1. How come the stock exchange price crumble so much in few days? What has happened in these companies exactly? (Enron,Lehman,Satyam computers) Explain in your own words in short and brief.

 

2. Which investment of Lehman Brothers became disaster? Lehman was investing in what kind of assets exactly?

 

3. How come people lost their homes and became homeless due to Lehman failure?

 

4. Applying microeconomics principles, explain why was the real estate market (properties and homes) in US and world wide collapsed due to Lehman failure?

 

5. World went into recession due to Lehman Brothers and subprime crisis, but where exactly the money gone?

How suddenly money disappeared from the world economy?

 

6. Why and how all 3 (three) cases affected the entire world?

 

7. How much was money lost worldwide in all 3 (three) cases?

 

8. What was the primary reasons which fosters a corporate giant like Enron to boost its profits?

 

9. What we can do to stop repetitions of these malpractices?

 

10. What are the basic and fundamental accounting convention which were not followed in the Enron case?

Use the statement of cash flows to support managementdecision-making.

The Artisan Shutter Company, like many companies thatrelied on the construction industry, took a financial hit when“housing bubble” burst in late 2007. Lenders were making subprimemortgage loans to borrowers who really couldn’t afford theprinciple and interest (P&I) payments and subsequentlydefaulted on their loans. This was followed, in 2008, by thecollapse of Lehman Brothers, a global bank, which almost broughtdown the world’s financing system. Due to tighter bankingregulations, many individuals and companies found it extremelychallenging to secure loans. Despite the government’s decision toimplement quantitative easing as a means of stimulating theeconomy, unemployment, personal and corporate bankruptciesincreased. Looking at The Artisan Shutter Company and imagine thatyou were a member of the leadership team and noticed that the cashflow position of the company was being severely weakened by whateconomists perceived to be a pro-longer economic downturn. Theowners are understandably concerned about the long-term viabilityof the firm. Prepare a position paper that outlines strategies toimprove cash position of the company as it tries to “weather thestorm” and experiences a normalizing of the economy. In order toformulate your position paper, you may want to carefully considerthe problem (reflecting back to 2008 recession), collect relevantdata and information, critically evaluate the alternatives, anddocument your recommendations using sound arguments that are wellsupported, properly vetted, and logically presented. It isimportant that management carefully consider any potential ethicalimplications associated with their stated position. If there areany potential ethical concerns associated with your position, theyshould be identified and discussed in the position paper.

WoldCom scandal. Discuss the following:

Why might the WorldCom fraud seem less egregious than Enron? Why, according to a telecon executive from the South, was WorldCom able to grow so quickly? What was the basic strategy of the nine investors who later became WorldCom at the beginning of their business? What was Ebbers’ acquisition formula? What were some of the factors that led to a decrease in WorldCom’s growth? What are some reasons why WorldCom might have been less able to deal with its problems than its telecom competitors, most of whom faced the same problems? What were some of the practices that WorldCom used to sustain its 42% E/R ratio? Very briefly state why the improper release of accruals was fraudulent? Briefly explain how WorldCom’s method of ‘Closing the Gap’ worked. What is the difference between a ‘disinterested judgment’ and an ‘interested judgment’? Give at least two reasons why Sullivan’s decision to capitalize line costs was an ‘interested judgment’. What is the difference between the burden of ownership and the way WorldCom’s lines were a burden’ to the company? How was Enron’s fraud similar to that of WorldCom? How were the Dutch doctors in WWII able to resist the Nazi demands that they euthanize patients and perform other medical atrocities? How did Arthur Andersen view its relationship with WorldCom? What were some ways that Arhur Andersen made it easy for WorldCom to commit fraud? How did the WorldCom fraud come to light in the end?

Enron's demise. Briely discuss the following:

What did Enron use to hide its debt? What was the main thing that led directly to the downfall of Enron? What was the basic idea underlying Enron’s use of SPEs and why was this flawed?Could Raptor and the other SPEs have actually worked? Tell briefly why or why not? What is a ‘Ponzi scheme’? Say briefly how it works? What is the classic definition of ‘materiality’? What is the basic difference of responsibility between a company executive and that company’s auditor? Was Arthur Andersen aware of the use Enron was making of its SPE? Give two of the things that Arthur Andersen discussed during their “Enron Retention Meeting.” What is the difference between the appearance and the reality of independence? Which is essential for an accounting professional? What is the relation of this difference to Arthur Andersen’s distinction between the level and nature of fees? What is one good reason why even the appearance of lacking independence should be avoided? What are the two kinds of objectivity? What is the basic relationship between rules and principles? Briefly explain what Ken Lay meant when he said that Enron had a ‘real time audit’ by Arthur Andersen all the time. Why is the concept of a ‘real time audit’ problematic? What is the basic relationship between ethics and legality? What are the ethical considerations that bear upon document destruction? What was the purpose of the SPE called RADR, which was controlled by William Dodson and, vicariously, Michael Kopper? In what way could Enron’s actions justify its corporate culture being call a ‘culture of greed’?