BECSR ASSIGNMENT ON

CASE STUDY “ACCOUNTING FOR ENRON”

SUBMITED BY:
SOURAV SAMAL
19202050
Q. what responsibilities did David Duncan owe to Arthur Anderson? To Enron’s
management? To Enron’s stockholder? To the accounting professions? Explain.
Ans. David Duncan owed the following responsibilities to the following
stakeholders:
Enron’s Management
We can know from the case that David Duncan was the head examiner of Arthur
Anderson. His duty is that he should keep them mindful about their real budgetary
conditions as opposed to surrounding a phony picture to keep them cheerful and
covetous for immense measure of cash from their customers. This could have halted
a definitive breakdown of Enron and spared the activity of 4000 representatives
serving there. In any event, when the bad habit seat Clifford Baxter, Treasure Jeff
McMohan and Vice President Sherron Watkins all were having questions of their
own. He could have educated them about these criminal operations in their firm to
spare their appearances. In any case, his inaction lead to full ruin from
effortlessness for the firm as on October 16, Enron revealed $618 million as a
quarter misfortune and declared that because of Anderson's examining report.
Arthur Anderson
As an employee of the organisation he needed to serve their best interest in long run
rather than putting them in harm. He was the one who was responsible to put the
company in risk, by not following the Generally Accepted Accounting
Principles(GAAP) while in his capacity as head auditor. He did so in order to save
his organisation a huge client (Enron), whose loss could have been pointed him
leading to axe from the firm. He violated section 10 of security Exchange
Commission that require auditors to report unlawful client activity. He was fully
responsible of auditing and should have maintained the records for Enron.
Enron’s Stockholder
David owed all legal responsibility directly to the stakeholders of Enron as his
actions broke their trust both from Enron and Arthur Anderson. The firm suffered
more as it reported $618 million and announced that as a result of Anderson’s
auditing decisions, they would take $1.2 billion cut in shareholder equity. Apart
from that Enron’s stock was trading at just $10 per share in October of that year,
which was an almost 90% drop.
Accounting Profession:
He disgraced the accounting profession as he failed to maintain even one of the
responsibilities of accounting profession.
Q. From the analysis of the case study “Fraudulent portfolio Management: HSBC
Versus Suchitra Krishnamoorthy”, evaluate the conduct of the relationship
manager(s) with reference to standard code of conduct of ethical conduct.
Ans: •They neglected to finish the Utility Assessment as the joy of the business
exchanges lied exclusively with HSBC bank though Suchitra Krishnamoorthy
had worried about the concern of agony. They sold her failing to meet
expectations approaches and plans promising her an exceptional yield of 24%
per annum on speculation. Incredibly, in her entire portfolio there was not a
solitary obligation conspire and only one fluid plan HSBC money finance.
Amusingly, commissions paid on obligation plans and fluid plans are a lot of
lower than the decent plans she was being tricked into. By winning her trust
and endorsement for venture, they had done an immediate loss of 83 lakhs
from speculation following 5 years, about ₹28 lakh in commission to HSBC,
₹8 lakh lsot from protection arrangement, ₹10 lakh valuation decrease in
protection approach. This was an instance of orderly misrepresentation and
investigation of sincerely helpless who had gotten ₹3.6 crore as a feature of a
settlement in September 2006.
 The relationship managers also failed the rights test and choice test as they
consciously violated the personal right of ‘Right to Information’ of Mrs.
Krishnamoorthy by denying her the knowledge of actual risk in the portfolio
and promising her higher return with assurance of safety of the portfolio.
They also violated her right to privacy as they exploited the knowledge of her
private information to sell her the toxic schemes for collecting a hefty entry
load and exit load.
 They bombed the equity test as a guardian operator for Mrs. Krishnamoorthy
they broke her trust on different occasions. First by selling her dangerous
plans with guarantee of better yield and afterward by denying her cases to her
speculation by recusing themselves of their underlying guaranteed duty in the
exchange from which they gathered a heavy passage burden and leave load.
They even kept her in dim about how to protect her speculation slowed down
in different plans to which they made her stroll into intentionally as a snare.