cultures. Take a good close look at your culture. What are the norms of behavior? What is valued? Are employees rewarded for succeeding at any cost or are they urged to be shepherds of the corporation’s reputation as well as its assets? What pressures do they face to commit
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“Describe how Enron could have been structured differently to avoid such activities” Enron consisted of a Board of Directors‚ Chief Executive Officer (CEO)‚ Chief Operating Officer (COO)‚ Chief Financial Officer (CFO)‚ Chief Accounting Officer (CAO) and a plethora of other officers. The upper level structure of Enron was normal compared to many other large businesses. The Board of Directors is charged with making policies for the company and the CEO and other officers are responsible for carrying
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some research on the Internet about what has happened with Enron. Now apply the three questions used to test the merits of a winning strategy (text p13) to Enron. Describe the strategic management failure in Enron that led it into its demise? Enron was formed in 1986 from the merger of natural gas pipeline companies Houston Natural Gas and Internorth. At the time of filing for Chapter 11 Bankruptcy protection in December 2001‚ Enron had a portfolio of diversified activities ranging from the transportation
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The Enron Case Questions: 1. Do you believe that there has been a significant shift or evolution over the past several decades in the concept of “professionalism” as it related to the public accounting profession? If so‚ explain how you believe that the concept has changed or evolved over that time frame and identify the key factors responsible for any apparent changes. a. Do you believe that there has been a significant shift or evaluation over the past several decades in the concept
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T. GLENN/AMBA 640/WEEK 2 Project Mismanagement How miscommunication and lack of ethics almost destroyed a project Timothy Glenn 7/17/2011 T. Glenn/AMBA 640/Week 2 Executive Summary Hiring Gary Allison as the Project Manager for the Orion Shield Project was a big mistake. One must question both the judgment and ethics of Henry Larson in hiring an inexperienced person to lead such an extensive project. Many erroneous decisions were made by Gary as he erroneously heeded the poor and unethical
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