The Rocking-Horse Winner Essay - 1138 Words

D. H. Lawrence’s fable of materialism, affluence and a broken mother/son bond echoes greedy transgression. His writings are well-known for delving into human nature and he does an excellent job demonstrating the trait of materialism, morally questioning the value of love versus the hazard of greed. This upper-class family is shattered by avarice; their eventual downfall comes, despite the overwhelming effort of keeping up appearances. The mother’s misplaced affection for her children illustrates the negative results that wealth, destiny, and lack of love will produce -- the dehumanization of society as a whole. â€Å"They lived in a pleasant house, with a garden, and they had discreet servants, and felt themselves superior to anyone in the†¦show more content†¦Both parents are guilty of neglecting their relative responsibilities, choosing instead to worship wealth. Because of their unique obsession with future riches, their home becomes â€Å"haunted† by one particular phrase: â€Å"There must be more money! (101)† Though this word was never spoken amongst the residents of the house, it was well-known in the minds of all who lived there. â€Å"It came whispering from the springs of the still-swaying rocking horse†¦The big doll, sitting so pink and smirking in her new pram, could hear it quite plainly, and seemed to be smirking all the more self-consciously because of it. (101)† The whisper infiltrated the rooms with its secret, filling each and every corners and cranny, right to the woodwork itself. The manner with which the author illustrates Paul, th e young boy at the heart of the story, is replete with a child’s emotion, as though you are looking through his eyes. When he asked his mother about luck, â€Å"it’s because your father has no luck, (101)† she responds. â€Å"Is luck money, Mother?† She tells him that luck is the reason you have money, further confusing him with her choice of words. This prevailing attitude toward luck in the sense that you must be lucky instead of skilled to make money explains her attitude towards work in general. She would rather have money and not have to work than earn wages for a job well done. Paul decided since neither his mother or father had luck, he had luck of his own. â€Å"Well,Show MoreRelatedSummary Of The Rocking Horse Winner 813 Words   |  4 Pages1244-1245 BP Rocking and LS 1261 1-4 A Shocking Accident and LS 1268 1-4 The Soldier and LS 1275 1-4 Wires and Ls Anthem and LS 1277 1-3 1296-1297 BP Demon Lover and LS 1305 1-4 1306 1-10 1307 Vocab Writing Assignments: Write: Three messages from Rocking Thesis: â€Å"The Rocking-Horse Winner† by D.H. Lawrence, represents three messages. POV #1: Lawrence, wrote â€Å"The Rocking-Horse Winner,† and brought forth the message that greed is a curse. POV #2: â€Å"The Rocking-Horse Winner†, by D.HRead MoreThe Rocking Horse Winner by D.H. Lawrence Essay1000 Words   |  4 Pagesbut neglect the emotional aspects. The overpowering need for money takes a toll on families. D.H Lawrence’s short story explores the dynamics of money and its psychological toll. The story’s unhappy family in D.H Lawrence’s short story, â€Å"The Rocking-Horse Winner†, demonstrates the adverse psychological effects that derive from the insatiable desire of money and mindless consumerism. The stories dissatisfied family demonstrates the adverse psychological effects that arise from the insatiable desireRead MoreAnalysis of The Rocking Horse Winner by D.H. Lawrence1723 Words   |  7 PagesJust Keep Rocking Individuals have struggled with ignorance time and time again, and this ignorance can penetrate every aspect of their lives. In the short story by D. H. Lawrence, â€Å"The Rocking-Horse Winnerâ€Å", young Paul has to encounter a series of misfortunate events, due to the fact that his beloved ambitious mother is unworthy of the what she has and each circumstance leads him and his family to great distress. With a burden on his shoulders, he will not stop until he gets what his mother desperatelyRead MoreThe Rocking Horse Winner: Examining Relationships Essay535 Words   |  3 PagesA relationship between a mother and son should be one that is full of unconditional love. The mother should be able to provide for the son and in return the son should look to the mother for comfort and stability. In D.H. Lawrences, The Rocking-Horse Winner, the relationship between the protagonist, Paul and his mother is not ideal at all. The first indication the relationship between Paul and his mother is not one that is ideal is when we are first introduced to the mother. She revealsRead MoreEssay about Examining Greed in The Rocking Horse Winner656 Words   |  3 PagesExamining Greed in The Rocking Horse Winner In The Rocking Horse Winner D. H. Lawrence tells us about the traumatic downfall of an upper middle class family struggling to maintain appearances through habitual overspending. Both the parents with common jobs and expensive tastes (pg.646) exploit all their resources to give their family the best; however, it was only to retain their high status in the society. The Rocking Horse Winner depicts a common demon we all face; greed, societys needRead More Character of Hester in Lawrences The Rocking Horse Winner Essay1068 Words   |  5 PagesCharacter of Hester in Lawrences The RockingHorse Winner Hester is one of the main characters in D.H. Lawrence’s â€Å"The Rocking-Horse Winner.