You are a staff auditor working for Arthur Andersen. You discover the use of certain Special Purpose Entities (SPEs) by Enron and decide to mention it to your immediate supervisor, Anna Richardson. She indicates that she is unaware of what you are referring to, and would like more information. Prepare a Memorandum to Ms. Richardson outlining the use of SPEs by Enron and your concerns with them from an auditing perspective. She has no knowledge about these entities and will need a thorough explanation of what they are, where they come from and how they work. Also, explain to her why you believe these SPEs are cause for concern and highlight the potential for use in materially influencing the financial statements of Enron as a whole.

In addition to the above, briefly outline the culture at Enron and how the creation and use of the SPEs is in keeping with or contrary to the overall ethical environment at Enron. Feel free to use examples of company policies to highlight the above. Be sure to be as complete as possible. Keep in mind that you are also attempting to convince your higher-ups that a problem exists. Utilize any or all of the following methods of ethical analysis in your memorandum to help highlight the issues at Enron: The Fraud Triangle Giving Voice to Values framework Conflicts of Interest that may have arisen Possible weaknesses in Internal Controls The Seven Signs of Ethical Collapse