Fraud Examination Enron Paper - 1140 Words

1. Define the problem(s) Enron failed to record some of its transactions. Arthur Andersen did not allow the LJM financial statement to stay unconsolidated. 2. Analyze the situation - again, take a lessons learned approach. You might use the following questions as guides: A. What important internal controls were ignored when LJM1 was created? LJM1 ignored some of Enron’s entries in the books that were missing. Outsiders owned less than 3% of the Special Purpose Entities equities. There was an error made by Arthur Andersen to let LJM’s financial statement to remain unconsolidated. If the financial statements had been consolidated, some of the errors could have been found. They may have even had some time to correct these errors before†¦show more content†¦The employees did what they had to do to stay in the running even if it was illegal. C. The fraud at Enron is one of many major financial statement frauds that occurred in recent years (Qwest, Global Crossing, WorldCom, etc.). What are some factors that could explain why the falsifying of financial statements is occurring so frequently? The falsifying of financial statements occurred so frequently because they were so much pressure for the employees to succeed. The turn over at Enron was so high. The employees were kind of desperate to keep their jobs. All of the employees were forced to compete against each other. The pressure was there for employees to make sure that their peers did not out do them in all aspects. It is hard for the employees to stay honest as they are working under those kinds of pressure. They had all the opportunities to hide all negative debts and poor investments. D. Suppose you are a certified fraud examiner but enjoys investing in the stock market as an additional source of income. Upon doing research of Enron’s stock, you notice that although its stock has a history of strong growth and a seemingly promising future, Enron’s financial reports are unclear and, frankly, confusing. In fact, you can’t even explain how Enron is making money. Could this lack of clarity in its financial reporting serve as a red flag in alerting you to the possibility of fraud at Enron? Why or why not? I believeShow MoreRelatedAnalyzing Ethical Behavior920 Words   |  4 PagesANALYZING ETCHICAL BEHAVIOR PAPER Analyzing Ethical Behavior Paper Chad L. Million Grand Canyon University BUS-340 Ethical amp; Legal Issues in Bus. Glen Germanowski July 25, 2010 Analyzing Ethical Behavior Paper When functioning in the corporate world, it is an essential to include moral ethics. Ethics is also particularly imperative when laboring with financial information. It is very hard to have faith in someone managing plenty of money. Corporations in the past have distortedRead MoreEnron : The Smartest Guys Of The Room Essay1549 Words   |  7 PagesIntroduction Enron was a Houston based energy, commodities and services company. 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