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Accounting abuses: difficulty of proving fraud by CEOs, 69; studies of, 30–35; types of, 30–31. See also Enron Accounting and auditing enforcement releases (AAERs), 31–32 Accounting firms. See Arthur Andersen; Auditing and auditors “Agency” function of accounting, 20 AICPA. See American Institute of Certified Public Accountants American Institute of Certified Public Accountants (AICPA): failure of enforcement by, 43–44; on fair value accounting, 39; function of, 21, 23; selfinterest problems of, 66; XBRL creation by, 89 Arthur Andersen: consulting business of, 72; failure as auditor, 2, 66; liability for litigation, 72; litigation against, 43; role in Enron scandal, 2, 24, 26, 28, 29–30, 58; sanctioning of, 2, 45; and SPE accounting by Enron, 51, 58 Assets: fair value of, 38–41; overstatement of, 31. See also Intangible assets; Valuation Audit committees. See Board of directors Auditing and auditors: costs of scandals for, 34; discipline for violations, 45–46; ethical and professional standards needed for, 77; external auditors, role of, 21, 23, 85; and fair-value accounting, 40; incentives for accurate auditing, 13, 71–72; increasing costs of audits for clients, 13, 73–74; individual auditor responsibility, 45, 72; liability of auditors , 42, 72; litigation against auditors, 33, 42; nonaudit business restrictions, 13, 72–73; partner misconduct, reasons Index 119 07-0890-INDEX 1/30/03 9:38 AM Page 119   for, 45; rotating firms as remedy, 74; smaller firms and auditing abuses, 31–32; state regulation of, 44; value of audited statements to shareholders, 20. See also American Institute of Certified Public Accountants (AICPA); Generally Accepted Auditing Standards (GAAS) Australia and Internet reporting, 92 Austria and Internet filings, 92 Bank One, 37 Bankruptcy laws as shelter for violating CEOs, 70 Banks: pressure on FASB, 47; XBRL use in financial statements of, 92. See also Investment banks and future requirements Beasley, Mark S., 31–32, 43 Black-Scholes formula for stock option valuation, 36 Blockbuster, Inc., joint venture with Enron, 28 Board of directors: audit committees of, 13, 71, 75; Enron scandal’s effect on, 49; incentives for fulfilling enforcement role, 70–71; outside directors’ oversight of compensation packages, 35, 71; stock options granted by, 52 Boeing, 37 Bonds, treatment of fixed-rate, 38 Business Roundtable, 84 Carcello, Joseph V., 31–32, 43 Cash flows, 88; fair-value accounting and inaccurate estimates of, 40 Certification of financial statements by CEOs, 69 Chamber of Commerce, 84 Channel stuffing, 30 Choice of GAAP or IFRS standards by corporations, 62 Citigroup, 37 Class actions. See Securities class actions Coca Cola, 37 Coffee, John, 42 Comiskey, Eugene, 30 Compensation. See Performance-based compensation Competition in standards, 10–12, 61–65; constrained competition, 10, 64; controlled competition, 10, 62, 63, 64–65; limited competition, 10, 64; mutual recognition and exchange-competition model, 10, 62–63, 64, 78; and natural monopoly argument, 65; objections to, 65 Conflict of interest: Enron as example of, 19, 29; shareholder wariness of, 20. See also Nonaudit business restrictions on accounting firms Consolidation of liabilities, 97–98 Consulting restrictions on accounting firms, 72–73. See also Nonaudit business restrictions on accounting firms Corporate Responsibility Act of 2002. See Sarbanes-Oxley Act Council of Foreign Relations, 62 Criminal prosecution, 32; difficulty of proving accounting fraud by CEOs, 69; Enron-Andersen scandal, 2; SarbanesOxley Act provisions, 69 Delay in rulemaking by FASB, 47, 52–53; adoption of IFRS as possible solution, 60 Depository receipts (DRs), companies trading in, 56–57 Derivatives, 38, 47 Directors. See Board of directors Discipline. See Penalties Disclosure’s importance, 5–7 Earnings management: and Internet reporting, 88; showing continued growth, 81 07-0890-INDEX 1/30/03 9:38 AM Page 120   Earnings restatements: increase of, 1–2, 33, 34, 42–43; legislation’s effect on, 42; and prior-period adjustments, 34; repayment of earnings-based bonuses due to, 69; SEC enforcement practices as reason for, 34; studies of reasons for, 32–34 EDGAR system, 92 Energy contracts, 38 Enforcement of standards, 12–14, 19; comparison of GAAP and IFRS, 103; failure of, 42–46; importance of, 23; incentives for, 13, 68–76; monitoring, 66–68, 79; reform, 66–78. See also Penalties Enron, 2, 23–30; auditing problems, 24, 26, 28, 29–30, 51, 58, 66; background and history, 23–24; conflict of interest in, 19, 29; disregard for rules by, 19, 28, 29; fair-value accounting, 8, 27–28, 29, 38, 51; incorrect income recognition, 27; “Powers Report,” 24, 29; prosecution of CEOs, 70; related-party transactions , inadequate disclosure of, 29; repercussions of...

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Additional Information

ISBN
9780815708919
MARC Record
OCLC
53798340
Pages
126
Launched on MUSE
2012-01-01
Open Access
No
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