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2. A company's board of directors is responsible for acting in favor of the shareholders benefit, such as making major company decisions that could affect the shareholders. The Board of Directors hires and fires the executives, decides on dividend policies, option policies and, how much to pay the executives. In my opinion, I think that the board of directors could have changed some policies, been more aware of the risk involving the SPE's instead of letting things unfold the way that they did. The Board of Directors could have researched SPE's and learned more about the way they work, not to mention finding out how to account for them on the financial statements. There should have been policies in place regarding employee stock options, putting a limit on how much they bought or even sold at the time.

5. Rule based accounting standards differ from principle based standards in that rule based accounting standards provide very detailed rules in an attempt to contemplate every application of the standard, where as principles based standards is a more broader simpler approach based on applying the principles to accounting procedures which could be done differently from one company to another. The principle based standards would allow be broader, simpler statements of what accountants would have to look for. Changing from the bright-line rules to principle based standards is seen as a way to prevent another Enron-like fiasco in the future in that the bright-line rules lay down specific examples of how accounting standards. Companies like Enron were able to get around this by arguing that if there was not a specific rule that prohibiting what they were doing they would continue to do it, whether it made good business sense or not. If the principle-based standards had been in place rather than the bright-line rules it would have been easier for accountants to adhere to

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