The Enron and Worldcom Scandals

The Enron and WorldCom Scandals
There have been several accounting scandals that shocked the world in the past.   Arthur Andersen, Enron, and WorldCom are three familiar names involved with some of these scandals.
Enron question # 1
Enron difficulties began with the establishing of Special Purpose Entities (SPE) such as Chewco, LJM1, LJM2, and the Raptors to generate false profit.   An employee of Enron, Michael Kopper worked for Fastow and was appointed as manager of Chewco later created a new structure for the company that put no cash into the SPE.  
Question # 3
I do believe the board understood how profits were being made because of the compensations that were received. Once the board heard Fastow's proposal to create a new type of financing that would remove debt from the company's balance sheet, they were all on board (Abelson, 2002).
Question # 5
Kenneth Lay showed lack of proper governance as CEO when Cliff Baxter and Sherron Watkins came forward to report wrong doing no action was taken.   Lay along with Fastow were trusted by the board, shareholders, pensioners to server with their best interest in mind, but this did not happen.
Question # 6
The failure of Enron's governance system was a combination ranging from management to directors and the audit committee to regulators and analysts.   With the conflict of interest between Fastow, the senior management team, Arthur Andersen, and the lawyers it was difficult for the board to ensure they were receiving the correct information and the policy was being followed (Brooks, 2007).
Question # 9
Enron set up SPEs to falsify earnings by hiding their debt.   The conflict of Arthur Andersen's activities is when he acted as the auditor and consultant.   The executive's activities created a conflict of interest when some created and managed SPEs and set on the board to make sure their own interest was met.
WorldCom: Question # 1  
WorldCom's management increased its net income and assets by transferring...
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