The Enron Corporation Scandal

The Enron Corporation Scandal
IDENTIFY THE ACCOUNTING PRACTICES THAT WERE ASSOCIATED WITH THE
ACCOUNTING SCANDAL.
The Enron Corporation failures made world headlines for many reasons ranging from greed from its
executives, the alleged malpractice and criminal behaviours, and its quick and disastrous collapse.
The most critical factor in Enron's melt down was the use of creative and manipulative accounting
practices to distort reported proﬁtability and indebtedness that befell the corporation (A. Holt and T.
Eccles, 2002) The accounting practices involved in this case are the revenue recognition criteria
adopted by Enron Corporation, Market to Market strategies, the use of Special Purpose Entities,
booking to cost as assets and the corporate governance practices.
Revenue Recognition Mark–to–market and Merchant Model Revenue is the gross inflow of
economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of
an entity (such as sales of goods, sales of services, interest, royalties, and dividends). [IAS 18.7].
Revenue recognition, as defined in the IASB Framework, means incorporating an item that meets
the definition of revenue in the income statement when it is probable that any future economic
benefit associated with the item of revenue will flow to the entity, and the amount of revenue can be
measured with reliability.
Enron used revenues as its primary financial objective, performance driver and a measure of
success. The employment of this hyper–inflated
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The Enron Scandal Of Enron Essay
One popular event that took place in our economy was the Enron Scandal, which happened in late
2000 and lasted into the following year. Those who were involved in this incident directly such as
CEO's Ken Lay and Jeff Skilling thought what they were doing was not wrong and that they were
able to get away with making millions falsely (Seabury, 2008). However, this was a serious crisis
situation and many people were affected through the process as well as their money. Enron was
valuing themselves at a higher price than what they truly were worth, and nothing was matching up
("The Fall of Enron"). Enron was able to make it appear that they were having many new business
ventures with imaginary companies or companies where it just did not work out for them, adding
value to their company, and hiding all of their mistakes (Keller, 2002). Not only this, but their main
goal was getting into the energy business and having it become de–regulated which subsequently
had the state of California suffering an energy crisis due to their greediness (Seabury, 2008).
Overall, the underlying causation of their downfall and crisis was their greed. These people behind
the Enron name were money hungry and as long as the pay checks were coming to them, they did
not care about the employees who would be losing their jobs, the people who had to endure the
power outages in California, nor the people who's money they manipulated and eventually lost.
Enron was also favored by the government since they had

Enron : Enron And Enron Scandal Essay
Enron was one of the largest energy, commodities, and services company in the world. It was
founded in 1985 and based in Huston, Texas. Before its bankruptcy on December 2, 2001, there are
more than 20,000 staff and with claimed revenues nearly $101 billion during 2000. Enron was the
rank 16 of Fortune 500 in 2000. In 2001 it revealed that Enron's financial report was planned
accounting fraud, known since as the Enron scandal. In the Enron scandal, Enron used fraudulent
accounting practices to cover its fraud in reporting Enron's financial information. Its purpose is to
hide the significant liabilities from its financial statement. Enron tried to make its financial report
with great revenue to attract more people to invest it. It continued to spread the information that
advance its stock price continued to rise. In fact, Enron was with a large amount of liabilities and
loss. The key executives of Enron continually spread the fake information of Enron's financial report
and kept encourage the people to buy its stock. They knew the real financial condition of Enron.
They knew the outlook of Enron is not good, so they sold their stocks secretly to generate profit
before the company bankruptcy. After the people knew that Enron had a large amount of loss, the
stock price was drop from 90 dollars per share to just pennies. In addition, the bankrupt of Enron
had a great effect in the California energy market. The bankrupt of Enron made California had a
shortage of electricity

The Enron Scandal Of The United States
The Enron Scandal is still viewed today as one of the largest corporate bankruptcies in history. The
greed that spilled throughout the organization started with gradual disregard for basic accounting
principles. Initiated by small discrepancies in the company financial system became extreme
financial crimes that left many without jobs and many investors penniless. The Enron scandal led to
legislation that tightened restrictions on accounting practices in the U.S. requiring more strict
compliance with GAAP. Kenneth Lay founded Enron Corporation in 1985. This new energy
company was the result of a merger between the natural gas pipeline companies Houston Natural
Gas and InterNorth. Throughout the 1990s the company was viewed as a ... Show more content on
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The internal practices continued in large measure because of improper auditing from accounting
firm Arthur Andersen. David B. Duncan, the leading audit partner to Enron, overturned many
accounting concerns in the late 1990s such as fake transactions to hide debt and misrepresentation of
earnings on financial statements. Enron earned its profits by providing services like wholesale
trading and overseeing energy facilities. They adopted the 'merchant' model of accounting instead of
the 'agent' model. Enron was not taking the risk of buying and selling contracts nor were they
earning the entire value of these contracts. Enron merely collected a brokerage fee for handling the
transaction. However, by using the 'merchant' model over the 'agent' model, they were able to report
the entire value of the contracts they were a part of as earnings. This led to grossly overstated
revenues on their balance sheet of over 600 million from 1997 to 2000. To keep up with this bubble
of revenue, Enron had to continue to mark up its earnings to outperform past results in order to
move their stock price upwards. In 1990, Jeffery Skilling joined Enron and was involved in
management. He later became President and COO and by 1997 the only one above him was the
founder, Kenneth Lay. Skilling insisted on the trading business using 'Mark–to–Market' accounting
for their long–term contracts instead

