It was the biggest bankruptcy in US history and cost 4‚000 employees their jobs. 1.1 The Reasons for Scandal Top Level Management & Board of Directors – Enron Bent the Accounting rules to satisfy their own desires to earn short term profit SPE Laws Accounting Laws The Immoral and unethical actions taken to achieve personal profits Violated Top Level Management & Board of Directors –
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exercise prudent judgment‚ failed to challenge management when necessary‚ and‚ as a result‚ failed to adequately protect the interests of the shareholders. 9. Identify the conflict of interest in: SPE activities‚ Arthur Andersen’s activities‚ and Executive activities. The conflict with the SPE was that Enron was keeping their losses off of the end of year reports to offset other dealings that were not profitable. If true numbers had been reported losses would have been seen and not covered
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Learning Outcomes and Assessment Feedback Name of the Assessor Learning Outcomes Assessment Criteria (AC) Assessor Feedback LO 1 Understand the relationship between strategic management and leadership 1.1 Explain the link between strategic management and leadership 1.2 Analyze the impact of management and leadership styles on strategic decisions 1.3 Evaluate how leadership styles can be adapted to different situations LO 2
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IBCCI’s Misgivings: Four major frauds explained in the Price Waterhouse report. 1. According to the Sandstorm Report‚ some $633 million of losses related to treasury trading. 2. Price Waterhouse had been doing its job‚ there’s no way that this $1 billion exposure [in BCCI’s Central Treasury] which was taken to $11 billion exposure in the course of 3 or 4 months [in 1985] could have happened. 3. All of BCCI’s serious treasury problems were related to the activities at Grand Cayman
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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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In the recent years Redlands Manufacturing‚ Inc. has been audited and subjected to constant fiscal penalties due to fraudulent financial reporting on the companies part. Due to the following incorrect procedure the company has had to paid a tremendous amount fines: Channel Stuffing: Incorrect Practice: For financial gain‚ Redlands Manufacturing‚ Inc. shipped equipment to vendors with out a full merchant agreement and agreed to except returned merchandise back if it was not sold by yearend
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strategies for Enron rather than created hundreds of SPEs to remove assets and debts off balance sheet‚ the picture of Enron could have made a difference. Secondly‚ if the audit committee of Enron could point out all those aggressive and risky accounting treatment and propose solutions‚ then the afterward damages could be eliminate or at least minimized. c. The BOD of Enron should have known about the risks and apparent lack of independence with those SPEs. They should have listen to some of the accountants
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Pandora Pandora ad terram mittebatur. Sed Pandora erat curiosa*. Pandora operculum (lid‚ acc. sing.) ollae removit. Multa mala (evils‚ nom. pl) erant in olla! Mala (evils) ad terram volaverunt. Eheu! (Alas!) Una anima in olla mansit--Spes (hope‚ nom. sing). Hodie spes remanet cum hominibus (human beings‚ abl. plural). Pandora was let go by the earth. But Pandora was curious. Pandora lid much evils were in the jar! Evils by earth did fly. Alas! One spirit in jar remained --- hope. Today hope remains
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Table of Contents Introduction 2 How it happened? 2 Financial Reporting Issues 3 Trading Business and Mark to Marketing 3 Reporting Issues for Special Purpose Entities 3 Other Accounting Problems 4 Governance and Intermediation Failures at Enron 4 Role of Top Management Compensation 4 Role of Audit Committees 4 Role of External Auditors 4 Role of Fund Managers 5 Role of Accounting Regulations 5 The Sarbanes Oxley Act 5 Did it help? 5 Bibliography 6 Introduction Kenneth
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daughter on top of this mountain‚ the climbing of the mountain was Ike’s long journey‚ to realization. It ends with Ike saying that they can come down off the mountain‚ symbolizing that everyone had finally realized the guilt‚ and the start of everyone on spes working towards a solution to fix what they had
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