Corporate Failures and Enron Case Study

A separate legal entity created for specific objectives, often used to hide debt or inflate assets.

A method of accounting where assets are valued based on their current market price, even if they have not been sold. This method is prone to manipulation.

A type of accounting fraud where a company inflates its revenues and assets by using creative accounting techniques.

A large company that sells energy and related services, like trading.

A financial instrument that derives its value from an underlying asset, such as energy or commodities. Often used for hedging.

A complex financial transaction that can be used to hide debt or manipulate profits.

The top executive responsible for overseeing day-to-day operations. Often involved in strategic decision-making.

A fraudulent scheme where early investors are paid returns from the investments of later investors instead of actual profits.

This Act criminalizes holding or transferring property where the ownership is hidden, making the true owner unclear, and allows the government to seize such property.

This Act deals with crimes where a public servant is bribed by a commercial organization.

This Act targets crimes related to influencing a public servant with the intent to gain an advantage.

This Act deals with the punishment for individuals who help or encourage someone to commit crimes defined in this Act.

This act establishes SEBI, which is responsible for protecting investors in securities, promoting the development of the securities market, and regulating it.

This chapter deals with the powers and responsibilities of SEBI.

This act aims to stop money laundering and ensures confiscated properties derived from such activities.

This Act deals with crimes related to bribing a public servant for personal advantage.

The process of uncovering the truth behind a whistleblower complaint. This involves collecting evidence, interviewing witnesses, examining documents, and analyzing data to establish the facts of the alleged misconduct or harassment.

Assessing the scope and severity of misconduct, such as harassment or fraud, to determine the impact on the organization and its employees. This includes evaluating potential financial, legal, and reputational risks.

Identifying the individuals involved in misconduct and evaluating their level of responsibility. This might involve examining the actions of senior staff, managers, and executives.

The investigation aims to discover the amount of financial harm caused by asset theft, bribery, or corruption. This involves analyzing financial records and data to determine the extent of the financial loss to the organization.

The investigation determines the full scope of wrongdoing involving asset theft, bribery, or corruption, by examining evidence, financial records, and witness accounts.

Identifying and evaluating the responsibility of individuals or groups involved in asset theft, bribery, or corruption. This might involve examining the actions of employees, supervisors, and executives.

Analyzing financial records and data to determine the amount of financial loss caused by asset theft, bribery, or corruption. This helps to quantify the damage done to the organization.

A specialized audit that investigates financial irregularities, potential fraud, or compliance violations. It focuses on finding evidence admissible in legal proceedings.

An independent examination of financial information to express an opinion on its fairness and accuracy. This can be statutory for legal requirements or internal for company improvement.

A type of engagement that focuses on gathering evidence and uncovering facts related to a crime or wrongdoing. The goal is to establish the truth and provide evidence for legal proceedings.

The primary stakeholder who initiates a forensic accounting or investigation engagement, providing the mandate and objectives.

The specific requirements, goals, and expectations outlined in the mandate provided by the primary stakeholder for a forensic accounting or investigation engagement.

The distinctive features and elements that define a forensic accounting or investigation engagement, such as the objective, approach, skills required, and expected outcomes.

Any person or entity that has legal authority to take action based on the findings of a forensic accounting or investigation engagement, such as law enforcement or regulatory bodies.

Evidence gathered in a forensic accounting or investigation engagement that meets legal standards and is admissible in court.

A misleading term used to describe a fraud investigation. It's incorrect because "Forensic Audit" refers to using forensic accounting techniques within an audit, not a separate type of audit.

A type of engagement where professionals investigate financial irregularities or crimes to find evidence and determine the extent of wrongdoing.

A set of standards designed to guide professionals conducting FAI engagements. These standards ensure consistency and professionalism in investigations.

Independent opinions expressed by auditors about the accuracy and fairness of financial statements based on their work conducted according to auditing standards.

The responsibility of an auditor to provide an independent opinion on financial statements, ensuring they are accurate and free from material misstatements.

Parties that have a stake in a company's financial well-being, such as investors, creditors, and regulators.

Government agencies like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) that have regulatory authority over financial institutions and markets.

A type of engagement where a professional accountant focuses on gathering evidence to confirm or refute suspected illegal, unethical, or fraudulent activities.

The desired outcome of the engagement as outlined by the mandate. It defines the problem to be investigated and what the professional is expected to achieve.

Indicative questions designed to help the professional clarify the nature of the engagement and determine if it qualifies as a forensic accounting engagement.

Providing expert testimony about financial or non-financial matters in legal proceedings, arbitration, mediation, or alternative dispute resolution processes.

A type of engagement where the primary purpose is to gather evidence about allegations of legal, ethical, or contractual violations.