Enron and WorldCom are companies that suffered from large frauds by corporate management.One important lesson with respect to such cases is that
A)when a company does really well financially,it is important to suspect that such results are always inflated.
B)an investigation of the integrity of management is an important part of deciding upon the extent of audit work.
C)securities and exchange commissions expect auditors to be perfect in their assessment of management.
D)partners and staff should cooperate in preparing working papers that prove the accuracy of the financial statements.

Question

Quizplus · Accepted Answer

Enron and WorldCom are examples of why it is important to investigate the integrity of management when deciding the extent of audit work. The auditors failed to detect the frauds because they did not investigate the management practices and relied solely on the financial statements provided by the management. Thus, investigating the integrity of management is critical in detecting fraud early on.

Enron and WorldCom Are Companies That Suffered from Large Frauds