Enron: Enron And The Natural Gas Market Essay Words | 8 Pages. Enron fires 20, employees and billions of investors’ money is gone almost overnight. Enron, an American energy, commodities and services company based out of Houston, Texas files Enron began its life in and appeared to be a rising star in the business world. In conjunction with the accounting firm Arthur Anderson Enron became one of the biggest accounting May 08, · Enron is the most recent story of classic Wall Street greed and fraud. However it is still argued today by different stakeholders who are is responsible. This essay will take the viewpoint from multiple stakeholders to use the Enron Scandal as an example to further explain American corporate
Enron Essays: Examples, Topics, Titles, & Outlines
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Type of paper: Essay. Topic: United StatesBusinessAccountingEnronAuditFinanceInvestmentCompany. It is a requirement for all enron essay financial institutions to be accountable for their financial activities and present their financial statements in enron essay a way that they are not fraud. This means that they have the mandate to provide financial information that is trustworthy and reflect the mission of the entire institution or company.
Because of this, the stakeholders who have interest in them are only left frustrated hence, lose their interests in these financial institutions and this contributes to the downfall of such institutions. It is therefore imperative for the institutions to present financial information that is not fraud and reflects the true nature of the institution.
The prepared financial statements should be enron essay correctly to detect any error whatsoever. The auditors and accountants in charge should possess the necessary skills in auditing and accounting and the management on its part should be in a position to scrutinize the reports presented before it without any favor.
Nevertheless, this fails to be possible as was the case enron essay the Enron Company. This scandal was discovered in October and it eventually led to Enron Corporation bankruptcy. Enron Corporation is actually an American energy company that was based in Houston. In the American history, enron essay company was the biggest bankruptcy reorganization and as a result, it was in fact attributed as biggest audit failure in America.
Kenneth Lay formed this Company in after it merged with Internorth and Houston Natural Gas. The Securities and Exchange Commission in the United States actually began an enron essay and the rival competitor in Houston called Dynegy offered to purchase it at a thrown away price. However, enron essay, this deal failed and on the 2 of Decemberenron essay, Enron Company filed for Bankruptcy under the United States Bankruptcy code chapter Majority of its executives were actually indicted for various charges and later they were sentenced to prison.
For instance, the company editor was found guilty in the United States of America district court. However, by the time the company ruling was overturned at the Supreme Court, Enron had in fact majority of its customers and had eventually closed. The enron essay and employees received limited returns in the lawsuits in spite of losing billions in stock prices and pensions. Because of this scandal, new legislation and regulations were actually enacted to expand the public companies financial reporting accuracy.
For instance, the Sarbanes-Oxley Act in fact increased the penalties for altering, fabricating, or destroying the records in the federal investigations or for the act of attempting to defraud the shareholders. The complex financial statements that the company was presenting to its analysts and shareholders only confused them. This is actually attributed to its downfall, enron essay.
Additionally, its business model was complex hence unethical practices in the company required it to use the accounting limitations in order to misrepresent the earnings and this led it to modify its balance sheet to stipulate favorable performance.
Enron scandal actually grew out of steady habits accumulation. Skilling on his part relentlessly enron essay on meeting the expectations of Wall Street, pressured the executives in the company to discover new ways of hiding its debts, and advocated mark to market accounting use, which is the accounting that is based on the market value that was at that time inflated.
Fastow together with the other executives created financing structures that were complex, created off balance sheet vehicles, enron essay, and made the company deals to be enron essay bewildering which made only few people to understand them. The board was in fact informed the rationale enron essay using the Whitewing, Raptor transactions, LJM and after approving all of them, they received the status update on the operations of the company, enron essay.
The company extensively relied on the derivatives for its transactions. When his officials were asked whether they enron essay guilty of their wrongdoings, they claimed that the burn enron essay crash of the Company was direct result of its faulty business model rather than the poor or questionable accounting practices. When this scandal was investigated by the law enforcement agencies and auditors, it was established that Anderson was in fact negligent at worst and at best completely in conspiracy with the Enron creating false earnings reports hence hiding enormous debt amounts and inflating stock prices artificially past the point of no return.