The Main Reasons Behind The Enron Scandal
The ENRON Scandal is one of the most well–known financial and ethical crisis within American
history. The main reason was the Agency problem as we will illustrate with this paper.
The "agency problem" generally raises to the conflict of interest between organization and
ownership in a corporate enterprise. Owners is primarily focused on maximizing its capital through
the business, while management is mainly interested in maximizing and stabilizing its salaries and
benefits without suffering or taking a serious risk to them, they always want to be in the safe side
and not engage or be in real loss in their financial life.
1– Research the reason behind the Enron scandal?? – The fall of Enron was an obvious and
predictable breakdown, that the main reasons for ... Show more content on Helpwriting.net ...
This was clear about the management culture practices Obviously; the Enron disaster did not occur
by chance. It was simplified by a corporate culture that encouraged greediness and fraud. Enron's
auditors (Arthur Anderson) showed absence of independence in their work. Enron's auditor, Arthur
Andersen, was found guilty in a United States District Court. Independence of auditors by
separating the consultancy and auditing part is also vital for the transparency aspects.
The estimation and reporting of the credit rating agencies was also very weak in the situation of
Enron. it been subjected on the false information given by the company. The agencies appear to be
least involved deeply in Enron financial statement details. As is it known to every specialist in the
financial markets the responsibility of the credit rating agencies is to show a clear picture of the
financial position of the company. Arthur Andersen was unsuccessful to make truthful judgement,
just because of the weakness in the skilled and ethical values, which led to its failure and exit from
the field of

Arthur Andersen And Enron Scandal Essay
1. Introduction
Arthur Andersen and Enron scandal might be the most recognized but not the only one, history have
seen many similar accounting failures such as at Satyam Computer Services and Lehman Brothers.
Will you invest in a company without unswerving financials? Accounting profession is considered
candid and Investors rely on their work. Arguably, an eighty nine year old firm did not take even
eighty nine days to crumble down! The downfall of the Arthur Andersen and one of its clientele,
Enron contributed to radical changes for publicly held companies, accountants, managers, and many
others. Employees lost their jobs, Investors lost their life savings, homes, and confidence in the
financial system. The impact was so significant that legislation was enacted through the Sarbanes–
Oxley Act of 2002 to reinstate public confidence financial markets. ... Show more content on
Helpwriting.net ...
A year before filing for bankruptcy, Lehman Brothers reported revenues of about $60 billion with
earnings of over $4 billion. The stock price of Lehman Brothers crashed to less than $4 from a high
of $65.73 in January 2008 within months.
What is the history of such organizations and how did they collapse? There were a number of factors
that contributed to the firm's failure. This paper is an attempt to make an introspective analysis of
select cases in retrospect to understand the pathology of failures and make a proper diagnosis for
prescribing remedies.
2. History
2.1 History: Enron and Arthur

Enron And The Enron Scandal
Enron, The Shadiest Guys In the Room When you ask young people about the Enron scandal today,
most of them have not even heard of it. The fact of the matter is, it is very relevant to young
professionals today. 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 corruption. To analyze this scandal, we first need to know what happened.
Enron opened as a natural gas company in Houston, Texas in 1985, founded by Ken Lay. It then
formed into energy, commodities, and service company. Lay then hired Jeff Skilling as CEO; it was
these two and a few other high–ranking executives that led to the failure of Enron. In short, Enron
was losing money, but with the work of fancy accounting and taking advantage of free enterprise,
reported huge false profits. This all came to a head in 2001 when Enron declared bankruptcy.
From the employees perspective. When looking at the employees' point of view on the scandal, we
first start with the executives. Ken Lay, chairman of Enron, Jeff Skilling, CEO, and Andy Fastow,
CFO, were the masterminds behind the huge profits. Skilling was in charge of somewhat changing
the face of Enron. He took the company from being solely a power company, to a commodity
trading company. To quote Alternet, "They tried to trade

In every single accounting or ethics class, the "Enron Scandal" as a lot might say is brought up to
teach all the students a lesson about ethics and how regulations in the accounting world were
enacted. The "Enron Scandal" dealt with two parties, first Enron itself, and then their auditors Arthur
Andersen. Enron used to be one of the most innovative companies in the world, and Arthur
Andersen was the biggest professional services company in the world, so when they both fell after
the so called "scandal" it completely changed the world of Accounting. The road to multi–million
dollar companies failing is a big one so how exactly did it happen. It all had to do with the way
Enron and Arthur Andersen were run and changed which ended up in the demise of both companies.
The Enron Corporation started in 1985 when Houston Natural Gas merged with InterNorth, a
Nebraska based Company. Enron was known as the 'Americas Most Innovative company' for 6
consecutive years."(Folger). The reason Enron was so innovative is because it completely changed
the way the energy industry was run. Kenneth Lay, Enron's CEO hired consultant Jeffrey Skilling to
completely change the business strategy that the company was run on. They started taking advantage
of the fact that energy industry because deregulated and "created a 'gas bank' in which Enron would
buy gas from a network of suppliers and sell it to a network of consumers, contractually
guaranteeing both the supply and the price, charging fees for

The Context Of The Enron Scandal
Introduction
The main aim of this essay is to analyze business ethics in the context of the Enron scandal. Enron
scandal became notorious for violating ethical standards. The Enron scandal is one that left a deep
and ugly scar on the face of modern business. As a result of the scandal, thousands of people lost
their jobs, some people lost their entire pensions, and all of the shareholders lost the money that they
had invested in the corporation after it went bankrupt. These corporations faced a great dilemma
with the federals and state for manipulating financial statements. Corporations alone cannot be
blamed on this, as accounting firms were involved in this as much as the corporations were. Even
though Enron went bankrupt and disappeared ... Show more content on Helpwriting.net ...
Kenneth lay the CEO of Enron stated in an interview that all these figures were above his head just
made him wanted more. In the end, those misplaced morals killed the company while it injured all
of those who had gone along for the ride. Enron scandal has both illegal and unethical activities,
causing the less of money jobs and investment for thousands of people. The violation came about
when everything got out of control and Mr. Lay could no longer cover his debts. This later laid to
the biggest bankruptcy filed by any corporation with over $62 billion in assets. Other violations are
bank fraud, money laundering, insider trade, and conspiracy. The final blow was dealt when Dynegy
(NYSE: DYN), a company that had previously announced would merge with the Enron, backed out
of its offer on Nov. 28. By Dec. 2, 2001, Enron had filed for bankruptcy. In addition to the conflict
of responsibilities, the violation of independence also existed because there were close relationships
and interest conflicts between AA's employees and Enron's

