corporate governance and restore investor confidence. It was sponsored by US Senator Paul Sarbanes and US Representative Michael Oxley. The act was passed in response to a number of major corporate and accounting scandals, the most popular being Enron, in the United States (audit-is.com/legislation/sox.htm, 2011). As a result of Enron’s scandal and public bankruptcy, congress passed the act which required all public companies that have business in the United States to have an accounting framework
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Running Head: ENRON CORPORATION Enron Corporation July 20, 2011 Based in Houston, Texas, Enron Corporation was an American energy, commodities and service company. Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Enron employed approximately 22,000 employees and was one of the world’s leading electricity, natural gas communications, and pulp and paper companies before its demise in late 2001. For six consecutive years, Fortune named Enron "America's
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(CBS) The stock markets got another king-sized jolt Tuesday as WorldCom revealed what could turn out to be one of the biggest accounting scandals in U.S. history. The telecommunications company said it had fired Chief Financial Officer Scott Sullivan, and accepted the resignation of senior vice president and controller David Myers, after an internal audit found improper accounting of more than $3.8 billion in expenses over five quarters. The misstated billions are also very bad news for ordinary
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Enron and Arthur Andersen Accounting Scandal The Enron accounting scandal resulted in a loss of reputation to Arthur Andersen which was a result of fraudulent financial statement reporting. Crimes discovered included irregular accounting procedures which could be turned in as fraud which involved Enron and Arthur Andersen as its accounting firm. They were found to have committed wire fraud, security fraud, making false statements to banks, creating several “independent” companies, called “Special-Purpose
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Assignment #6 10. Create your own “financial shenanigan” and explain how it might work. Do not use the shenanigans described by Schilit. A “financial shenanigan” is the act or practice of buying and selling securities on a portfolio immediately before a report is due in order to make the portfolio look more profitable than it has been. For example, as the industrial sector portfolio manager of Fordham’s Student Managed Investment Fund I will sell stocks that have performed poorly (i.e.
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Within the last ten years corporate scandals such as Enron, WorldCom, Tyco, etc., triggered Congress to pass the Sarbanes-Oxley Act of 2002 (Ross, Westerfield, & Jaffe, 2010). False reporting of financial transactions was the number one commonality in all the scandals. In every case, shareholders of the companies suffered hefty losses due to the misrepresentation of the transactions. Almost $11 billion was lost by the shareholders of Enron (Blackburn, 2002). WorldCom shareholders lost about $194
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Generally Accepted Auditing Standards Jessica Lyle ACC/491 February 17, 2014 Dwayne Thompson The auditing process is an important part of the financial system. The auditing of a company provides a means of accountability, and it ensures that the financial information provided by the company is accurate. This is significant because investors use these financial statements in order to determine the value or financial health of a company. When conducting an audit, it is important to take into
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Enron as an ethical dilemma can only be described as a travesty. The violations of ethical code and moral obligation ceased to exist while the company was alive. A tremendous contributor to the scandal is Arthur Anderson, who was Enron’s outside auditor since 1985. Arthur Anderson was able to hide major losses from Enron. Many projects that had failed through Enron seemingly went unnoticed as they were covered up by Anderson. Not only was this illegal, but it was ethically wrong of Anderson and Enron
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ANALISYS FOR CONSERVATIVE RECOGNITION OR COOKIE JAR RESERVES Summary: O’Brian Software is a family software firm started by Amelia O’Brian. She started the company on a very small scale many years ago, but it has grown tremendously over time. The company went public and she now holds the position of chief executive officer at the company, while managing the majority of the business operations herself. Nick, who is Amelia’s nephew and a recent graduate with an accounting degree, began
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concept and rationale behind mark to market accounting and it’s significance to Enron. When the President of Enron, Kenneth Lay, hires new CEO Jeffrey Skilling, a very energetic and a “dreamer” who joins Enron on the condition that they utilize mark-to-market accounting, allowing the company to book potential profits on certain projects immediately after the deals are signed. To keep its stock price going up par example Enron began a venture that might make $50 million 10 years from now, it could claim
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