ABSTRACT
This chapter explains how the hedge worked, how the accountants entered the next transactions on the books of Enron and the special purpose entity (SPE). The SPE created in June 1999 to hedge the Rhythms Net Connections (RNC) investment involved a transfer of Enron own restricted stock in exchange for a note and put options. The chapter surveys and evaluates the Sarbanes-Oxley Act of 2002. It discusses the important players in the corporate reporting supply chain-the boards of directors, the company executives, and the independent auditors. It evaluates where American businesses stand with regard to reforming corporate governance, especially the board of directors and its audit committee. The chapter talks about appropriate executive compensation and other changes that may more effectively focus managers on long-term financial success. It also evaluates the financial reports and reporting from the standpoint of investors.
