Internal Checks And Balance System Essay - 1414 Words

Internal checks and balance system are used to prevent company from mistakes. However, Enron’s internal checks and balances system were fail to prevent its from demise because its external auditors were provide service to help Enron to cover the loopholes, internal accountants were violate accounting rules in several of off-balance sheet and the lawyers did not provide fair reports because of conflict of interest. First, as an external auditor, Andersen was help to conceal the false statements rather than revealed them to ensure a stable accounting system and verify the accuracy of accounting reports. Andersen not only being Enron’s external auditor, but also been working for Enron as internal auditor. Meanwhile, Andersen provided consulting services and joined Enron’s accounting department in senior positions (Nadad 2003a, p.2). Hence, some mistakes, such as generated by senior positions and provided by consulting services, would not be revealed because Andersen would not happy that those mistakes were publically known. Moreover, Andersen was help Enron to cover the untrue statement by using the loopholes of the accounting standards rather than correct them, and therefore, the number of off-balance sheet and the flaws in balance system would be increased. Second, same as auditor, Enron had hired same company which was Vision Elkins to provide inside counsel and outside counsel. Therefore, the errors provided in transactions and errors provided by inside counsel could notShow MoreRelated The U.S. Constitution: Checks Balances Essay1283 Words   |  6 Pagesgovernment remained separate. To ensure that one of these branches did not trump the other branches, the Founders crafted – within the Constitution – a set of checks and balances. 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A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accountingRead MoreAcc121 Course Project1745 Words   |  7 Pages| Student Answer: |    | the four basic financial statements are the income statement, statement of owners equity, statement of cash flows which reports activity for a specific period of time usually a month, quarter or year and the balance sheet which reports balances of certain elements at a specific time. the income statement should be prepared first, it lists revenues and expenses and calculates the companys net income or net losss for a period of time. it lists all the expenses and losses onRead MoreTo Keep a Companys Integrity and Prevent Fraud, Internet Controls Should be Utilized541 Words   |  3 PagesInternal Controls Definition. Internal Control is systems and controls that are implemented in a business to ensure that the integrity of information and prevent theft and fraud of the company’s cash and assets. This helps to ensure the legal Compliance and provide accurate information efficiently. Purpose. The purpose in Internal Controls to show you’re shareholders and employees what you would like the business to achieve in the year to come. When an business has internal controls implementedRead MoreAnalysis Of The Narrative And Observation Of Auditing Alchemys Workplace1749 Words   |  7 PagesSystem Strengths Based on the information provided in the narrative and observation of Auditing Alchemy’s workplace, it appears that the organization has implemented internal control practices, policies, and procedures in an attempt to minimize organizational risk. The strengths of Auditing Alchemy’s internal control system include effective warehouse management, a perpetual inventory system, various checks and balances, and a full time security staff. The existence of these internal controls allowRead MoreThe importance of a control system within the business.1116 Words   |  5 PagesInternal controls are methods or procedures adopted in a business to: -Assist in achieving the businesses objectives - Ensure financial information is correct and reliable - Ensure cooperation with all operational and financial requirements - Protect its Assets They are essentially checks and balances within a business. Its objective is to reduce errors, limit financial losses and prevent fraud. They also segregate duties within the company and limit one persons control over an entire area