. Members of Enron management were the individuals who perpetrated the financialstatement fraud.
Given this, why do you think auditors were held responsible when they are notthe ones actually making
the fraudulent journal entries?First and foremost, an auditors are not responsible for the preparation
and presentationof the financial statements. Auditors are only responsible to express an opinion about
thefairness and reliability of the management’s assertions about their own operations. In the caseof
ENRON scandal, the auditors of the Arthur Andersen were still held responsible since fromthe very start
of their agreement, they had the control over the company’s information anddocuments, whether to
tolerate or reveal the fraud found.Second, it is the auditors who are supposed to be the representative
of the public toprovide increased assurance whether the financial statements are reliable or not, and
the publicput confidence to their reports. In this case, it is true that they are not the ones making
thefraudulent entities but because of their purpose mentioned above, it is their task to uncover
anyfraudulent act of the management. And lastly, Arthur Andersen, as the auditing firm who is
responsible of evaluating andhaving the Enron’s financial statements be true have allowed the formal
procedures provided bythe standards in performing audit disregarded in its transactions with Enron and
made themaccomplice in Enron’s fraudulent acts. 2. Explain why the consulting fees and importance of
Enron to David Duncan and the Houstonoffice of Arthur Andersen might have affected Duncan’s
independence, and thus the quality ofthe audits he supervised.Mr. David Duncan may had developed
close ties with their client, Enron. Even his officewas in an Enron building. And receiving $$$ as his
consulting revenue. But given at that time,