Presentation on theme: "Enron: An Extended Case Study"— Presentation transcript:
1 Enron: An Extended Case Study Jim RothwellAssistant Professor of AccountingHickingbotham School of Business Ouachita Baptist University
2 The Crooked E: Coincidence or Prophecy ? JAMES NIELSEN/AFP
3 Questions ? What happened within the company? What was the corporate environment and culture of the company?Who were the major players and their roles?What “red flags” were there for analysts, auditors, and others to observe?What accounting and auditing issues arose within the company?How did the Enron scandal impact the accounting profession?What did we learn from Enron?
4 Activities View the movie “The Smartest Guys in the Room.” View the movie “The Crooked E: The Unshredded Truth about Enron.”Read the book “The Smartest Guys in the Room.”Read the book “Anatomy of Greed.”Research the financial statements of Enron fromCreate a timeline of the major events related to Enron fromCreate a list of the major players and their roles in the Enron scandal and collapse.Identify the “red flags” of fraud that were evident within the Enron organization, culture, structure, and environment.
5 Enron Portfolio Major events timeline List of major players and roles Financial statement analysis and summary“Red Flags” paperImpact on the accounting profession paperRole of Arthur Andersen“What Did We Learn?” paper (personal reflection)Enron Quiz Questions
6 Accounting and Auditing Issues and Concepts (Cont.) Mark-to marketSPEs (off-balance sheet financing)Impact on the professionGovernment intervention
7 Accounting and Auditing Issues and Concepts (Cont.) Impact on the professionCollapse of Arthur AndersenSarbanes- OxleyPCAOBEthicsAccounting firmClientLegal LiabilitySocial ResponsibilityEvidence and documentation
8 Accounting and Auditing Issues and Concepts (Cont.) Social ResponsibilityEvidence and documentationAudit PlanningUnderstanding the client – corporate cultureUnderstanding the industry/marketRisk assessmentFraud risk factorsInternal ControlReporting Issues
9 Current Status Enron Arthur Andersen Legal issues and court cases Former executivesEmployeesArthur Andersen
10 Resources “The Smartest Guys in the Room” – DVD (video) The Smartest Guys in the Room: The Amazing Rise and the Scandalous Fall of Enron– Book (McLean and Elkind)“The Crooked E: The Unshredded Truth about Enron” – DVD (video)Anatomy of Greed – Book (Cruver)SAS 99: Consideration of Fraud in a Financial Statement AuditOther articles, presentations, literature, etc.