Enron Corporation, one of North America's largest and most profitable corporations was founded in 1985. The company

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Question:

Enron Corporation, one of North America's largest and most profitable corporations was founded in 1985. The company was by and large an oil and gas trader. In 2000 it reported revenues of $101 Billion dollars US. In 2001 it was bankrupt. Its common shares traded at a high of $90 US in mid-2000 and in the fall of 2001 they were trading for less than $1. Enron's financial auditors, Arthur Anderson, one of the largest worldwide public accounting firms would dissolve its partnership as a result of this financial scandal. You are required to write a paper, not just a listing of the questions and answers, which addresses, at minimum, the following:

1) An overview of events leading up to the scandal of Enron. Be sure to mention key figures and the pressures the company faced.

2) What were the inherent risks at Enron which the auditor should have been concerned with?

3) In your own words, discuss the key accounting policies of Enron (SPEs, rules vs. principal-based standards of accounting, mark to market accounting, and their recording of revenues).

4) Discuss the fall-out of Enron. What happened to the key figures? Arthur Anderson? Do you think the penalties were too much, too little?

5) Discuss the purpose of an audit and the role of the auditor. Was Arthur Anderson in breach of practice, professional, and ethical standards? If so please explain why.

6) In your opinion why did the Enron scandal happen? Who was at fault?

7) Briefly explain the Sarbanes Oxley Act. Could it have prevented the Enron Scandal? What do you think could have prevented it?

In addition to the above marks will be awarded for having a good introduction, conclusion, formatting, and spelling. Your paper is to be doubled spaced, and not contain more than 3,000 words. Grades will be deducted for papers which do not meet this requirement.