Accounting Issues at Enron
The failure of Enron sent shock waves through the economy, resulting in a series of reforms that will change accounting standards setting, auditing practice, and the financial reporting environment. The authors integrate a short history of the rise and fall of Enron with a discussion of the analytical procedures that would have revealed the sham operations accounted for there.
Due Professional Care In Cases Of High Engagement Risk
Auditing concerns that are particularly relevant on high-risk engagements such as Enron include going-concern assessments; related-party disclosures; subsequent discovery of facts; auditor independence; audit documentation; and loss contingency disclosures. This article examines each, and the authors discuss the relationship between due professional care and an auditor's legal liability.
Why Management Fraud Is Unstoppable
Management fraud is unstoppable because no controls, past or present, exist to completely control management's actions. Because of the way internal controls have been constructed, they can generally be overridden by management whenever they prevent it from attaining its objectives. This hampers corporate governance in its present form, and the author believes improvements are sorely needed.
When Good Assets Go Bad
When economic conditions get tough, managers size up their operations and look for ways to cut costs, including costs related to asset carrying values. Many corporations, auditors, and analysts expect to see a lot of restructuring and writedowns in the near future in accordance with the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
The IRS' Right to Setoff Under the Bankruptcy Code
To collect unpaid federal income taxes from bankrupt debtors, the IRS must pursue its claim as a creditor of the bankruptcy estate. A recent court decision should expand the IRS' right to setoff under the Bankruptcy Code in cases where the provisions of the Internal Revenue Code and the Bankruptcy Code conflict.