Audit systems, Financial Management

Enron did not manages its trade account receivable in significant manner that made huge financial loss for the organizations. Hence, the management faced biggest fraud due to the failure of audit systems. This scandal did tack place due to the gap in the accounting systems of general accepted accounting principles. This scandal had been done by the auditor of the company by that the organization did not retain its balance sheet and it increased the level of confusion in the mind of investors and shareholders. The auditors did not able to present income level of the company, cash flow up, the values of asset inflation along with the liabilities off the books that reduced the transparency in the auditing system of the company (Greene, 2013). On the other hand, the auditors met with the top management of the company in limited time that also restricted them by taking each consideration related to regular checking about the condition of trading accounts.

The chief financial officer of Enron along with other executives misled the audit committee members and board of directors that increased the high-risk accounting practices that was very important for the auditors to reduce the risk. The organization also not disclosed its hearing process to the investors. The fraud was uncovered by Bethany McLean's in a meeting with the financial officers of the company. She pointed out that how the organization of Enron could manage its stock value in the market at that time, when its earning is below 55 times from earnings (Greene, 2013). She also commented that how the management of Enron provide the information to the investors and shareholders of the company related to the earning of the company at that time when the company is earning low revenues.

Posted Date: 4/3/2013 2:41:00 AM | Location : United States







Related Discussions:- Audit systems, Assignment Help, Ask Question on Audit systems, Get Answer, Expert's Help, Audit systems Discussions

Write discussion on Audit systems
Your posts are moderated
Related Questions
Which of these two methods is better: discounting the Equity Cash Flow or discounting the Free Cash Flow? The results we get by discounting the Equity Cash Flow and the Free Ca

ON THE BASIS OF TIME • Long term budget :  as per the National Association of Accountants, America, a long term budget is a systematic and formalized process for purposeful co

Company Z has just been organized. It is expected to experience zero growth next year and grow at a 10% rate in year 2.  Beginning in the third year the company should attain a 5%

Is it possible to use a constant WACC in the valuation of a company with a changing debt? Theoretically, the WACC can only be constant if a constant debt is expected. If the de

This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment.  The report is due in Week 10, in needs to be at least 5 pages,

Future V alue The value of an investment is based on the rate of interest paid at set time periods and at some point in the future. Future values incorporate both the i

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio points out how much investor are willing to pay for each dol

QUESTION (a) What are the main benefits of E-Banking to customers and banking institutions? (b) Internet Banking products and services are of two primary types, informationa

(a) One could obtain a market arbitrage position as follows: buy Honeywell shares as well as sell General Electric shares. If the merger gets place the Honeywell shares will conve

What are the objectives of the Insurance Companies? Insurance companies: The main objective of insurance companies is to prevent individuals and firms (termed as policy-h