QUESTION 1
A course on fraud examination just wouldn’t be complete without discussing Enron! Let’s turn to the first case study for Chapter 12 regarding Enron. After reading the case, answer one of the following questions:
What important internal controls were ignored when LJM1 was created?
How might Enron’s harsh Performance Review Committee (PRC) have aided company executives in committing this fraud?
The fraud at Enron is one of many major financial statement frauds that occurred in recent years (Qwest, Global Crossing, WorldCom, etc.). What are some factors that could explain why the falsifying of financial statements is occurring so frequently?
QUESTION 2
Let’s try analyzing financial statement information for possible fraud symptoms at the Tool Co. (Case 7 at the end of Chapter 12).