† The story describes a young boy, Paul, who tries to win his â€Å"mother’s love by seeking the luck† (Kaplan 1971), which she believes she does not possess. Lawrence â€Å"condemns the modern notion that happiness and luck come from the outside, rather than from within; that happiness must take the form of money and goods rather than the erotic, parental, andRead MoreEssay about D. H. Lawrences The Rocking-Horse Winner1535 Words   |  7 PagesD. H. Lawrences The Rocking-Horse Winner â€Å"The Rocking-Horse Winner† is a short story by D. H. Lawrence in which he creates a criticism of the modernized world’s admiration and desire for material objects. It was published in Harper’s Bazaar magazine in 1926 for the first time (E-Notes). The story’s main character, Hester, is a beautiful woman who is completely consumed by the idea of possession, and so she loses out on the love of family and the happiness of life. Her son, Paul, also learnsRead MoreAn Abrupt and Surprising Ending in The Rocking Horse Winner by D.H. Lawrence753 Words   |  3 PagesThe Rocking Pig (An analysis of Abrupt, Surprising Endings) Life is a sudden gift, that is bestowed upon us in a magnificent way, with people all around us mostly for guidance and help, but with all of these gifts, there are tragedies. Even more sudden they come out of nowhere with enough malice to cause the death of thousands of people a day. This has become a very great trend for authors, the act of sudden disasters that will slap you in the face as you read them. In the story, â€Å"The Rocking-HorseRead More Use of Tone to Create Mood in D.H. Lawrences The Rocking-Horse Winner1820 Words   |  8 Pages D. H. Lawrence uses tone to create a mood in his short story The Rocking-Horse Winner. His ability to create tone allows us to understand the characters of the story, and enables us to actually feel as if we are in the story by creating such a vivid mood. Lawrence uses the eyes of the main character, Paul, to show how he feels about the events taking place, and this in turn helps the reader empathize with the boy and understand the story. Lawrence also establishes a theme by allowingRead MoreThe Rocking Horse Winner908 Words   |  4 PagesYour traditional life lesson is learned when an older, more experienced person leads by example or instruction. D.H. Lawrence has news for the status quo in his short story, â€Å"The Rocking-Horse Winner.† Hester is the unloving mother of three children that she describes as being â€Å"thrust upon her, and she could not love them† (793). The reason she cannot love her children is because of the nagging feeling of not having the cash flow to live the lavish life she desires. Hester is a beautiful woman who

How does bilateral trading differ from electricity pooling Free Essays

string(257) " Capacity short and Capacity sufficient countries Capacity short and Capacity sufficient countries as far as energy is concerned, refer to countries whose demand response for energy is short and sufficient respectively \(through capacity mechanism\)\[13\]\." ABSTRACT Liberalisation in the energy sector opened opportunities for new market entrants leading to high competition in the market. As such, countries were forced to change their models of electricity trading in order to remain efficient and competitive in the market. The differences between bilateral and electricity pooling models are well described by the arrangements made. We will write a custom essay sample on How does bilateral trading differ from electricity pooling? or any similar topic only for you Order Now In this sense, the differences between bilateral and electricity pooling will be critically analyzed pointing out the differences between contracts for differences, power purchase agreements, differences in market structure, rules and procedures. The research in question is expected to reveal the inefficiencies that are associated with electricity pooling (centralized market system) and the reason why most countries are transferring to bilateral trading (decentralized market system). Equally important, a comparison of both models of trading to each other in a liberalised market will be carried to show that bilateral trading is a market oriented model and as such, the most efficient in a liberalized market. CHAPTER ONE Introduction To begin with, electricity as a commodity has the capability to be sold, bought and traded altogether. At the most basic level, it is not easy to store electricity and as such, it has to be available on demand. Therefore, electricity has to go through a cycle of generation, transmission, distribution, supply and metering and as such, the supply should meet the demand[1]. According to Crew, Schuh the Centre for Research in Regulated Industries[2], â€Å"electricity markets are defined by the physical realities of transmission systems along with the features of regulation and the institutions†. In the same line of deliberation, electricity marketing is based on various models and in this context, there will be an exploration of bilateral and electricity pooling models along with a comparison of both to each other in a liberalised market. Background of Study According to Bjornebye [3], electricity trading may take place bilaterally or at organized markets, where contracts for the sale and