In a major speech, Arthur Levitt, former chairman of the SEC, chided auditors for failures in four areas:
• Allowing companies to use "cookie jar reserves" used by firms to manage earnings.
• Allowing improper revenue recognition.
• Assisting companies in using creative accounting for mergers and acquisitions that did not reflect economic reality.
• Assisting management in meeting earnings targets that helped managers achieve stock option price targets.

Required
a. Describe each of the four activities identified by Levitt and give an example of each. For example, give an example of how a firm would use "cookie jar reserves" to manage earnings.
b. If we assume that there were some instances in which auditors acted the way Levitt described, identify the potential motivation for the auditors to provide such assistance to management.
c. For each item identified in part (b), describe how the Sarbanes Oxley Act addressed the issue.