Q.1 In Arthur Levitt's speech, referred to in the opening quote, he also said: "I fear that we are witnessing an erosion in the quality of earnings and therefore, the quality of financial reporting. managing may be giving way to manipulation; integrity may be losing out to illusion." Explain waht you think Levitt meant by this statement. What role do financial analysts' earnings expectations paly in the quality of earnings?

Q. 2 Relevance and faithful representation are the qualitative characteristics of useful information under SFAC 8. Evaluate these characteristiics from an ethical perspective. That is, how does ethical reasoning enter into making determinations about the relevance an faithful representation of financial information?