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Congress is opening hearings to determine how Enron's financial mess escaped the attention of its auditors. But some of Enron's most vocal Congressional critics have routinely opposed significant new accounting rules over the past decade. Lynn Turner, a former chief accountant at the Securities and Exchange Commission (SEC), said that pressure from Congress has led to compromises that weakened proposed accounting rules. The SEC, which oversees the Financial Accounting Standards Board (FASB), an independent rule-making body, has complained that pressure from Congress makes it harder to impose needed regulations. Rep. Richard Baker, a Louisiana Republican who chairs a House subcommittee on capital markets, securities, and government-sponsored enterprises, recently criticized Enron's misleading disclosures. Yet, in 1994, Mr. Baker helped block a FASB proposal to force companies to deduct employee stock options from profits. More recently, he opposed a proposal to require better disclosure of derivatives (investments pegged to the underlying value of assets, such as commodities or currencies). Through his efforts and pressure from Congress, the FASB issued a new, less stringent standard. Sen. Joseph Lieberman, a Connecticut Democrat, chairs the Senate Governmental Affairs Committee. He plans to ask why Enron's auditors allowed the company to overstate its profits for four years, using what now appear to be very questionable accounting practices. Yet, during the 1990s, he rallied opposition to overhaul accounting for corporate mergers and acquisitions. Companies complained the change would reduce their earnings. Under pressure from Congress, the FASB compromised. Similarly, in 1994, he led the Senate in a resolution to urge the FASB to back off from an accounting change that would have required companies to reflect the value of future stock options in current earnings. The FASB did. Discuss the following questions based on the above case study: 1. How far do you agree that Congress should have an influence on the FASB? 2. What is the auditor's role in finding a fraud?
An auditor at a prestigious CPA firm
An S corporation has both voting and non-voting stock. What effect does this differentiation in voting rights have on S corporation eligibility and on shareholder pro rata share of corporate tax items?
lesley chomski is the supervisor of the new product division of mco corporation. her annual bonus is based on the
at january 1 2010 xyz company reported total assets of 400000 total liabilities of 150000 and total equity of 250000.
Compute earnings per share for 2012, using the weighted-average number of shares determined in part (a).
Last year, Twins Company reported $750,000 in sales (25,000 units) and a net operating income of $25,000. At the break-even point, the company's total contribution margin equals $500,000. Based on this information, the company's:
Distinguish between controllable and uncontrollable aspects of revenue and costs. Can a manager tototally control all revenue and costs? why or why not? Describe some of the drawbacks of using budgets as a control device
robbie is 18 and a dependent on his parents return. his income consists of interest of 1300 and 2500 from being a
you want to have 25000 for a down payment on a house 6 years from now. if you can earn 6.5 percent compounded annually
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the manager of weiser is given a bonus based on net income before taxes. the net income after taxes is 35700 for fifo
skane shipping ltd. ssl operates a fleet of container ships in international trade between sweden and singapore. all of
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