1. Evaluate earnings management from a utilitarian perspective. Can earnings management be an ethical practice? Discuss why or why not.2. Read (27) EnronWhat was Arthur Andersen’s rationale for concluding that $51 million of known misstatements in Enron’s 1997 financial statements were immaterial?According to Andrew Fastow’s testimony, how did Enron manipulate its reported earnings through trades with the LJM partnerships?Innovation in business can sometimes lead to trouble for an auditor. Audits rely on comparable information to determine reasonableness for balances and transactions. Without such information, auditors end up relying more heavily on management assertions than they normally would during an audit. Describe how an auditor might prepare themselves (as individuals, team or firm) to audit sometime new and innovative? Should fees be difference for such a client?