Enron Corporation : The Enron Scandal Essay
The Enron Scandal
The objective of an audit is to "obtain reasonable assurance" of the credibility of the financial
statements of a company . However, in some cases auditors can fail to recognize – or intentionally
ignore – misleading data within a company's financial statements, leading to negative outcomes for
lenders and investors. This report will discuss the Enron scandal in which the auditing firm Arthur
Andersen LLP turned a blind eye to the fraudulent actions of Enron Corporation, leading to the
downfall of both companies and great harm to thousands of stakeholders.
Enron Corporation Background
Enron Corporation was an American energy company formed by Kenneth Lay in 1985 in Texas.
Enron was hugely popular with investors throughout the 1990's rising to become the "seventh–
largest company in America" with a stock price of $83.13 (over 70 times earnings) by December
31st 2000 .
However, less than a year later, on December 2nd 2001, Enron filed for bankruptcy and the stock
price plummeted to a mere $0.67 . This resulted in investigations into the company's use of
misleading, fraudulent, "aggressive accounting" techniques that understated debts and overstated
earnings .
The Scandal
Timeline of Events
In 1990 Kenneth Lay hired McKinsey & Co consultant Jeff Skilling to improve Enron's finances.
Skilling joined the company on the condition that they adopt mark–to–market accounting for their
long term contracts .
As a result of this implementation, alongside other

Enron was a corporation located in Houston, Texas and in just fifteen years the US energy trading
and utilities company grew to become one of America's largest and more successful cooperation's.
Enron suffered a major fall. After being one of the most successful corporations Enron became the
biggest company to file bankruptcy in history. In this research paper it will discuss about the history
of Enron, the fraud committed and who is to blame. The historical development of white collar
crime in the Enron Corporation was committed for financial gain. The Enron scandal is an example
of a continuing trend of falsifying data in the history of white collar crime.
Falsifying data has been a problem that has been happening for a long ... Show more content on
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Enron became the largest seller of natural gas in America. In August 2000 Enron stocks reach almost
$91 a share. As reported by Li, its annual revenues rose from about $9 billion in 1995 to over $100
billion in 2000 (2010, p.37). It has been more than a decade ago since the Enron scandal in Houston,
TX. Enron was also known for one of the largest fraud scandals in American history. After so many
years of power and successful deals and contracts, the company suffered a collapse and the company
suffered rapidly. Both Lay and Skilling were headquartered in and also head in the entire fraud,
scam and scandal of the Enron Corporation was best known for.
Even though records show executives of the company made hundreds of millions of dollars and was
going in the right track the successful corporation collapsed, and cost investors as much as seventy
billion dollars its shares trading for about $90 each. Furthermore, Lay was convincing his employees
to hold on to their stocks and purchase even more. Meanwhile, executives were selling their stocks.
Enron executives learned that they faced a major problem for hiding and allowing inflating, the
offshore and loose of the company to happen.
Enron executives also attempted to hide the debt with the help of the US Security and Exchange
Commission but were unsuccessful. Enron's investors had no idea of the fraudulent activities
occurring in their

Impact Of Enron Financial Scandal
Introduction – Historic Enron Financial Scandal
In 1985 Houston Natural Gas and InterNorth merged to become Enron which started specializing in
natural gas production. It moved from a $10 billion company in 1990 to a $101 billion in ten years.
Kenneth Lay is the founder, Chairman and CEO who was challenged by the board of directors to
diversify the company portfolio, grow faster, increase investor's confidence, attract more
investments and increase their credit rating. This is a great vision that has to come through
legitimate means and sustainable growth. Unfortunately Enron managements' greediness justified to
themselves a lot of unethical actions to achieve their self–interest. They took advantage of loop
holes in deregulated markets, influenced ... Show more content on Helpwriting.net ...
The first is the fact the Enron and its board of directors created a corporate culture that inspires
innovation and creativity while totally ignored Ethics. It was not in the board of directors nor the
corporate management top priorities, so how it would be for those who report and commit day to
day transactions. The absence of a corporate culture that motivates transparency, integrity and
carouge to report was a major cause of Enron's Scandal. For example, Enron hired several
accountants who understood the accounting loopholes. They helped the company to maximize on
the loopholes in the Generally Accepted Accounting Principles (GAAP). (Rapoport , Van Niel, &
Dharan, 2009). The accountants did not write–off the losses from the special purposes entities but
they only deferred the charges from them. This was also coupled by management focus on share
prices, the second intrinsic variable, that will impact their allowances and compensation packages.
The focus on meeting or exceeding external analysts made Enron's management manipulate
financial statements and take advantage of any loops in the system that helps in claiming unrealized
profits. The company had to make more deals to illustrate the growth in its income. Jeffrey Skilling,
the CEO, wanted to meet Wall Street projections and listed revenues from projects that losing.
(Unerman & O'Dwyer, 2004). Such aggressive and fruadunet accounting allowed Enron to falsely
be in the wealthiest 50 companies of the Fortune 500 companies and dramatically increase Enron's
revenues by over 700% (Benston & Hartgraves, 2002). Enron started using the mark–to–market
accounting method to recognize income from long–term projects which is not the intent of SEC
approved accounting method. Enron also introduced and recorded the present income from its
estimated future value, although, the income is not guaranteed. (Benston & Hartgraves,

The Ethics Of The Enron Scandal
More than a decade ago, one of the most commanding corporations in modern American history
filed for bankruptcy. Enron, a seemingly invulnerable company would eventually provoke sweeping
changes in regulation that controls the management and accounting of public companies even to this
day. The Enron scandal has come to be known as one of the prime audit failures of all time and
serves as a classic example of corporate greed and corruption. However, for the generation that
watched in horror as corporations such as Enron fell along with the stock market, this scandal is
slowly becoming just that: history. And for the newer generation of college students like me, it is
almost ancient history. Despite the time that separates us from this scandal, it has never been more
important to remember the lessons learned and best understand how the adoption of The Clarkson
Principles can guide our careers in the business sector.
The story of Enron is truly remarkable. As a company it merely controlled the electricity, natural gas
and communications sectors of the world. It reported (key word, reported) revenues over one
hundred billion US dollars and was presented America's Most Innovative Company by Fortune
magazine for six sequential years. But, with power comes greed and Enron from its inception
employed people who set their eyes upon money, prestige, power or a combination of the three. The
gluttony took over sectors which the company could not operate proficiently nor successfully.