purchase of electricity under bilateral trading are entered into directly between the seller and the buyer. It can also be done by the help of trading institutions, brokers or basically out of the sole initiative of the parties in the contract. Fundamentally, such agreements or contracts are termed as over-counter contracts, abbreviated OTC[4].Currently, it has been noted that in many European electricity markets, bilateral trading has been playing a key role. On the other hand, electricity pooling is the mechanism through which electricity contracts involve predetermined multilateral contracts amongst participants in the market[5]. Importantly, bilateral trading is market-oriented in design as it encourages more interaction between sellers and the buyers. While this is the case, electricity pooling operates as a centralized trading model and as such, competition is exclusively on generators with nominal contribution from the buyers[6]. A critical analysis of the two models in a liberalized market would make it easy to suggest which models work most efficiently. Statement of the Research Problem Having stated that electricity is a commodity that cannot be stored, it then becomes essential to determine the best model of trading that can efficiently be used in a liberalized market. Following this point, the statement of the research problem is how bilateral trading differs from electricity pooling detailing the major differences in terms of contract for differences and power purchase agreements, differences in Market Structure and the differences in Market Rules and Procedures. This will then shed light on which model works best in a liberalised market. Objective of the Research The main objective of the study is to show the main differences in terms of contract for differences in power purchase agreements, differences in Market Structure and the differences in Market Rules and Procedures for both bilateral and electricity pooling models of trading. Research Questions The research in question is meant to answer the following questions: How does bilateral trading differ from electricity pooling What are the differences between contract for differences and power purchase agreement, differences in Market Structure and the differences in Market Rules and Procedures Which is the most efficient model in a liberalized market Significance The study in question is of great importance to the electricity industry in the sense that the results obtained can be used to make recommendations on which model of trading is the most efficient; bilateral trading or electricity pooling. Again, stakeholders in the electricity market can use the information to make informed decisions. Study Plan CHAPTER TWO Liberalisation in the energy sector In reference to Collier, European University Institute Working Group on Environmental Studies[7], energy being an important commodity, should receive free movement. Outstandingly, government intervention in the energy sector has always been strong and as such, public regulation and ownership is what has controlled the sector. Recently, there has been much reform, and as such, a number of countries across the world have changed their focus from the traditional one to liberalisation made possible through international energy investment law[8]. It is actually through the liberalisation of the energy sector that markets have been opened to competitors. The rationale for liberalization is deemed to have been merely based on arguments of economists. This is to suggest that liberalisation is deemed to reduce barriers in the market along with the increased economic efficiency[9]. According to Geistberger[10], liberalization of the energy sector has been well received by some states while others have lagged behind. However, Geistberger[11], points out that through liberalisation prices are expected to be lower owing to more efficiency in both the allocation and the management of resources. In particular, Europe has lagged behind with a large percentage of the major gas utilities focusing on the domestic operations. However, if such companies exploited the liberalisation opportunity, then, Europe would benefit from more merger and acquisition opportunities also, Europe would benefit from better investment in the management and infrastructure along with the creation of opportunities for distribution companies[12]. Capacity short and Capacity sufficient countries Capacity short and Capacity sufficient countries as far as energy is concerned, refer to countries whose demand response for energy is short and sufficient respectively (through capacity mechanism)[13]. In this sense, a capacity short country cannot supply enough energy and as such, cannot even try to engage in the cross border marketing or meet demand. On the other hand, a capacity sufficient country has the capability to supply energy sufficiently even at its peak loads. Such a country can then engage in cross border trading (liberalized market) without being constrained. Brief Description of Pooling Principally, electricity pooling operates in the market under arrangements of trading that are mandatory along with compulsory bidding and settlement procedures. The goal of electricity pooling is to maximise on the social welfare made possible through electricity production and consumption[14]. The main participants