Phase 3 Jenna Nick Final Harvard Case Name: Innovation Corrupted: The Rise and Fall of Enron Phase 3

Harvard Case Name: Innovation Corrupted: The Rise and Fall of Enron Phase 3 NAME: Jenna Vollmer & Nick Triembacher .Please insert the names of all members of your team Please insert page numbers on your report Please adjust the orientation and size ONLY for your APPENDIX to ‘landscape’ and ‘Folio’, otherwise I will not be able to read the content of all the .Phase 2 work .Please complete 3 additional items ONLY for the table labelled APPENDIX .Please use ONE quote ONLY for each item Please remember that you are now looking at the weaknesses in fulfilling responsibilities for both the BOD/TCWG (not owners) and for .CPA/External Auditor .Please select each of the 3 additional quotes from the legal decisions provided in the REFERENCES links I sent you after Phase 1 If there are no legal decisions, then please select from the 3 additional quotes REFERENCES you do have. You should complete the APPENDIX before .completing the EXECUTIVE SUMMARY .Below is the format to use to organize the content of the report .PLEASE read through the format BEFORE you do the search of quotes TITLE: Final report for… Enron Fraud Risk Assessment AUTHORS: Jenna Vollmer & Nick Triembacher EXECUTIVE SUMMARY :The three weaknesses in order of priority from highest to lowest as a contributor to the successful fraud are Governance (.1 Fraud (.2 Internal Controls (.3 :The most important reasons for establishing the priorities are Internal Control PRIORITY 3 PRIORITY 2 Fraud PRIORITY 1 Governance CAS FRAUD Handbook CoCo & ROGC CoCo- The criteria Commitment B1 Shared ethical values, including integrity, should be established, communicated and practised throughout the organization. Fraud risk assessment- 1.2 Risks and Controls The degree of fraud risk faced by any entity depends on the risk inherent in its business model, the nature of its business, the ef- fectiveness of controls to prevent or detect fraud, the level of deterrence perceived by those who might perpetrate a fraud and the attitude and integrity of those working at all levels of the organization. Organizations should have sufficient controls in place to prevent or detect fraud. To determine whether exist- ing controls are sufficient, organizations should actively con- duct a fraud risk assessment to identify risks for the purpose of mitigating or controlling them. When conducting the assessment, consideration must be given to all types of fraud, including both financial reporting fraud and misappropriation of assets. The latter can be committed by insiders, outsiders or both in collusion. In addition, illegal acts also need to be considered, such as breaches of regula- tion, insider trading and payment of bribes. Each organization should have an ongoing process to systematically identify, as- sess and evaluate fraud risks. At a minimum, the process should be updated annually. CAS 260 17. In the case of listed entities, the auditor shall communicate with those charged with governance: (a) A statement that the engagement team and others in the firm as appropriate, the firm and, when applicable, network firms have complied with relevant ethical requirements regarding independence; (i) All relationships and other matters between the firm, network firms, and the entity that, in the auditor's professional judgment, may reasonably be thought to bear on independence. This shall include total fees charged during the period covered by the financial statements for audit and non-audit services provided by the firm and network firms to the entity and components controlled by the entity. These fees shall be allocated to categories that are appropriate to assist those charged with governance in assessing the effect of services on the independence of the auditor; and (ii) The related safeguards that have been applied to eliminate identified threats to independence or reduce them to an acceptable level. (Ref: Para. A29-A32) .........................................CONTINUED,.......................................................................