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Describe and consider the lessons for auditors and regulators from Enron fraud
Finance & Accounting
Pages 12 (3012 words)
Describe and consider the lessons for auditors and regulators from the Enron fraud Introduction Auditing is simply defined as an investigative process performed to verify the reliability and accuracy of a company’s state of affairs for the last fiscal period.
It seems that even a well structured audit programme may fail to provide desired outcomes unless the whole audit team pays special attention to each and every phase of the audit process. The past decade witnessed a series of corporate scandals including Lernout & Hauspie, Arthur Anderson, Enron, WorldCom, Parmalat, Peregrine Systems, Rite Aid, and Homestore.com. Subsequent investigations have proven that majority of those failures were attributable to accounting fraud. However, these incidents greatly increased the significance of audit work and firms nowadays allot more money for developing internal control systems. Many of the economists argue that weaker corporate governance structure also greatly contributed to those corporate failures. As a result, organisations are vehemently trying to improve their corporate governance framework. Evidently, audit firms have made strategic amendments to their processes and procedures to detect frauds and errors in the account books of the client on time. This paper will analyse the lessons that auditors and regulators must learn from Enron Fraud. Enron Scandal: Overview In 1985, The Huston Natural Gas integrated its natural gas pipeline companies with those of InterNorth under the supervision of Kenneth Lay to form Enron. ...
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