1. The parties who are most responsible for that crisis are:
a. The CEO and CFO – I was ultimately the environment that they created which was set up to manipulate not only the numbers but also people. It fostered greed and an idea that there was nothing that would stop this company from becoming number one. Kenneth Lay, Jeffrey Skilling, Andrew Fastow
b. The External Auditor (EA) – They should have handled the accounting treatment of those transactions with more care. They should also have stood up earlier and said things were wrong instead of cashing the checks. They also jeopardized their independence by providing so many services (audit and consulting). David Duncan and EA who destroyed the Enron workpapers or people in charge of the engagement
c. The Company’s Accountant – Although this person was manipulated to believe this was the right thing to do he/she should have stood up like Watkins did.
d. The Media – The expectations gap was widened by the media. The media put its dramatic spin on the story, which is their job, but it also villanized all accountants. They focused on the story and not the profession as a whole.
e. SEC and FASB- they didn’t provide proper guidance (especially on SPE’s). There was not enough pressure from the SEC to limit “Scope of Services”.
2. Three type of service and Independence Impairment?
a. Bookkeeping- this would directly impair independence b/c the external auditor would not want to jump up and say hey look what I found; we have booked $600 million in assets incorrectly.
b. Internal Control Implementation – One again the auditor would n ...