in an electricity pool are the generators, system operators, market operators and suppliers just to mention a few and as such, they are the ones who are obliged to sign the pooling agreements. For compulsory pools, generators are required to sell their output to the pool and as such the price is determined by the pool. Notably, electricity pools often allow member generators to place bids on the amount of electricity that they can generate given a certain price. It is clear in this case that the buyers input is not considered. Pools operate on an hourly basis whereby generators have to compete to meet demands of each hour. Brief description of bilateral trading Kirschen Strbac[15] asserts that bilateral trading involved two parties, namely the buyer and the seller. In this sense, the contracts entered in this case are without the interference or facilitation from a third party. Basically, the amount of time and the quantities of energy available for trading enable the sellers and buyers to choose different forms of bilateral trading[16]. Such forms of bilateral trading take in customized long-term contracts which are used on small amounts of energy in over counter trading which are meant for large amounts of energy. Bilateral trading may also take the form of electronic trading which is commonly used in a computerized market place. Needless to say, prices in a bilateral trading are determined by parties involved. CHAPTER THREE Comparison Notably, both electricity pooling and bilateral trading models have both advantages and disadvantages but is worthy to note that bilateral trading gives opportunities for the parties involved to trade without restrictions to . On the other hand, electricity pooling allows generators to find a market for their electricity. Comparison between contract for differences and power purchase agreement Contract for differences (CFD) is a contract between two parties which takes in a buyer and a seller and in particular, it shows that the seller is to pay the buyer the difference realized between the current value of the particular asset and the value at the time of the contract. In other words it is an equity derivative that gives room for the parties involved to speculate on share movements without the need to own the underlying shares. In this sense, there is no connection between the CFD and the system operator; therefore there is no market operator in this case[17]. On the other hand, power purchase agreements refer to contracts that are entered into between two parties. In particular, it is a contract entered in by the seller (electricity generator) and the buyer (the one who seeks to purchase electricity). It is actually a take it or leave it contract and as such, the producer is obliged to finance, design, build, maintain, own and as such monitor the energy production asset of the host and then sell the power to the host at a rate that is negotiated at a predetermined moment in time[18]. Differences in Market Structure Both the electricity pooling and the bilateral models of trading have abstract differences. For instance, electricity pooling assumes a centralized market accompanied with a central schedule and dispatch of generators. On the contrary, a bilateral model assumes a decentralised market with much dependence on self dispatch. Whereas, pools have their contracts based purely on finances and as such, contracts entered into are used to manage the fiscal risks. Quite the opposite can be said of the bilateral model that uses contracts as the main tools of trade. Differences in Market Rules and Procedures Market rules and procedures in both models of trading differ. While pools are not considered as markets owing to lack of involvement of buyers in price determination, bilateral models make a better market owing to the involvement of buyers and sellers in the process of trading. Notably, differences of prices due to demand fluctuations are common in pools and as a result, CFDs are commonly used in order to cope with the volatility of prices[19]. There is less volatility in a bilateral model since there is room for negation between the buyer and the seller. Therefore, use of power purchase agreements is common with this model. Therefore, in pools the price is determined without input from the buyer while in a bilateral model; price determination is reached through a negotiation between the buyer and the seller. CHAPTER FOUR Country specific text and cases (E.g England and Wales Experience) Noticeably, The England and Wales Experience have proved to be a good example owing to its use of the electricity pooling model in the 1990s. However, the new labour Government in power in the UK from May 1997 introduced new reviews of the systems of energy owing to the government’s concern over manipulation of the pool by large generators. Electricity trading arrangements were subsequently reviewed and the year 2001 witnessed a launch of new rules termed as New Electricity Trading Arrangements (NETA)[20]. This allowed electricity trading to be conducted outside a central power market (pool) and as such, the trading took place in a bilateral model of trading whereby sellers and buyers were afforded the opportunity to negotiate the prices of the electricity. This led to enhanced competition and price reductions along with the introduction of a balancing