Auditing of Enron Corporation
Responsible Accounting and Enron Questions
There were numerous parties associated with Enron who were responsible for creating the "crisis of confidence" in the accounting profession. At the top of the list would be Enron's executives themselves: Jeffery Skilling, Kenneth Lay and Andrew Fastow all broke numerous rules, regulations and laws that govern accounting principles in order to increase their revenue on the income statements and in turn raise their stock prices. Among the most grievous accounting sins committed were the failing to recognize Enron's true revenue, in which revenue numbers were inflated using mark-to-market accounting; falsifying earnings so that the stock prices would stay high; and committing insider trading in order to benefit even further from their deception.
A second party that caused just as much chaos in the accounting profession was the accounting giant Arthur Andersen. As Enron's own committees discovered, the then-respected firm failed to handle the company's financial irregularities ethically, and instead chose to ignore and avoid the irregularities instead of raising the problems with Enron's board. Andersen was making tens of millions of dollars from Enron every year through both its consulting and auditing services,...
Former Enron employees reported that important documents continued to be shredded despite federal subpoenas and court orders, which prohibited the practice. The employees' condition was so severe that the word "enron" was coined to mean getting victimized or wronged by the company or boss. An "enronian" came to mean an employee or investor who suffers from corporate scandal or corruption through no fault of his or her own. It
Enron could engage in their derivative trading strategy with no fear of government intervention because derivative trading was specifically exempted from government regulation. Due in part to a ruling by the Commodity Futures Trading Commission's (CFTC) chairwoman, Wendy Graham, derivatives remained free of regulatory oversight. Ms. Graham, wife of Texas senator Phil Graham, made this ruling 5 weeks before resigning as chairwoman of the CFTC and joining the Enron Board
THE PEOPLE BEHIND THE RISE AND FALL OF ENRON Kenneth Lay being one of the pioneers of Enron from its establishment in 1986, had lead the way of Enron's emergence as one of the leading company in the U.S. And eventually to its collapse and declaration of bankruptcy on December 2001. Kenneth Lay held the position as the CEO and chairman of Enron from 1986 to January 23, 2002. Lay is
Enron Identify one of the examples of financial reporting misconduct associated with the Enron scandal In the wake of the stratospheric success and subsequent fall of Enron, many were compelled to ask: how could this be possible, namely how could a firm which seemed so successful on the surface be so corrupt at its core? The answer, although not simple, can be boiled down to this: creative financial accounting. While Enron deployed
They weighed the greed of the few against the good of the many and decided in selfish favor. Without protection from this sort of corporate greed, American investors would be less inclined to invest at all. One can see the effects of just the one incidence of betrayal to investor confidence and the lack of funding in the energy sector following Enron's demise, to begin to appreciate what corporate scandal
Enron was a Texas based, low profile, gas pipeline Company that progressed from delivering energy to brokering energy futures. Exploiting de-regulation, it pioneered an innovative mark- to- market pricing strategy and started selling electricity in 1995, entering the European energy market in 1995. Enron broke new ground by buying, selling and hedging electricity against market risk just like shares and bonds. In 1999 Enron entered the hi-tech, Internet bandwidth market buying
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