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Lessons from the Bankruptcy of Enron and Worldcom
The bankruptcy of Enron and Worldcom made the investors and consumers feel astonished and panic. Because they all were the large scale public companies, the people thought they were been strictly overseen and they deserved the trust of public. But the truth was that they abused the trust of public and cheat the public by compiling the faked finance statement and exaggerating the profit of companies. What reason cause the occurrence of such situation? Is it because of the malfunction of management, the imperfect management system or contrived fraud? Hence, we need to delve the reasons that are deeply secreted under the ostensible facts. More importantly, we need to get some lessons from such events to strengthen the company governance and promote the healthy grow-up and development of company.
1. Different jurisdiction facing different issues
2. Financial issues considered in investigation and prosecution
3. Possible and realistic solution
Conclusion
Bibliography

Enron-The red flags that Auditors missed
Enron, ranking it seventh on the Fortune 500, ‘was widely regarded as one of the most innovative, fastest growing, and best managed businesses in the United States’ before filling the bankruptcy application in December 2001. But, suddenly, such a big giant collapsed. Shareholders, including thousands of Enron workers, who held company stock, lost tens of billions of dollars. Enron’s meltdown has already raised the corporate governance, financial oversight and audit independence issues. Many lessons can be learned from the collapse of Enron. Thus, the rights and benefits of shareholders can be effectively protected.
The following schemes were exploited by Enron in financial statement.
1. Establishing the Special Purpose Entities (SPEs) and LJM partnership to manipulate the financial results.
2. Producing income by fraudulent manipulating asset values.
3. Fraudulently circumventing accounting standards regarding sale of financial assets.
4. Concealing the losses of Enron Energy Services (EES)
5. Inflating Enron Broadband Services (EBS) to generate income and concealing losses of EBS.
6. Manipulating reported earnings through improper use of reserves
Red flags that Auditors Missed
The following red flags are some indicators that auditors shall not overlook in auditing the financial statement of Enron. A cursory review of these red flags can point out clear danger signs at Enron.
1. Unusually rapid growth or profitability, especially compared with that of other companies in the same industry.    
2. Significant bank accounts or subsidiary or branch operations in tax-haven jurisdictions.
3. Unconsolidated Entities.
4. Overly complex organizational structure involving numerous or unusual legal entities.
5. Significant related-party transactions not in the ordinary course of business.
6. Complex business and contractual arrangements not well understood and appearing to serve little practical purpose.
7. Widely dispersed business locations with decentralized management and a poor internal reporting system.
8. Hesitancy, evasiveness, and/or lack of specifics from management or auditors regarding questions about the financial statements.
9. Overly optimistic news releases or shareholder communications, with the CEO acting as an evangelist to convince investors of future p本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。