Rubber stamps for the management of public companies

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Reference no: EM132034285

Over a decade ago, Enron was a high flying publicly traded company. It’s stock had soared and created tremendous wealth for many employees and stockholders alike. The financial statements for Enron that were disclosed as part of their SEC filings were highly complex. A whistleblower within Enron led to disclosures that revealed fraud ultimately leading to its bankruptcy and collapse. Employees lost their jobs. Shareholders lost vast fortunes. Several executives went to jail. And Arthur Andersen, a leading accounting firm, had its name dragged through the mud as an accomplice to the fraud leading to the ultimate demise of that entire accounting firm. Should we expect accountants to uncover fraud and be an early warning signal? Do you think auditors are just “rubber stamps” for the management of public companies? In general do you think we can trust the financial statements released by public companies? In cases where a public company has to restate it's financial statements, should the blame be with the accountants or the management? Explain.

Reference no: EM132034285

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