Enron was an energy company that began to trade extensively in energy derivatives markets. The company hid massive trading losses, ultimately leading to one of the largest accounting scandals and bankruptcy in recent history. Enron executives used fraudulent accounting practices to inflate the company's revenues and hide debt in its subsidiaries. The SEC, credit rating agencies, and investment banks were also accused of negligence—and, in some cases, outright deception—that enabled the fraud. As a result of Enron, Congress passed the Sarbanes-Oxley Act to hold corporate executives more accountable for their company's financial statements.
You're required:
a. Identify and explain THREE(3) unethical behavior found in Enron Scandal.
b. Assuming that Enron Corporation is having an Audit Committee, discuss what actions or steps the Audit Committee can take to prevent fraudulent activities in Enron Corporation.
c. What is Sarbanes-Oxley Act? How this Act can influence the practice of an accountant in preparing financial reports.
d. List and discuss the FIVE(5) ethical code that Arthur Andersen should follow.