ACCOUNTING II
INTERNAL CONTROL ASSIGNMENT
As
we have discussed in class, internal control over accounting functions is an
important part of good business management.
A good internal control system involves hiring competent, reliable and
ethical personnel, assigning appropriate responsibilities to these personnel,
and then monitoring by a variety of methods the documents and records created.
One
of the most recently publicized corporate scandals has involved Enron
Corporation and their accounting firm, Arthur Anderson. This scandal involved falsifying accounting
records, poor internal control, and ethics. It is a very complicated situation
with far-reaching results. This
activity is designed to demonstrate what can occur when accountants do not
adhere to generally accepted accounting principles (GAAP).
Instructions:
1.
Visit
the following website and read the article: Chicago
Tribune/Ties to Enron blinded Anderson
· What was the relationship between the two firms?
· How did this relationship start?
·
Describe
in your own words, what the relationship was like when the scandal broke.
·
Who
were the key players in this scandal and how were they connected?
·
Who
uncovered the scandal and what made him/her suspicious?
·
What
impact did the discovery have on the accounting firm of Arthur Anderson?
4.
In
your own words, compare this scandal with the discussion in your text on
internal controls. What internal
control measures can you site that were violated by Arthur Anderson?
(Hint: There are quite a few)