Enron Scandal Of Enron Corporation Essay
Introduction
Enron scandal which aroused in 2001 was one of the most famous events in the area of fraud audit.
As the auditor company of Enron, Arthur Andersen failed to prepare true and fair auditing reports.
They both suffered lethal loss at that time. The following paragraphs will discuss this fraud event,
including the organization history, the organization's event, the fraud issue in the event, the
consequence of the main stakeholders, auditors in the event and their roles, and the current situation
of people who are responsible.
The organization, the time and place
Enron Corporation was an energy company which founded in 1930 in the United States. At that
time, the predecessor of Enron was named as Northern Natural Gas Company which was mainly
based in Houston, Texas. In 1985, the Northern Natural Gas Company purchased one of its
competitors, Houston Natural Gas Corporation, and renamed as Enron Corporation. During Enron's
operating years, over 30 different types of products are provided around 40 countries in the world,
such as power, petrochemicals plastics, steel and pulp and paper. Before the bankruptcy of Enron, it
had approximately 20,000 staff around the world and it was the seventh largest American company
and one of the largest integrated communication, natural gas, pulp and electricity companies in the
world (Referenceforbusiness, 2016).
What happened – an overview of the events in general
However, a series of intentional accounting frauds lead Enron

Business Ethics : Enron Scandal
Business ethics have been the central concern of all corporations in operating business. Enron
scandal was the highlighted case representing the dramatic violation of business ethics with the
involvement of misusing power to conduct unethical missteps to gain self–interest, resulting in a
collapse of the whole organization. This report is aimed at assessing Enron case to provide better
understanding of its rise and fall through the background of the company's formation and
bankruptcy as well as applying few of ethical approaches to seek some possible alternative
outcomes such as utilitarian, expectation and choice.
II. Body
a. Background:
Enron was found in 1985 as the result of between Houston Natural Gas and Inter North Pipeline ...
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Moreover, Enron used invasive approach to archive $27 billion in one quarter as biggest energy
wholesaler and boosted Enron share value up to $90 in 2000 that attracted attentions of investors to
purchase more. However, misleading information and other financial practices on online system
caused several collapse in 2001 that led Enron share value felt down under $1 and bankrupt after
that (The New York Times, 2001).
b. Utility test
Although Enron has their own code of ethics, which listed out their policies highly focusing on
honesty, respectfulness, and generation of the benefit for stakeholders as a whole, Enron
management actions were only complied with a certain level of ethics philosophy that led to poor
approaches to handle behavioral and moral circumstances (Paine 1994; Petrick and Quinn 2000).
According to utilitarian theories with solely concentrating on "social consequences" – generating the
best outcomes for affected people as a whole, Enron's executive actions were recognized as being
unethical because they failed to yield the greatest benefit of all other stakeholders while playing the
critical role of a linkage between employees, shareholders, suppliers and customers (Petrick and
Scherer, 2003). Particularly, their top management focused on their own interests that derived from
other's expenses by feeding hunger with greediness, bribing government under political donation
and making series of unethical actions that caused the uncured

Effects Of Arthur Andersen And Enron Scandal
. Introduction
Arthur Andersen and Enron scandal might be the most recognized but not the only one, history have
seen many similar accounting failures such as at Satyam Computer Services and Lehman Brothers.
Will you invest in a company without unswerving financials? Accounting profession is considered
candid and Investors rely on their work. Arguably, an eighty nine year old firm did not take even
eighty nine days to crumble down! The downfall of the Arthur Andersen and one of its clientele,
Enron contributed to radical changes for publicly held companies, accountants, managers, and many
others. Employees lost their jobs, Investors lost their life savings, homes, and confidence in the
financial system. The impact was so significant that legislation was enacted through the Sarbanes–
Oxley Act of 2002 to reinstate public confidence financial markets. ... Show more content on
Helpwriting.net ...
A year before filing for bankruptcy, Lehman Brothers reported revenues of about $60 billion with
earnings of over $4 billion. The stock price of Lehman Brothers crashed to less than $4 from a high
of $65.73 in January 2008 within months.
What is the history of such organizations and how did they collapse? There were a number of factors
that contributed to the firm's failure. This paper is an attempt to make an introspective analysis of
select cases in retrospect to understand the pathology of failures and make a proper diagnosis for
prescribing remedies.
2. History
2.1 History: Enron and Arthur

The Ethics Of Enron Scandal
The Dilemma Often an ethical dilemma does not appear abruptly but can rather be the proverbial
slow boiling of a frog as they say. Enron was an economic powerhouse in the early to late 90's. Its
financial success was due to a great understanding of the opportunities available in the energy
market due to deregulation across the country. The company was founded on sound financial
principles which turned to illegal recklessness over time. Key personnel succumbed to unethical
pressures which built up slowly over time. Since the public's trust of professionals in the accounting
industry is paramount to society (Mastracchio et. al. 2015) this paper will discuss the ethics not
exhibited in the Enron scandal which came to a head in 2001.
History
In 1985 Houston Natural Gas merged with Internorth and renamed itself Enron. In 1990 Jeffrey
Skilling was hired to focus on trading in commodities. Skilling later becomes the president of Enron
in 1997. Andrew S. Fastow is named as Enron's financial chief in 1998. According to the New York
Times Fastow created partnerships which the company claimed were to buy company assets which
were not performing very well. We now have come to realize that these partnerships were instituted
in order to conceal the company's debt and give an image of overinflated profits to the public
(2006). In 2000 through 2000 there was shuffling around of key leadership. Skilling resigned citing
personal reasons only. Six days later Sherron Watkins approaches CEO

