1. Page 1 Enron

2. Page 2 Enron 1.Revenue Recognition 2.Abuse of fair values - mark-to-model 3.SPEs 4.Auditors’ documentation retention

3. Page 3 Cast Kenneth Lay, PhD in Economics, CEO Jeffrey Skilling, television weatherman, MBA Harvard, McKinsey, COO Andrew Fastow, degree in Economics & Chinese, CFO Sherron Watkins, Masters degree in Accountancy, ex Andersen - whistleblower

4. Page 4 Businesses Oil and Gas Electricity Tradable pollution rights Metals Pulp and paper Speciality chemicals Weather Band width

5. Page 5 Business Model Free markets Profit, profit, profit Asset lite Rank and yank Liquidity Investment grade Political favours Accounting profit Revenue Recognition SPEs

6. Page 6 Causes of the Enron failure? 1.Unfettered Management Greed 2.Weak auditing 3.Ineffective regulation 4.Dozy non-executive directors

7. Page 7 Causes of the Enron failure? continued 5.Inattentive or poorly qualified Audit Committee 6.Failure of whistleblowers 7.Compliant lawyers 8.Dubious analysis 9.Rules-based environment

8. Page 8 Not a lone example 1.Worldcom 2.Xerox 3.Waste Management 4.Non-US examples

9. Page 9 Accounting Dodges 1.Bogus revenue 2.Book revenues early 3.One-time gains 4.Defer expenses 5.Ignore liabilities 6.Big bath provisions

10. Page 10 Standard Setting to 2005 1.Improvements to IFRSs 2.Provide a sound base for 2005 3.Start the future programme Insurance Fair Values

11. Page 11 Co-ordination between IASB & FASB 1.Business Combinations 2.Financial performance reporting 3.Liabilities and revenue recognition 4.Pension accounting

12. Page 12 Co-ordination between IASB & FASB continued 5.Derecognition (other than IAS 39) 6.Impairment of assets 7.Intangible assets 8.MD & A

13. Page 13 2005