o Fact: Adlephia Communications caused losses of over 60 Billion to investors

 A company books its everyday, ordinary, operating expenses under capital expenses

 Problem is according to GAAP capital assets expenses can be spread out for the duration of use

 Example: WorldCom transferred over $3.83 billion in operating expenses to property plant and equipment accounts in their ledger.

 This it inflates income because expenses that are supposed to be recognized in a certain time period are now spread out.

 Causes an inaccurate EBITDA (Earnings before interest, taxes, depreciation, and amortization) Analysis which is widely used by stakeholders to measure a company's health

o Companies Under Investigation: Adelphia Communications, Enron, WorldCom, Xerox

o Fact: Enron hide over $1 Billion Dollars in Debt

 "Companies will move liabilities and debt off the books by moving them into different entities."

 A loophole in GAAP allows companies to create legal structures called special purpose entities (S

* Change the composition of the Audit Committee

 Could cause animosity between Management and the Board

o This is a step further than the rotation of Audit partners is Sarbanes-Oxley Act

 Some people simple do not trust CEOs

o It should include at least one person who has financial expertise such as an accountant

Some common words found in the essay are:
Independent Board, Calling SEC, Educating Board, CEO Accountability, Rotation Auditors, Dollars Debt, Global Crossing, Responsibilities Importance, According SEC, Enron AOL, companies investigation,  board, audit committee, * calling, auditing firm, * requiring, forensic accounting, * calling sec, accounting firms,  example,  companies, compensation plans including, plans including stock, including stock option, stock option plans,
Approximate Word count = 2261
Approximate Pages = 9 (250 words per page double spaced)