mechanism which ensured stability of the market system by either paying for the shortfalls or being paid for excesses. CHAPTER FIVE Conclusion Basically, electricity pooling and bilateral trading present two models of trading with different ideas of operation. In actuality, electricity pooling is a centralized market system while the bilateral model of trading is decentralised. As such, the bilateral model of trading allows competition and the interaction between buyers and sellers and as a result, it is the most efficient method for use in a liberalized market. Thus a liberalised market allows suppliers to compete across the whole spectrum of the market and as such, just as bilateral trading, liberalization allows room for competition. REFERENCES Bajpai, P Singh, SN 2004, Electricity Trading In Competitive Power Market: An Overview And Key Issues , International Conference On Power Systems, ICPS, Kathmandu, Nepal P110. Bielecki,J Desta, MG 2004, Electricity Trade In Europe: Review Of Economic And Regulatory Challenges, Kluwer Law International, Netherlands. Bjornebye, H 2010, Investing in Eu Energy Security: Exploring the Regulatory Approach to Tomorrow’s Electricity, Kluwer Law International, Netherlands. Brennan, TJ, Palmer, KL Martinez, S 2002, Alternating Currents: Electricity Markets and Public Policy, Resources for the Future, Washington, DC. Cameron, PD 2010, International energy and investment law: the pursuit of stability, Oxford University press, New York, USA. Collier, U, European University Institute Working Group on Environmental Studies 1998, Deregulation in the European Union: Environmental Perspectives, Routledge, New York. Cottrell, M 2011, Guidebook to the Leed Certification Process: For Leed for New Construction, Leed for Core Shell, and Leed for Commercial Interiors, John Wiley and Sons, New Jersey. Crew, MA, Schuh, JC Center for Research in Regulated Industries (Rutgers University) 2003, Markets, Pricing, and Deregulation of Utilities, Springer, Massachusetts. Dow, S 2008, Electricity Privatisation, Liberalisation and Contracting, (Lecture Notes on Downstream Energy Law and Policy, University of Dundee, CEPMLP. Geistberger, M 2012, The Internationalization of Energy Firms: A Literature Review, GRIN Verlag, German. Harris, C 2006, Electricity Markets: Pricing, Structures And Economics, John Wiley Sons, New Jersey. Kirschen, DS Strbac, G 2004, Fundamentals of Power System Economics, John Wiley Sons, New Jersey. Organisation for Economic Co-Operation and Development 2004, Energy Policies of IEA Countries: The Netherlands 2004 Review, OECD Publishing, Paris, France. How to cite How does bilateral trading differ from electricity pooling?, Essay examples

Financial Statement Fraud and Corporate Governance

Question: Discuss about the Financial Statement Fraud and Corporate Governance. Answer: Introduction Lehman Brothers was an international financial service provider firm. It was the fourth largest firm in the field of investment banking in the United States before September 2008. In September 2008, Lehman Brothers declared themselves as bankrupt and filed for Chapter 11 Bankruptcy. The main causes for failure and collapse of Lehman Brothers were not -assessment of risks on the part of the management and the condition was further aggravated by the auditors by not warning the management about the consequences that would follow because of negligence by the management (Cappelleto, 2010). The auditors also concealed such facts and figures from the financial statements, which if shown, would have saved the firm from collapsing. Hence, strong procedure and regulations is the need of the hour as it demands strict control and lead to an effective course of action. Between the year 2001 and 2008 there a major boom in the housing market. Lehman Brothers assumed the investment in the housing market a highly profitable venture and it started borrowing heavily and invested all its proceeds in the mortgage market. By the time, the sub- prime mortgage business of housing finances had also become worse. Another major part of exposure by Lehman Brothers at that time was in Real Estate, private financing and leveraged lending from its own capital (CPA, 2012). The firm had invested billions of money in risky portfolios without keeping the consequences in mind. And for all these investments, it had raised billions of dollars from various financers just like other investment bankers were doing. Instruments used A major disastrous and deceitful step that was taken by Lehman Brothers was the use of Repo 105 transaction in a wrong manner so as to present a rosy image of its balance sheet before the public who was investing in Lehman Brothers and the financial institutions in order to receive more lending. The Investment Securities were kept as collateral and the funds thus received were used to pay off the troubles obligations of the firm (Kruger, 2015). The firm was supposed to show the holding of securities as collateral by the third parties as a nothing in the financial statements and to show the securities as it is in the Balance Sheet, which was concealed with the help of auditors. The transaction was shown as for sale of inventory of securities and the securities were slowly and gradually decreased by these Repo Transactions (Christensen, 2011). Moreover, the loan taken against