In recent times, the central Bank of Ghana has embarked on re-organization of the financial sector that among others has resulted in the increase in the minimum capital requirement to 400million Ghana cedis. This exercise led to the revocation of licenses from some universal banks. This was followed by a full report by the Bank of Ghana (herein after called that BOG report) regarding their basis for the revocation of licenses. A carful review of this report reveals a number of financial reporting and corporate governance lapses. You are required to compare your understanding of the salient elements of that BOG report to the Enron Case (see excerpts below) and answer the questions that follow: Excerpts from the Enron Corporate Scandal Enron was one of the worlds leading electricity, natural gas, pulp, paper and communications firm based in Texas. Its claimed revenue was estimated to be $101bn. However, at the end of the 2001 it was revealed that its financial condition was sustained mostly by systematic and creative accounting fraud. Four thousand of its staff lost their job due to its bankruptcy. The scandal cost the dissolution of Arthur Anderson, a Big Five accounting firm. Many of Enrons financials and assets were inflated, fraudulent and non-existent. The firm used sophisticated financial transactions in addition to losses and debt put into offshore firms not reported in the financial reports. Later investigation revealed that, the Executives knew 3 about the offshore account, hiding losses from the firm. CFO, Andrew Fastow led the team who created the offshore books and manipulated the deals to suit himself and family. The scandal discovery led to a fall in Enrons share price on the stock market. Employees of the firm had earlier expressed concerns about this for some time. Sherron Watkins, Vice President, met the then CEO reported dubious deals of Vinson & Elkins and Arthur Anderson. SECs inquiry into the matter reveals more worrying concerns relating to Arthur Anderson which led to its indictment. Other firms were also identified in the scandals. By mid-2006, 16 of Enrons top executives pleaded guilty or were convicted and in the process of being sentenced. Required: a. Express your opinion of the statement: Checks and balances are critical tenants of corporate governance (2 marks) b. Discuss two (2) ways by which instituted corporate governance structures can address the agency problem (4 marks) c. Using four (4) strong points demonstrate how the financial reporting and corporate governance issues mentioned in that BOG report compare against that of the ENRON case. (8 marks) d. Identify and explain any four (4) mechanisms in the corporate governance chain that should/could have prevented lapses, reported in both the ENRON case and that BOG REPORT