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Case 1.1 Enron

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Case 1.1 Enron Corporation
Saint Leo University

1. a. Andersen auditors – the auditors from Andersen failed to properly perform their professional auditing duties. b. Enron Board of Directors and top executives – the Enron executives focused on creating the foremost corporation, and with that goal performed many actions that would lead to the demise of Enron. Specifically, Kenneth Lay, Jeffrey Skilling, and Andrew Fastow are the masterminds behind the scheme. c. Accounting regulators – at the time of Enron, there was not as much regulation as there is post-Enron, so while there was no one specifically at fault for catching Enron in their actions, there should have been more regulation put in place as there is today to prevent this fraud.
2.
a. Executive professionals search/human resource services – a company’s auditing firm cannot also provide employee search services for them. The potential executives have a large amount of power in the company, therefore relating the two can serve as a powerhouse for internal fraud. b. Software design services – if the company’s auditor is the designer of the software being audited, there would be a large amount of bias on the auditor’s part to put the software in a positive light. This would make it difficult for the company to see where real improvements need to be made. c. Investment adviser – essentially the auditor’s job description is to evaluate the firm’s financial escapades. If an auditor suggests a certain investment, they cannot fully evaluate the legality of the investment process if they had a hand in it.
3.
a. Standards of Reporting – Assuming the excerpts to be true, Andersen did not adequately maintain an objective and independent attitude when auditing Enron.
b. Independence – Andersen became too far involved in Enron’s non-audit decisions, as stated in the excerpts. When Andersen began...

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