Question

What would you have done differently if you were Enron's external auditors   the year the scheme was exposed?

Answer 1

The financial statements of the company would have been assessed and verified to see whether the financial reporting standards have been followed properly or not. The financial reality and state of affairs of the company must be reflected correctly in the financial statements. Thus, as the auditors all necessary evidence must be collected on the basis of which the financial statements and there relevance should have been assessed to check whether these correctly reflect the financial performance and state f financial affairs of the company. The frauds would have been easily identified with proper use of auditing standards at the time of conducting the audit.

The Generally Accepted Auditing Standards should have been used while conducting the audit of the financial statements of Enron to see whether the financial statements correctly reflect the state of financial affairs and performance of the company.