Forensic Investment

1144 Words5 Pages
Situation analysis Important internal controls that were ignored? The auditors of Enron did fail in their task of providing a duty of care to all of the parties. The main reason for this is that they failed to correctly audit the assets and financial position of Enron resulting in all stakeholders having no clue about the forthcoming collapse of Enron. This resulted in the stakeholders facing a very critical condition or a phase where in they were not sure if they would be able to recover their investments and debts or not. The auditing process has revealed several issues and findings of problems within the accounting system and the same have been discussed as the primary areas of exposure, areas of possible mishandling of accounts…show more content…
Pacts, specifically in the financial department were done rapidly without scrutinizing whether they were harmony with organizations risk management rule or goals. 3. Opportunity is one factor that can explain why falsifying of financial statement is occurring frequently it is common through weakness in the internal controls which includes insufficient supervision and review by board of directors of some organization, separation of duties, oversight and management approvals that are not consistent with the organization goals as well as system controls. Pressure also is another factor which relates from non realistic time frames and performance targets arising from conspiracies between employees and third parties. 4. When there is lack of clarity or any unclear financial report that is most of the times inconsistent like in the case of Enron, this is a clear indication of a red flag some one especially auditors under strict supervision should consider taking action. Investigations and analysis in fraud cases consistently show that red flags were actually present and that there were in many instances recognized or upon recognition they were never acted upon. When red flags are discovered suitable action should be swift though, mistakes are most times errors types
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