Explore BrainMass

This posting addresses related-party transactions and fraud.

The motivation of upper management can be an indicator of possible financial statement fraud, Another indicator of financial fraud is related-party transactions. Please review the Web-site http:///.cnn.com/2002/LAW/02/03/enron/index.html and read the article on Enron. Briefly explain how this article illustrates that management motivation and related-party transactions are indicators of this fraud.

Solution Preview

This article shows several ways as to both how and why there was motivation from management and related-party transactions are indicators of the Enron frauds that took place. The first indicator to both the public and the government should have been when executives started to sell their Enron stock right before it began to plummet. The Powers Report even showed further how management continually manipulated accounting practices, including those involving related-party transactions, to reap the profits from their fraudulent accounting schemes. Throughout the trial, and as also discussed in this ...

Solution Summary

The solution provides a detailed discussion based on my experience as a fraud examiner regarding the article referenced by the student. The article is based on management motivation and related-party transactions that took place at Enron.