Case 1.1
Yoyo Chen (Former Yen-Hui Chen)
Professor Arthur Dignam
Acct 723
09/12/2013
Case 1.1
1. There were the parties that were responsible for Enron’s crisis: Enron’s managers since they did not tell those auditors the truth about Enron’s fraud. Anderson’s senior managers since they did not check those individual auditors’ work was sufficient or not. They also were responsible to discover the problems in Enron’s. Anderson’s individual auditors since they did not make proper and professional decisions as individual auditors were supposed to do. Regulatory authorities since they were supposed to prevent Enron’s managers to effect Anderson’s individual auditors. Accounting academics since they were supposed to guide their students as future auditors to deal with the problems in the real auditing procedure. Bankers since they were supposed to be able to find the fraud in their clients’ financial statements when other parties traded those securities with Enron.
2. Anderson’s auditors provided these prohibit services to their public company client Enron: offering consulting service to Enron about their daily accounting decisions and operations which states as “bookkeeping or other services related to the accounting records or financial statements of the audit client” in Section 201 Sarbanes-Oxley Act of 2002. Anderson’s auditors were also deeply involved in Enron’s Accounting system software creation and financial reporting which violated the prohibit service as Sarbanes-Oxley Act of 2002 states “financial information systems design and implementation”. As independent auditors, Anderson’s auditors accepted the fees from Enron as their public company audit client and provided them legal consulting service, which violated the prohibit service as Sarbanes-Oxley Act of 2002 states “legal services and expert services unrelated to the audit”.
3. When Anderson’s auditors were too involved in Enron’s daily Accounting operation, they had loss their independence as independent
Professor Arthur Dignam
Acct 723
09/12/2013
Case 1.1
1. There were the parties that were responsible for Enron’s crisis: Enron’s managers since they did not tell those auditors the truth about Enron’s fraud. Anderson’s senior managers since they did not check those individual auditors’ work was sufficient or not. They also were responsible to discover the problems in Enron’s. Anderson’s individual auditors since they did not make proper and professional decisions as individual auditors were supposed to do. Regulatory authorities since they were supposed to prevent Enron’s managers to effect Anderson’s individual auditors. Accounting academics since they were supposed to guide their students as future auditors to deal with the problems in the real auditing procedure. Bankers since they were supposed to be able to find the fraud in their clients’ financial statements when other parties traded those securities with Enron.
2. Anderson’s auditors provided these prohibit services to their public company client Enron: offering consulting service to Enron about their daily accounting decisions and operations which states as “bookkeeping or other services related to the accounting records or financial statements of the audit client” in Section 201 Sarbanes-Oxley Act of 2002. Anderson’s auditors were also deeply involved in Enron’s Accounting system software creation and financial reporting which violated the prohibit service as Sarbanes-Oxley Act of 2002 states “financial information systems design and implementation”. As independent auditors, Anderson’s auditors accepted the fees from Enron as their public company audit client and provided them legal consulting service, which violated the prohibit service as Sarbanes-Oxley Act of 2002 states “legal services and expert services unrelated to the audit”.
3. When Anderson’s auditors were too involved in Enron’s daily Accounting operation, they had loss their independence as independent