Taking a Look at the Enron Scandal
With the complex system where there were wide ranges of product which include physical assets, it
had reached the limits of accounting. The company had taken fully advantage of this to make
balance sheet become a perfect picture of company's performance. They used mark–to–market
method of accounting, which state that "once a long–term contract was signed, the present value of
the stream of future inflows under the contract was recognized as revenues and the present value of
the expected cost of fulfilling the contract were expensed". (Pauls, 2003) Therefore, the future profit
had been account even the real cash flow had not come to the company yet.
Moreover, cause when Enron come to the long term contract, they would assumed that there were
long term declines in spot prices (Page 6, journal of economics), there would be the risk of loss if
there were the increase in the price of gas in the future and it does not recognize in the financial
statement; therefore, to make the income statement made more sense in economics term, Enron had
created an accounting structure that help the company to stable their income fluctuation. (ISDA,
2002)
In additional, Enron used special purpose entities to fund or manage risk as well as achieve financial
reporting objective (page 11, Paul, 2003). For example, when they wanted to remove a significant
investment in their financial statement, they used one of its entities which were joint venture with
them to acquire it (Chewco case, ISDA, page

Essay on Overview of the Enron Scandal
Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose
Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest
natural gas and electricity providers in the United States, and even the world. In the 1990's, Enron
was widely considered a highly innovative, financially booming company, with shares trading at
about $90 at their highest points. Little did the public know, the success of the company was a
gigantic lie, and possibly the largest example of white–collar crime in the history of business. The
roots of the lies start with former Enron CEO Kenneth Lay. This man helped bring together a
number of smaller energy companies, namely InterNorth International and ... Show more content on
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All these factors lead to figures that were less than what Ken Lay promised, and even started posting
losses by the second quarter of 1997. These less than stellar numbers did not discourage company
executives, and Enron continued to spend foolishly on advertisement and lobbying for deregulation.
All of the prior represents the business side of the downfall of Enron. That being said, businesses
fail all of the time. The reason why Enron Corporation and its executives will always live in infamy
is not because the company failed, but how and why the company failed. How, exactly, does a
company worth about $70 million collapse in less than a month? It became clear that the company
not only had financial problems, but ethical problems that started from the top of the company and
trickled down. A key player in these problems was Jeffrey Skilling. He was a man brought to the
company by Ken Lay himself. Skilling brought his own accounting concept to the company. It was
called mark–to–market accounting. This concept allowed Enron to record potential profits the day a
deal was signed. This meant that the company could report whatever they "thought" profits from the
deal were going to be and count the number towards actual profits, even if no money actually came
in. Mark–to–market accounting granted Enron the power to report major profits to the public, even
if they were little or even negative. It became a major way

Enron Scandal Essay
The reason of Enron Corporation downfall for audit failure is conflict of interest and accounting
fraud. This is because it has been suggested that conflicts of interest and a lack of independent
oversight of management by Enron's board contributed to the firm's collapse. Some have suggested
that Enron's compensation policies engendered a short–sighted focus on earnings growth and stock
price. In addition, recent regulatory changes have focused on enhancing the accounting and
strengthening internal accounting and control systems. In these issues, it begin with Enron's board.
The conflict of interest between the two roles played by Arthur Andersen, as an auditor, he also as a
consultant to Enron Corporation. While investigations continue, Enron Corporation has sought to
salvage its business by spinning off various assets. As that, Arthur Andersen actually has admitted
some ... Show more content on Helpwriting.net ...
It also help to understand the real meaning of Shareholder Wealth Maximization. Enron Corporation
scandal also help to conceal the true of financial statement and ensure that investor fund. When the
time of Enron's collapse, it was the biggest corporate bankruptcy ever to hit the financial world. But
then WorldCom, Lehman Brothers and Washington Mutual have surpassed Enron as the largest
corporate bankruptcies. The Enron scandal drew attention to accounting and corporate fraud, as its
shareholders lost $74 billion in the four years leading up to its bankruptcy, and its employees lost
billions in pension benefits. The Sarbanes–Oxley Act has been called a "mirror image of Enron, the
company's perceived corporate governance failings are matched virtually point for point in the
principal provisions of the Act." Increased regulation and oversight have been enacted to help
prevent or eliminate corporate scandals of Enron's

The Scandall : The Failure Of The Enron Scandal
The Enron Scandal is the bankruptcy of the Enrol Corporation, one of the America's biggest
company, that suddenly happened in 2001. This happened quite unexpected, as the company has
officially expanded rapidly over the last decade, decimating its value and reaching the 7th position
in the ranking of the most important US multinationals.
However, within a very short time, the Enron shares, all of them considered solid, lost all their
value, ranging from $ 86 to 26 cents, burning around $ 60 billion in three months. The failure of
Enron affected many workers because a proposal had been made for them to buy the shares of the
company but they could not do anything to recover from the disaster.
The management of the company is obviously one of the main reason for the failure of Enron
because they fooled the accounts. The first great lesson to be learned from what has happened is that
the fake budget, which is already severe for unlisted companies, becomes for those listed, which can
have devastating effects on the efficiency and functionality of financial markets. Then when the
company started to loose, the top executives of the company, have had time to sell their shares
before the crack, making huge profits.
Kenneth Lay, was the CEO of Enron Corporation and helped to develop this firm in one of largest
companies of America. But he a big part of the worth of the firm was based on shady accounting
practices and not recorded losses in the financial statement. In 2001 many

