Read the following article written by Paul M. Healy and Krishna G. Palepu, the fall of Enron case study by Paul M. Healy and Krishna G and write a report that addresses the following issues:
1. Define and explain mark-to-market accounting approach and give examples where Enron's management / accountants perhaps misused this approach to portray a rosy picture of its performance / profitability?
2. What are special purpose entities and how Enron's management used them to fund contracts or achieve financial reporting objectives?
3. Enron's top management enjoyed high compensation/ remuneration including stock options, what was the main purpose of the stock options compensation scheme provided to top management. Your explanation, discussion and argument should principally be based on the assumption of the agency theory.
4. Have the accountants / auditors involved in the case behaved in accordance to the code of ethics for professional accountants? Explain and discuss the fundamental principles of the code of ethics in relation to the case and provide examples.
The assignment must be written in essay form with a clear introduction, a demonstrate critical arguments and draw strong conclusions. While the word allowance is 3,000 words an allowance of no more than 10% either way will be acceptable. All work must be the student's own work and sources clearly cited within the text according to APA 6th edition referencing style. A reference list must be incorporated at the end of the assignment. Only submissions via Moodle will be accepted and late penalties of 10% per day will be incurred if not submitted on or before the due date. Any forms of plagiarism will result in a fail grade and notification of the plagiarism will be sent to the Academic Dean.