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The lessons for auditors and regulators from Enron fraud - Essay Example
Author : gerholdcade
Finance & Accounting
Pages 12 (3012 words)
The researcher of this paper will analyse the lessons that auditors and regulators must learn from Enron Fraud. The researcher of this paper will also attempt to describe and consider the lessons for auditors and regulators from the Enron fraud…
This paper concerns the auditing as an investigative process performed to verify the reliability and accuracy of a company’s state of affairs for the last fiscal period. A comprehensive and authentic audit report adds to shareholder values and assists the company’s stakeholders to analyse how the management has responded to their financial interests. In addition, business decisions of third party stakeholders such as banks, other lending institutions, and investors are centred on the company’s annual audit report. 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. ...