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Essay / Research Paper Abstract
A 5 page paper that discusses what steps various agencies are taking to avoid another Enron or WorldCom incident, particularly another Enron debacle. The writer notes the loss of investor confidence in corporate financial reports and the describes new regulations that will affect the FASB. The SEC has also initiated a new committee in wake of the Enron. Bibliography lists 8 sources.
Page Count:
5 pages (~225 words per page)
File: MM12_PGinvcnf.rtf
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Unformatted sample text from the term paper:
noted that recent events have made it clear there are very definite deficiencies in the system that are used to produce audits of corporate financial statements and these deficiencies have
reduced the efficacy of the nations capital markets (Pitt, 2002). The events have also caused investors to lose confidence in public companies, the companies financial reports and in the accounting
profession as a whole (Pitt, 2002). Enron Corporation and WorldCom were both involved in fraudulent accounting and auditing practices. In March 2002, two of the largest telecom companies, WorldCom and
Qwest Communications, found themselves facing investigations by the Securities and Exchange Commission for their accounting practices (Backover, 2002). Issues included sales commissions, accounting policies for goodwill, disputed customer bills, loans
to the companys directors and officers and the integration of the computer systems of MCI, a unit of WorldCom, and WorldComs accounting policies (Backover, 2002). The SEC is also investigating
earnings estimates by analysts (Backover, 2002). Enrons books were such a mass of partnerships, dummy companies, sales and purchases that even a Senate Committee could not get a clear idea
of what they had done. Every person involved in the situation gave a different story to the Committee and to the press. The companys auditor employed by Andersen allowed the
misrepresentations to go uncorrected. Hamilton and Leeds charged: "Andersen did not fulfill its professional responsibilities in connection with its audits of Enrons financial statements, or its obligation to bring to
the attention of Enrons board, concerns about Enrons internal controls over related-party transactions" (2002). And, Lynn E. Turner, former chief accountant for the Securities and Exchange Commission, commented: "Financial fraud
and the accompanying restatement of financial statements have cost investors over $100 billion in the last half-dozen or so years" (Hilzenrath, 2001). Andersen is the fifth largest in the world
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