these securities were never shown in the Balance Sheet as the firm treated these Loans as Sales Proceeds of Inv estment Securities. All this was done to depict more liquid assets and funds and less risky liabilities in the Balance Sheet of the firm. The long-term investments securities and assets were being mortgaged for short-term borrowings by Lehman Brothers in form of Repo Transactions and Commercial Papers and in mid and late 2008, the firm was borrowing huge amounts on a daily basis. This firm was exposed to a huge risk because it borrowed huge sum of money. Once the obligation of debt enters the system, it leads to hype in the interest rate and ultimately a major iskOver the time, the financial institutions stopped accepting long-term securities as collateral against short-term borrowing and the firm gradually failed to meet its obligations (Hoffelder, 2012). All theses major transactions and facts had led to the collapse of Lehman Brothers. The situations worsened more with the concealment of these material and key matters from the financial statements. Had all these risky ventures been forewarned by the auditors in the financial statements, the collapse could have been delayed or might have been avoided (Kaplan, 2011). The Auditors of Lehman Brothers were Ernst Young LLP (one of the big four accountancy and audit firms) having its headquarters in New York. Auditing Standard ASA 701- Communicating Key Audit Matters in the Independent Auditors Report It came into effect for financial reporting periods ending on or after 15th December 2016. The main objects of inculcating this auditing standard are mainly to assess the key audit matters and once assessed, these matters should be communicated along with an unbiased opinion on such key matters to the management of the audited firm. The purpose of such communication is to ensure enhanced transparency in the financial statements audited and to enable the users of the financial statements to have a look into the matters which can in any way affect such users in future. In the case of Lehman Brothers, if ASA 701 was to be followed then the auditor would not have concealed the material fact that was key audit matters on the basis of which the financial statements were to be interpreted by its users and investors. As per Roach (2010) Key Audit Matters are those matters which require significant attention of the auditor during the auditing process of financial statements and reports. For assessing such significance, the auditors have to find out the matters that have a high risk of material misstatement, high uncertainty and the effects of such transactions that have occurred during the audit period. Auditing Issues surrounding the Lehman Collapse: Following points explain in Lehman Brothers collapse case, the role of Auditors in Concealment of material facts and non-communication and now- disclosure of key matters that would have been disclosed if the ASA 701 was there at that point of time and was followed. However the unavailability of the standard and major loopholes in the system led to the total downfall. In the Repo Transactions undertaken by Lehman Brothers, the short-term financing transactions were treated as sales. In the Balance Sheet of the firm, the Securities offered as collateral were removed from the Balance Sheet and liability was reduced so as to depict that the liabilities were being paid off by selling off of securities thereby reducing the leverage. The actual treatment of Repo Transaction should have been that the Securities were to be shown as it is in the Balance Sheet and a nothing was to be given that the securities have been given as collateral to third parties against the funds raised from them (Wiggins et. al, 2014). Further, the loan raised from the third parties was to be shown in Balance Sheet till these were repaid. As the transaction was treated as Sales under FAS 140, hence the loan taken from third parties was shown nowhere and the securities shown as sold were reduced from the assets in the balance sheet (Parker et. al, 2011). All this was affirmed by t he auditors of the firm and no nothing for the same were given in their Audit Report as the FAS 140 did not say anything about the independent obligation of disclosure and the same was taken advantage of by the firm and auditor too. Lehman and its Auditor firm decided not to show the impact of the Repo 105 transactions on the balance sheet as it would make it clear to the investors and the financiers that the leverage effect was not changing and the firm was already under huge loan liabilities. The Auditors should have disclosed all the impacts related to the wrong method of treatment of Repo 105 transactions that were being done by Lehman Brothers (Christian Metrick, 2014). Hence, the auditor decided not to disclose the impact of Repo. Approval of Lehmans Repo 105 Policy for manipulating the Balance Sheet Lehman had made an internal policy of Repo 105 and Reverse Repo and to further treat the same in the balance sheet as trading (sale and repurchase) of investments. This policy was made after the approval and affirmations from Auditors. The Auditor should have stopped Lehman from doing so and should have forewarned them against the consequences that this policy could have in future. Afterward Lehman had also started Repo 108 transactions in