Auditing and Accounting Cases: Investigating Issues of Fraud and Professional Ethics 3rd Edition by Jay Thibodeau,Deborah Freier

Exercise 5

Consider the role of the Enron employee who was responsible for applying MTM accounting rules to electric power contracts, like the Eli Lilly contract. Assuming the employee knew that the use of MTM accounting was beyond the scope of the SEC approval parameters, do you believe that the employee had a responsibility to report the behavior to the audit committee? Why or why not?