Doncouse_Jeremy_Week6

Doncouse_Jeremy_Week6 - Running head: Extensive Case 1 Week...

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Running head: Extensive Case 1 Week 6 Extensive Case, Chapter 12 Jeremy Doncouse Mountain State University
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Running head: Extensive Case 2 Extensive Case 12. 1. What important internal controls were ignored when LJM1 was created? Because there was not a significant outside investment in LJM1 it should have been consolidated into Enron, a lack of judgment on the part of Arthur Andersen. Enron should not have allowed Fastow, its CFO, to run LJM1 because this lack of oversight was sure to result in fraudulent activity. 2. How might Enron’s harsh Performance Review Committee have aided company executives in committing the fraud? The Performance Review Committee created a perceived pressure to either perform or be terminated from employment. This perceived pressure is what caused many employees to seek a good review by fraudulent means. Plus, it also limited employee’s ability to express opinions or concerns for fear of being ranked too low and fired. 3. What are some factors that could explain why the falsifying of financial statements is occurring so
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Doncouse_Jeremy_Week6 - Running head: Extensive Case 1 Week...

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