Ultimately, this conspiracy led to total scrutiny of American accounting system. The Enron essay aided by the government resources was in a position to wreak a deal of havoc in a short period. Majority of the public officials described the demise of the enron essay as a product of the corporate misbehavior. However, enron essay, the company could not have scaled to such global heights nor could not have fallen so dramatically without the close financial relationships with the government agencies, enron essay.
Therefore, government employees had contributed to this scandal. However, this audit committee was criticized for these brief meetings despite its members possessing modest accounting and finance knowledge. In addition, this audit committee lacked technical knowledge to query the auditors properly on the accounting issues that were related to the special purpose entities of the company.
The board members were accused of allowing the conflict of interests to obstruct their duties as they monitored the accounting practices in the company. When this scandal became public, the conflicts of interest of this audit committee were regarded with a lot of suspicion.
The company in addition engaged in other enron essay malpractices. It actually made enron essay unethical habit of booking the costs of assets and projects that were cancelled with a rationale that there was no an official letter that was stating the cancellation of the project.
This method was commonly called snowball method. The competing company, Dynegy Inc, enron essay. disengaged from proposed acquisition of this company. In addition, its credit rating was actually reduced to the junk status.
In fact, it possessed very little cash that was necessary for it to operate efficiently despite the enormous debts it had. This scandal in addition affected the individual employees and the US in various ways and it was a good thing for the responsible individuals to be brought to punishment, which actually happened. Ethically speaking, this scandal led to what maybe are the most important pieces of legislation that is associated with oversight of corporate ethics.
This actually led to the formation of the Sarbanes or Oxley Act. With this legislation, there is a promise for the elimination and total eradication of the corporate fraud as it was practiced in Enron Company.
The formation of this Act was essentially important as it is and will continue being applied in cases like these hence provides the necessary guidelines. Bryce, Robert Pipe Dreams: Greed, Ego, and the Death of Enron. Public Affairs.
ISBN Cruver, Brian Anatomy of Greed: Telling the Unshredded Truth enron essay Inside Enron, enron essay. Basic Books. Fox, Loren Enron: The Rise and Fall. Salter, enron essay, Malcolm S. Innovation Corrupted The Origins and Legacy of Enron's Collapse. Harvard University Press. Toffler, Barbara Ley; Jennifer Reingold Final Accounting: Ambition, enron essay, Greed, and the Fall of Arthur Andersen.
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Who We Are Contact Us Our Writers WowEssays Reviews Blog Our Services. HIRE WRITER PREMIUM DATABASE. ORDER PAPER LIKE THIS. Premium samples database Get access to over 1 MILLION samples with WowEssays Premium! LEARN MORE. Introduction It is a requirement for all the financial institutions to be accountable for their financial activities and present their financial statements in such a way that they are not fraud.
References Bryce, Robert White Collar Crime. Bad Faith. Accounting Practices. Environmental Justice. Cite this page Choose cite format: APA MLA Harvard Vancouver Chicago ASA IEEE AMA. Accessed 19 May Free Essay On The Enron Scandal. January Accessed May 19, Retrieved May 19, com, Jan
The Enron Scandal Explained in One Minute: Corporate Recklessness, Lies and Bankruptcy
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May 11, · Enron is the most recent story of classic Wall Street greed and fraud. However it is still argued today by different stakeholders who are is responsible. This essay will take the viewpoint from multiple stakeholders to use the Enron Scandal as an example to further explain American corporate. Continue Reading May 09, · enron Essay vnron: The Smartest Guys in The Room is a movie about one of the US largest corporations, Enron, that went bankrupt in The movie starts with the story of Enron Corporation founder who was the chief executive officer of Houston Natural Gas, Kenneth Lay. Kenneth Lay established Enron in Enron: Enron And The Natural Gas Market Essay Words | 8 Pages. Enron fires 20, employees and billions of investors’ money is gone almost overnight. Enron, an American energy, commodities and services company based out of Houston, Texas files
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