1 . Define the problem(s)
Enron failed to record some of their transactions. Arthur Andersen did not allow the LJM financial declaration to stay unconsolidated. 2 . Assess the situation - again, have a " lessons learned" procedure. You might utilize following inquiries as manuals: A. What important interior controls were ignored once LJM1 was developed? LJM1 disregarded some of Enron's entries in the books that have been missing. Outsiders owned below 3% from the Special Goal Entities equities. There was a blunder made by Arthur Andersen to let LJM's financial statement to keep unconsolidated. In case the financial statements had been consolidated, some of the mistakes could have been located. They may possess even had some time to fix these problems before that had gotten until now out of control. There was clearly not regulating controls in place and deceitful activities were unlimited. Andrew Fastow created LJM1 to take care of investments with Rhythms NetConnections, high-speed Internet connection provider. The inventory that they discovered at $10 , 000, 000 was worth $300 , 000, 000 after a year. Enron tried to sell the stocks to an investor, in the event the share price decreased. They could not find an entrepreneur to purchase the stock in the put option because of the hazards that was involved. M. В How might Enron's harsh Performance Assessment Committee (PRC) have helped company management in doing the fraudulence? Enron's harsh Performance Assessment Committee (PRC) have aided company professionals in committing the fraudulence because the excessive turn over may well have caused them to look for revenge. Each of the Enron staff were scored on a scale of 1-5. The employees which might be at lower part of the scale were terminated and changed. The employee may possibly have well-known that they would not do so very well and would ne scored as the best score within the scale. They may have halted putting as much effort into the work because they recognized beforehand that they were going to be released. They may have got felt as though they required to get the returns that were deserved and needed,...
Case Study a couple of - Enron and Arthur Andersen