Enron's directors realized that Enron's conflict of interests policy would be violated by Fastow's proposed SPE management and operating arrangements and they instructed the CEO, Andrew Fastow, as an alternative oversight measure, endure that he kept the company out of trouble. What was wrong with their alternatives?

Enron's directors realized that Enron's conflict of interests policy would be violated by Fastow's proposed SPE management and operating arrangements and they instructed the CEO, Andrew Fastow, as an alternative oversight measure, endure that he kept the company out of trouble. What was wrong with their alternatives?

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter2: Ethics & Governance Scandals

Section: Chapter Questions

Problem 5.4EC

See similar textbooks

Similar questions

Which of the following is true about the Sarbanes-Oxley Act? A. It was passed to ensure that internal controls are properly documented and tested by public companies. B. It applies to both public and smaller companies. C. It requires all companies to report their internal control policies to the US Securities and Exchange Commission. D. It does not require additional costs or resources to have adequate controls.
Assume that a corporate officer or other executive asks you, as the accountant for the company, to omit or leave out certain financial figures from the balance sheet that may paint the business in a bad light to the public and investors. Because the request does not involve a direct manipulation of numbers or records, would you agree to go along with the request? What ethical considerations exist for you in deciding on a course of action?
In 2005, Tony Menendez , a former ernst and young LLP auditor and director of technical accounting and research training for Hallibution, blew the whistle on Halliburtions accounting practices, the ................ Question: Describe the inadequacies in the corporate governance system at Hallibution ( This Is the case, for subject Accounting Ethics and Regulation )
Mr. George faced an ethical dilemma when his manager ordered him to send the customers data to outsiders without permission of customers. Mr. George followed the order of his manager. How he can he justify his action? a. His action is in accordance with the law of his country b. His action is based on the principle of non-maleficence c. His action is based on ethical norms of the society d. His action is based on a lack of freedom of choice and free will
However, the board is confused by the reference in the ASX Corporate Governance Principles and Recommendations to both independent directors and non-executive directors, as they thought that they were the same thing. As a result, they have sought your advice concerning the structure of their audit committee. Identify two key account balances at risk of material misstatement
Although top management’s attitude toward ethics sets the tone for business practice, sometimes it is the role of lower-level managers to uphold a firm’s ethical standards. John, an operations-level manager, discovers that the company is illegally dumping toxic materials and is in violation of environmental regulations. John’s immediate supervisor is involved in the dumping. What action should John take?
Why have there have been so many business scandals mentioned in the media over the past few years? Have companies simply gotten worse, or have people become more sophisticated in identifying improper activity? What is the role of the Accountant? Sarbanes-Oxley, for example, has placed much more responsibility on the CEO and corporate officers? Are there additional laws that should be considered to ensure these scandals do not continue to occur? Should non-executives be held liable for corporate wrongdoing? in 200 words, please.
At a recent board meeting of Dartig Co, a non-executive director suggested that the company’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non-executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the share option scheme if the stock market were in decline. Explain the nature of the agency problem. Discuss the use of share option schemes and performance-related pay as methods of reducing the agency problem in a stock-market listed company such as Dartig Co. I need help with a more detailed explanation to the responses
For each situation below identify and explain the threat and one fundamental principle that is comprised.- An accountant has compiled the financial statements for a client and was requested to also audit the statements.- The financial director of Baboo Ltd is very aggressive and dismissive of the audit function and audit team- A chartered accountant values a client’s shares and then leads the negotiations on the sale of the client’s company- The chartered accountant fails to report a fraud of a client because the perpetrator is a close friend and he issympathetic to the interest of his friend.
For each situation below identify the threat and one fundamental principle that is comprised.a) An auditor has shares in a company which is an audit client of theirs.b) An accountant has compiled the financial statements for a client and was requested to also audit the statements.c) The financial director of Baboo Ltd is very aggressive and dismissive of the audit function and audit teamd) A chartered accountant values a client’s shares and then leads the negotiations on the sale of the client’s companye) The chartered accountant fails to report a fraud at a client because the perpetrator is a close friend and he issympathetic to the interest of his friend.
AOW auditors found that Accord's management and board of directors did not fully disclose the stage of the appeal of the Civic Company case, had improperly deferred a material loss on ne product start-up costs as an element of its inventory, and had accrued sales revenue for promotional chip sales that carried an unconditional right of return. As partner in charge of the engagement, D. Ward agreed with the president that the accounting and disclosure were suitable to protect Accord's shareholders from adverse business developments, and he issued a standard unmodified opinion that was included in the entity's 10-K annual report filed with the SEC and dated April 1, 2021. On April 2, 2021, AOW then billed Accord for the $200,000 audit fee and sent a reminder for payment of the $265,000 consulting fee. Required: a. Was AOE independent for the audit of Accord for the fiscal year ended December 31, 2017? b. Did Ward and AOW follow generally accepted auditing standards in the audit?…
For each of the following management scenarios, (1) indicate whether you believe the scenario reflects negatively on management integrity, and explain why; and (2) indicate how the assessment would affect the auditor’s planning of the audit Management Scenarios: The owner/manager of a privately held company owns three other companies. The entities could be run as one entity but they engage extensively in related-party transactions to minimize the overall tax burden for the owner/manager. The president of a publicly held company has a reputation for being stubborn with a violent temper. He fired a divisional manager on the spot when the manager did not achieve profit goals. The financial vice president of a publicly held company has worked her way to the top by gaining a reputation as a great accounting manipulator. She has earned the reputation by being very creative in finding ways to circumvent pronouncement to keep debt off the balance sheet and in manipulating accounting to…