Case Study Enron Scandal
CASE 3 Enron: Questionable Accounting Leads to Collapse
Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant Tilted
―E‖ in front, slowly revolving in the Texas sun. Enron's suggested to Chinese feng shui practitioner
Meihwa Lin a model of instability, which was perhaps an omen of things to come. The Enron
Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a
mountain of debt that had been concealed through a complex scheme of offbalance –sheet
partnership. Forced to declare bankruptcy, the energy firm laid off four thousand employees;
thousand more lost their retirement saving, which had been invested in Enron stock. The company's
shareholders lost tens of ... Show more content on Helpwriting.net ...
Delivering bad news could result in the ―death‖ of the messenger, so problems in the trading
operation, for ~ample, were covered up rather than being communicated to management. Enron
Chair Ken Lay once said that he felt that one of the great successes at Enron was e creation of a
corporate culture in which people could reach their full potential. He said at he wanted it to be a
highly moral and ethical culture and that he tried to ensure that people did in fact honor the values of
respect, integrity, and excellence. On his desk was an Enron paperweight with the slogan ―Vision
and Values.‖ Despite these intentions, however, ethical behavior was not put into practice. Instead,
integrity was pushed the side at Enron, Particularly by top managers. Some employees at the
company believed that nearly anything could be turned into a financial product and, with the aid of
complex statistical modeling, :traded for profit. Short on assets and heavily reliant on intellectual
capital, Enron's corporate culture rewarded innovation and punished employees deemed weak.
ENRON'S ACCOUNTING PROBLEMS
Enron's bankruptcy in 2001 was the largest in U.S. corporate history at the time. The bankruptcy
filing came after a series of revelations that the giant energy trader had been using partnerships,
called special–purpose entities (SPEs), to conceal

The Enron Scandal Of A Company
To invest your whole savings in a company through stock is an important risk almost everyone will
do in their lifetime. When investing in a company you see their financial records and can see if the
company's stock value will go up if you invest in them making your money increase as well. What if
this company falsifies their records and in a couple of days the company and its stock value go from
$90 per share to just a penny per share. You lose your money just because a company cheated and
stole your money.
This is what the Enron scandal did to thousands of people. It could have been stopped if more
forensic accountants in the world are checking on the companies. This way they don't lie about their
stock value. Forensic accountants are in ... Show more content on Helpwriting.net ...
This also shows the terrible affect it has had on the stock market, the people who are tied with these
companies, and how forensic accountants are badly needed to prevent future problems with false
financial records. To be informed on the problems and solutions you must first look into the
company that started the fraud in the first place.
Enron was a major natural gas company, which was created in 1985. Enron was audited by the
public accounting firm Arthur Andersen. It has not been confirmed when Enron began falsifying its
records, but it is roughly around 1995 (Douglas O. Linder). Enron falsified its records by taking past
assets and claiming them as current. This made the company 's financial records look very good
with a large income coming into the company. These reports made Enron the fifth largest company
in the Fortune 500. The report was shown to the public stock and shareholders. From this report
many people would invest into Enron because of its large source of income. As people invested in
the company it increased the company 's value. Enron then decided to use its employees 401(k)'s to
its advantage and invest these 401(k)'s into the stock of Enron. Although the company 's records
were in great shape, the company was losing lots of money to its ever increasing competition from
the market. People got suspicious of how the company became so big. This is what began the

The definition of ethics is living one 's life according to right or wrong behavior both towards others
and themselves (Ghillyer, 2014). How a person derived to their beliefs of right or wrong is a direct
reflection of several factors such as; family upbringing, and religious dynamics. Each of these
characteristics plays a major role in the direct choices a person will make in their day to day lives.
While some people can stand by their personal beliefs regardless of the situation, there are some
who are heavily influenced by others.
However, in the business world, the influence of power and money has cost people their livelihoods
as well as compromised their self–dignity on many levels. One highly publicized scandal that many
have known and read about is the Enron Scandal. The motive behind what a person will do remains
endless as it is seen in this unfortunate tale of lies and greed in one corporation. The part that many
question even to this day is when the story unfolded it was announced that several people in high
positions were all aware of the unethical practices being done but, all decided to turn a blind eye. In
the next few paragraphs, we will look at the events that led up to the fall of a company that was at
the height of its growth and how all of that would change within minutes.
Undoubtedly the Enron scandal will be one incident that will be spoken of amongst big corporations
and financial institutes for a long time. Many have asked the question, who was

The Enron Scandal Of Enron
Public accounting firms have long played a role in convincing the public the authenticity of the
corporates' financial statements. However, the public started to become skeptical about accountants'
reliability when the Enron scandal occurred. In October 2001, SEC started an investigation against
Enron for improper accounting practice. According Sherron S. Watkins, the former vice president
for corporate development, Enron failed to disclose complicated deals with its partnerships to inflate
the stock price. In a report by Enron's law firm, Arthur Andersen, the accounting firm that was in
charge of auditing Enron, was involved and failed to report the partnership transactions, which
resulted in the collapse of Enron.
Many believed ... Show more content on Helpwriting.net ...
It is no doubt that Arthur Andersen (AA, hereinafter), Enron's auditing firm, have violated many
laws and rules prior to and during the investigation. Thus, our group does not believe there is
anything that could argue for them from an ethical point of view. From the case that we read, it is
clear to everyone that AA's senior level management knew most of the intentional misstatement in
Enron's financials, yet they still issued an audit report that does not include any of the information.
Furthermore, when SEC initiated the investigation over Enron, instead of cooperating with the SEC
and turn in the evidence of fraud, AA's Enron auditors shredded thousands of pages of evidence,
made the entire process much harder for SEC. Both actions are alterations of the general public's
interests, and thus, are unethical.
There are several things that could have helped to prevent the auditing fraud in the accounting
profession, and many of which have already been in effect following the Sarbanes–Oxley Act. Most
of these actions are to increase the standard of independence in an auditing process. The main reason
why Arthur Andersen was not disclosing material misstatement in Enron's financial reports is due to
conflict of interests. As we know today, auditing firms are not to be providing consulting services to
remain independent. However, back in the days prior to the fall of

