Arthur Anderson Questions week 2 assignment

Arthur Anderson Questions week 2 assignment - 1 What did...

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1. What did Arthur Andersen contribute to the Enron disaster? Arthur Anderson did not protect the shareholders or stakeholders of Enron. They did form a governance system for Enron which left all the directors and other employees at risk. They were concentrated on revenue recognition more than anything else. Overall, they neglected responsibilities that come along with all the financial reporting for Enron. They also failed to recognize the GAAP that prohibits the recording of shares issued as an increase in shareholders’ equity unless they are issued for cash. They did advise Enron’s audit committee that Enron’s CFO and his helpers were involved in significant conflict on interests situations without adequate alternative means of managing these conflicts. Many transactions between Enron and the SPEs were not in the interest of Enron shareholders since: Enron profits and cash flow were manipulated and grossly inflated, misleading investors and falsely boosting management bonus
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