Read Watkins' Whistle Blower Letter to Enron Chairman in Chapter 5, pp. 149-152.

Explanatory notes:

AA=Arthur Andersen (auditing firm)

MTM=Mark to market

EES=Energy exchange schemes

ENE=Equity non-existing

IBIT=Income before Interest and Taxes

NI=Net Income

N/P=Notes payable

VIE=Variable interest entities

REQUIRED:

Identify as many financial and non-financial red flags from the letter as you can. According to my analysis, there are at least 20 red flags mentioned in Watkins' letter.

List your red flags in a numerical order (1, 2, 3...20).

Each red flag description should not exceed two lines. Red flags need be drawn from Watkin's letter directly, and not from any random source or other chapters in the textbook.