The Enron and Worldcom Scandals
The Enron and WorldCom scandals
Enron
#1. The segment that put Enron in difficulties was the LJM1. That SPE was the worst of all four
SPE's. This one had no independant investor that could put up the 3% that they needed for the
controlling investor, where CHEWCO would work as a counterparty accounting to the U>S>
guidelines. Enron already owned 97% of CHEWCO, where if they had a controlling investor, the
profits from CHEWCO would go directly to Enron's assets. Later, they did not find a controller
investor, and invented another SPE, which was LJM2. The problems in LJM1 still was there that
affected LJM2. Arthur Anderson, the auditor for Enron, went ahead and approved of this SPE,
knowing that the financial statements had ... Show more content on Helpwriting.net ...
WorldCom
#1. In the general ledger of WorldCom, they were supposed to reduce the line cost expense accounts
and reducing– in accounts corresponding to the improper and false line cost expense in various
reserve accounts. This would through off your balance sheet and your income statement, showing
you made profits, which indeed, you never did. Later, the senior management would instruct that the
line cost expenses are fraudulently be reclassified. By doing this, they had to adjust the schedules of
certain Property, Plant and Equipment Capital expenditure accounts by increasing certain capital
accounts for "prepaid capacity". In the future periods, the increase of these certain accounts for
"prepaid capacity" would then remain manipulation of choice by Ebbers, which would add to their
profits.
#3. WorldCom's board of directors should have reduced the conflicts of interest, so they could
exercise the fundamentals of ethics to the shareholder's or company and to the public's interest. They
could have ensured that financial reported were accurate, complete, understandable, and transparent.
The directors should have also ensured that the accounting standards were adequate to protect the
investor's interests.
#4. Lay may never been an accountant, but a milkman, but he was assisted in all of these
manipulation by his Chief financial officer and his Controller , which both men worked for Arthur

The Enron Scandal And Its Impact On The Business World
Ethics in the business world can often times become a second priority behind the gaining of profits
and success as a company. This is the controversial issue that led to the Enron scandal and
ultimately the fall of this company. Enron Corporation was an energy company, and in the peaks of
their success, they were the top supplier of natural gas and electricity throughout America. Enron
Corporation came about from a merger between Houston Natural Gas and InterNorth. Houston
Natural Gas was a gas providing company formed in Houston during the 1920's. InterNorth was a
company formed in Nebraska during the 1930's and owned one of America's largest pipeline
networks. In 1985, Sam Segnar, the CEO of InterNorth bought out Houston Natural Gas for $2.4
billion. A year later in 1986, Segnar retired and was replaced by Kenneth Lay, who renamed the
company and created Enron. Enron was the owner of the second largest pipeline in America that
measured over 36,000 miles. The company was also the creator of the "Gas Bank", which was a new
way to trade and market natural gas and served as an intermediary between buyers and sellers. As
the company continued to develop, it became more of a trader rather than a producer of gas. This
trading extended into coal, steel, water and many other areas. One of Enron's largest successes was
their creation of a website called, "Enron Online" in 1999, which quickly became one of the top
trading cites in the world. By the year 2000 Enron as a company was

Essay On Enron Scandal
The reason of Enron Corporation downfall for audit failure is conflict of interest and accounting
fraud. This is because it has been suggested that conflicts of interest and a lack of independent
oversight of management by Enron's board contributed to the firm's collapse. Some have suggested
that Enron's compensation policies engendered a short–sighted focus on earnings growth and stock
price. In addition, recent regulatory changes have focused on enhancing the accounting and
strengthening internal accounting and control systems. In these issues, it begin with Enron's board.
The conflict of interest between the two roles played by Arthur Andersen, as an auditor, he also as a
consultant to Enron Corporation. While investigations continue, Enron Corporation has sought to
salvage its business by spinning off various assets. As that, Arthur Andersen actually has admitted
some ... Show more content on Helpwriting.net ...
It also help to understand the real meaning of Shareholder Wealth Maximization. Enron Corporation
scandal also help to conceal the true of financial statement and ensure that investor fund. When the
time of Enron's collapse, it was the biggest corporate bankruptcy ever to hit the financial world. But
then WorldCom, Lehman Brothers and Washington Mutual have surpassed Enron as the largest
corporate bankruptcies. The Enron scandal drew attention to accounting and corporate fraud, as its
shareholders lost $74 billion in the four years leading up to its bankruptcy, and its employees lost
billions in pension benefits. The Sarbanes–Oxley Act has been called a "mirror image of Enron, the
company's perceived corporate governance failings are matched virtually point for point in the
principal provisions of the Act." Increased regulation and oversight have been enacted to help
prevent or eliminate corporate scandals of Enron's

Enron Scandal Research Paper
The Enron Scandal was an enormous controversy in 2001. This scandal went on for years until
finally the government caught up with what was going on. In the Enron case, the company was
stating that they were making profits from assets even though they were not making any money
from it. They would also transfer any information to an off–the–books corporation if they were not
making as much as they thought that they should be making. All this information would be
unreported so that nobody would know that the company was losing money.
Enron then started using mark–to–market accounting so they could get investors to sign a long–term
contract with them. They would have them sign a contract with them and then lie to their investors
about how much money they were making and how the company was doing. When the investors
would sign the contracts then Enron would use special purpose ... Show more content on
Helpwriting.net ...
After the explosion an investigation was conducted to see what the cause of the explosion was. The
investigators found that not only was Massey Energy at fault but so was the U.S. Department of
Labor and its Mine Safety and Health Administration were at fault for failing to act decisively at the
mine even after Massey was issued 515 citations for safety violations at the Upper Big Branch mine
in 2009. Don Blankenship, CEO of Massey Energy was aware of these violations but was still
having workers work in these minds. It was also reported that some employees were being
threatened with dismissal if they did not go into the mines. This is a problem that seemed to slip
through the cracks, if the U.S. Department of Labor and Mine Safety and Health Administration
would have continued to fine Massey Energy for their continued incompliance with the laws and
eventually shut them down until the violations were fixed then this catastrophe could have been

