【正文】 ble amount. 5 The fifth element in the perfect storm was the large amounts of debt and leverage held by each of these fraudulent panies. This debt placed tremendous financial pressure on executives to not only have high earnings to offset hi gh interest costs but also to report high earnings to meet debt and other covenants. For example, Enron’s derivativesrelated liabilities increased from $ billion to $ billion during 2021 alone. Similarly, WorldCom had more than $100 billion in debt when it filed history’s largest bankruptcy. During 2021 alone, 186 public panies, including WorldCom, Enron, Adelphia, and Global Crossing,recorded $368 billion in debt filed for bankruptcy (Portland Business Journal, 2021). The sixth element of the perfect storm was the nature of . accounting rules. In contrast to accounting practices in other countries such as the United Kingdom and Australia, . generally accepted accounting principles (GAAP) are much more rulebased than If a client chose a particular questionable method of accounting that was not specifically prohibited by GAAP, it was hard for auditors or others to argue that the client couldn’t use that accounting method. The existing general principles already contained within GAAP notwithstanding, when auditors and other advisors sought to create petitive advantages by identifying and exploiting possible loopholes, it became harder to make a convincing case that a particular accounting treatment was prohibited when it “wasn’t against the rules.” Professional judgment lapsed as the general principles already contained within GAAP and SEC regulations were ignored or minimized. The result was that rather than deferring to existing, more general rules, specific rules (or the lack of specific rules) were exploited for new, often plex financial arrangements, as justification to decide what was or was not an acceptable accounting practice. Consider the case of Enron. Even if Andersen had argued that Enron’s Special Purpose Entities (SPEs) weren’t appropriate, it would have been impossible for Andersen to make the case that they were against any specific rules. Some have suggested that one of the reasons it took so long to get plea bargains or indictments in the Enron case was because it wasn’t immediately clear whether GAAP or any laws had actually been broken. 6 A seventh element of the perfect fraud storm was the opportunistic behavior of some CPA firms. In some cases, accounting firms used audits as loss leaders to establish relationships with panies so they could sell more lucrative consulting services. The rapid growth of the consulting practices of the Big 5 accounting firms, which was much higher than the growth of other consulting firms, attested to the fact that it is much easier to sell consulting services to existing audit clients than to new clients. In many cases, audit fees were much smaller than consulting fees for the same clients, and accounting firms felt little conflict between independence and opportunities for increased profits. In particular, these alternative services allowed some auditors to lose their focus and bee business advisors rather than auditors. This is especially true of Andersen。 Poor’s and Fitch/IBC—who all received substantial fees from Enron— also did nothing to alert investors of pending problems. Amazingly, just weeks prior to Enron’s bankruptcy filing—after most of the negative news was out and Enron’s stock was trading for $3 per share—all three agencies still gave investment grade ratings to Enron’s debt. Finally, the ninth element of the perfect storm was three types of educator failures. First, educators had not provided sufficient ethics training to students. By not forcing students to face realistic ethical dilemmas in the classroom, graduates were illequipped to deal with the real ethical dilemmas they faced in the business world. In one allegedly fraudulent scheme, for example, participants included virtually the entire senior management of the pany, including but not limited to its former chairman and chief executive officer, its former president, two former chief financial officers, and various other senior accounting and business personnel. In total, there were more than 20 individuals inv