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Enron Corporation and Andersen,LLP: Analyzing the Fall of Two Giants inAuditing CasesBy: Team AAICPA Code of Professional ConductPrinciplesSix principles form the foundation of the rules for theAICPA Code of Professional Conduct.Violation the AICPA Code ofConductMany Principles of AICPA's Code of ProfessionalConduct were violated.Enron's Business Risks Entering into numerous aggressive transactionsthat involved special purpose entities (SPE's).Board of Director'sResponsibilities Overseeing the company's activities.Hidden Company Debt UsingSPE'sThe sell of assets between SPE's and othercompanies were used to hide huge amountsof debt.Auditor Independence Issues Independence is risked by both internal andexternal audits for the same company beingperformed by the same accounting firm.Rules-Based VersesPrinciples-Based AccountingStandardsRules-based accounting uses a detailed setof rules.Principles-based accounting uses GAAPguidelines.Lack of IntegrityThe run on the bank analogyIrreparable Damage A company has to remain ethical if not oftentimes irreparable damages occur.Tough Accounting DecisionsCan Cause Issues A fear of losing a client can make toughaccounting decisions a struggle.Regaining Public Trust Sarbanes-Oxley Act of 2002 The International Accounting Standards Board (IASB) The Public Company Accounting Oversight Board (PCAOB)ReferencesBoynton, W

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