ASSIGNMENT

Assignment

Assignment

It is anticipated that the accountancy profession would play quite an important function in scandals such as Enron, Xerox, and Worldcom, as all they all deal with the financial accounts not displaying a true and equitable outlook the company. Hence it is the function of accountants to arrange and ascertain the financial statements. Therefore I seem that in the term paper it is worth investigating who precisely in the accountancy occupation was to blame for each action in scandals, and display how 'accountants move easily from watchdogs in their capacity as auditors to being the architects of quick-witted agreements and deceptions as CFO's and CEO's.' (lies condemn lies)

In the statement of Auditing Standards 100, released on March 1995, we are notified that 'the blame for the preparation of the financial statements is that of the controllers of the entity'. Therefore the auditor is only to blame to proceed as a watchdog and make certain that the controllers' of the company have arranged the statements in accordance to Auditing and Accounting measures.

Authur Andersen LLP (Enron's auditors) were thus responsible in providing shareholders with 'reasonable promise' that the financial statements offered a true and equitable view of the company's financial position. Consequently one could contend that because they failed to do this that they were solely responsible, as far as the public is worried, in Enron's scandal. The detail that thousands of sheets of documents were shredded verifies on itself that Andersen was guilty of deception, as this is a violation of the regulation and fairness Department.

In answer to these accusations Andersen asserted that their only function in this scandal was to 'express an attitude on the financial statements prepared by the company,' (accountancy age) and thus will hold themselves to blame for any errors in the auditing. In supplement to this it has been 'publicly acknowledged that there was one mistake of judgment in the remedy of one joint venture' (Accountancy Age). Though in another partnership issue, they have kept safe their case in saying that they were not supplied with the necessary data by Enron. According to SAS 600 it was Andersen's function to qualify the financial statement, and therefore disclaim it if the effect of this limitation of scope was pervasive sufficient to make the statements as deceptive as they were.

However the position was much more convoluted than this, as it was Enron who prepared the financial statements in the first place. It is accepted that the financial statements were arranged in such a way that they would display a earnings, and failed to report billions of dollars in debt. This was done to make its supply appealing to unsuspecting investors.

As accountants Andersen had an obligation to be neutral in analyzing the company's financial statements, and making certain that all financial transactions were duly reported. Therefore we should inquiry Andersen's motive to accept such manipulated accounts. The cause been easy, they were paid $52 million last year, therefore not only were they been paid for auditing work ...