which equities were used in place of fixed income securities as collateral. The same was also affirmed by the Auditors of the firm. For treating the Repo 105 transactions as Sales under FAS 140, the firm had to obtain a true sales opinion that stated the transactions are fully complying the legal criteria to be followed for transfers /sales. This True Sales Opinion was not obtained by Lehman in the US. Afterward he tied up with finances of UK to enter into Repo transactions where he had obtained true sales opinion with a condition that the investment securities will only be traded within the UK and the securities should also be sited in the UK (Manoharan, 2011). Lehman Brothers entered into a number of transactions on the basis of this opinion through which he collateralized fixed income securities amounting to billions of dollars (Fazal, 2013). After some time, without disclosing it to UK financers, Lehman started transfers of billions of dollars of American fixed income generating securities also. The auditors had full knowledge of the above situations but never disclosed the same in financial statements. Approval of Financial Statements that concealed Repo 105 transactions There was an obligation on the part of Lehman to buy back the billions of dollars of securities that were transferred temporarily to the third parties. This was nowhere disclosed by Lehman Brothers in their Financial Statements regarding the same. All such transactions were merely presented as Balance Sheet Fluctuations in the management reports (Baldwin, 2010). Secondly, the obligation to repurchase these securities at a lower rate were treated as derivatives on the balance sheet and these derivatives were hidden in a large group of derivatives mentioned in the footnotes of the financial statements (Heeler, 2009). All this was approved by the Auditors which was a total concealment of material misstatements. As per IFAC (2015) the leverage ratio had materially declined in the year 2008 as compared to the year 2007 for the firm. Moreover, the reduction was temporary and falsely created by Repo 105 transactions. After the end of fiscal quarters, Lehman used to repay the debts of Repo transactions and the securities would again get shown in the Balance Sheet. This would affect the leverage ratios up to a material level that had to be disclosed by the firm in financial statements and by the auditor in his audit report (Fazal, 2013). The above-said points clearly explain as to what were the key matters in the case of Lehman Brothers that were to be communicated to those charged with governance. If the Auditing Standard ASA-701 was followed and were there for the persual of Lehman Brothers and its auditors, the auditors might have strictly followed the same and saved a lot of investors and mainly Lehman Brothers from such huge irrecoverable losses. Therefore, the standard ASA-701 could have acted as a safeguard and provided a remedial course of action. Recommendation Auditors should also correctly depict and audit the financial statements. Auditors have the responsibility of the society as a whole to correctly audit the books of accounts and to report the misappropriation of the company. Auditors should comply with the auditing standards and completely apply them in use of audit. Auditors are the watch dog and not bloodhounds, but they should be able to correctly understand the working of the company and audit the books. Auditors can be held responsible for the loss to the third parties who relied on the financial statements audited by the Audit firm as seen in the case of Lehman Brothers. Hence auditors should correctly report all misappropriations done by the management in their audit report. Further, the collapse of Lehman indicates that there was huge gap between the regulations and the real implementation. The failure indicates the pitfall in the regulatory mechanism hence, urging for stringent supervision and audit standards. It is essentia l for policy makers like IFRS, Accounting Standard Board, and Basel to implements stringent norms so that ethical practice are followed. Conclusion The case of Lehman Brothers provides many important lessons to every organization, be it small or large with regard to corporate governance and the ethical standards to be followed by the management and its evaluators including the auditors. The organizations should strictly adhere to the accounting policies and standards that have been set as these have been set keeping in view the impacts of each and every aspect of financial matters that are to be incorporated while preparation of financial statements and that can even get a countrys economy at stake if misled (Larcker Brin, 2011). It is recommended that the companies should do such reporting of true and correct financial transaction which should not mislead the stakeholders. Also, the financial statements should reflect the correct picture of the books of accounts and company`s operations. In such case, the company should try to resort to the adoption of regulatory accounting and auditing standards. References Baldwin, S., 2010. Doing a content audit or inventory. Pearson Press. Cappelleto, G., 2010. Challenges Facing Accounting Education in Australia. AFAANZ, Melbourne Christensen, J., 2011. Good analytical research. 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