Enron : Year Of Scandal Essay
Cost Accounting Project Paper
Enron – year of scandal 2001 – Arthur Andersen
Introduction
As per various researches, it has been proved that today variety of issues are prevailing in our
society and all of them should be properly catered so that no further issues can be raised and this
will, in the end, helps in reshaping the entire structure of our society too. Therefore proper measures
should be taken from the very start so that no negativity can be raised and this will eventually help
in enhancing the efficiency of our society too. The ethical code of conduct is linked directly with the
research ethics and this is the major arena that should be highlighted positively in our society in
order to enhance potential outcomes. In an organization, it is important to see how work is done by
keeping in mind the ethical code of conduct and how it is affecting the society. In the majority of the
fields, information security is not directly linked with the security and ethics and this is the reason
how it is leading towards various alarming issues too. Therefore it is important to see how to
enhance the effectiveness of various products. This paper will focus on ethics and how Eron faced
issues due to lack of ethical strategies (Conroy & Emerson 2006).
Therefore it is important to note that there is a positive strategy that is linked with ethics and this is
the only possible method with the help of which variety of other negative issues can be resolved and
by this organizations will

Enron Accounting Scandal
Enron was originally a pipeline company in Houston, Texas in 1985. Enron became a company that
was able to profit by providing deliveries of gas to utility companies and businesses. As the
deregulation of electric power rose, Enron diversified the business and entered into an energy
broker, which traded electricity and other types of commodities.
Enron employed several highly qualified PHDs in mathematics, physics, and economics. Enron
continued to enter into contracts with customers and utilized a group of skilled employees to
interpret, manage, and confine the high risks Enron was taking. Enron's attempt to create a
collection of partners that would permit employees to shift debt and losses off of the books would
soon come to an ... Show more content on Helpwriting.net ...
The greatest disadvantage of the mark–to–market system is that once already in use by a company it
is very hard for the company to change its direction of systems.
Enron had many SPE's that it used to help defraud the company. Emerging Issues Task Force (EITF)
created in the 1990's help Enron maintain and conceal the SPE's. EITF only required 3 percent of
capital/assets to be contributed by independent external sources in order for a SPE to exist. Albrecht,
a PhD in the AICPA (American Institution of Certified Public Accountants), states in his report:
EITF 90–15" (The 3% rule) Allowed corporations such as Enron to "not consolidate" if outsiders
contributed even 3% of the capital (the other 97% could come from the company.) 90–15 was a
license to create imaginary profits and hide genuine losses. FAS 57 require disclosure of these types
of relationships (FAS 57 was proposed and implemented after the Enron scandal).
Enron had a $597 million dollar cash flow in the first half of year 2000 by taking loans out from
banks such as Citigroup and Morgan– Chase totaling nearly 3.4 billion. Just in interests alone, Enron
was collected 2 million dollars each day.
The damage incurred in the monetary form, was seen through the stockholders, employees, and
other companies involved. Employee pension plans could not be paid, investors watched the stocks
fall to $0.09 cents per

The Enron and Worldcom Scandals
E. Boos – Week 2 – Assignment
February 17, 2013
The Enron and WoldCom Scandals
ENRON
1. The segment of Enron's operations that got them into difficulties had several parts. They
published misleading financial reports. They could not meet their bridge financing commitment with
Barclay Bank because outside investors were not found. Because of this, they restated activities of
JEDI and Chewco SPEs so they could be retroactively consolidated into Enron's accounts. The SPEs
helped to hide the inaccurate accounting records. Enron's legal department wrote contracts that
helped provide a cover for misuse of funds regarding the SPEs. Future revenue was reported as
current revenue. Stocks were paid with promissory ... Show more content on Helpwriting.net ...
5. Ken Lay was chairperson of the board. He reassumed the position of CEO after Skilling resigned.
As CEO he oversaw all of Enron's activities. Lay and Whaley directed Causey to sell the Raptor
SPEs. The sale price of was privately negotiated between Fastor, on behalf of Enron, and Kopper on
behalf of LJM2. Lay did not interfere when Arthur Andersen directed Enron to record the buyout
excess money as income. He knowingly allowed fraudulent activities and false information to be
included in the financial reports. This was unethical. The Powers Report identifies seven
questionable accounting issues concerning the sale of the Raptors (Brooks, 2007). 6. The board of
directors did not insist that full disclosure of Enron's earning be made available to the public and the
shareholders. They allowed inaccurate reports to be published. Since they did not challenge
management involvement in fraudulent activities, this meant the shareholders interests were not
protected (Brooks, 2007).
9. Conflict of interest concerning SPE activities occurred because Enron employees were active in
managing certain SPEs. Losses were not reported in end of year reports to offset other nonprofitable
dealings. Arthur Andersen did not report all of the earnings and helped Enron cover up losses. When
Andrew Fastow, wanted to manage

Enron Scandal
CILM Book Review
0834172
IB3A20 Critical Issues in Law and Management
Book Review
Enron, Titanic and The Perfect Storm – Nancy B. Rapoport
Student No: 0834172 Word Count: 1500
1
CILM Book Review
0834172
Two years after Enron filed for bankruptcy in 2001, Nancy b. Rapoport wrote this essay expressing
her unique perspective on the real cause of Enron's demise. This essay catches the reader's attention
instantly, because unlike abundant other articles written on the biggest corporate scandal in
American history, the author here rejects Jeff Skilling's (former president of Enron) argument1 of
what brought about Enron's downfall. She instead uses another metaphor, arguing that Enron's
downfall was more like Titanic's– ... Show more content on Helpwriting.net ...
I would go a step further to say that it seems like the author has taken the metaphors a bit too
seriously and would agree with Mark's comment in 'Lawyers in the Perfect Storm3' that ''her
insistence on comparison of the Enron scandal to the tragicomedy of human errors in the sinking of
the Titanic underestimates the importance of the systemic failures that allowed the malign leadership
of Enron to produce such an enormous disaster.'' Nevertheless, she develops her further argument
well as she explores the inextricable link between Character and Leadership. She elaborates on the
inevitable failure of character in Enron leaders to resist illegal deals when the supervisors of those
leaders were also engaging in side deals (pg 209). Her close attention to the underlying conflict of
human traits and situations, aggravated by the magnitude of profits offered by the Enron culture
justifies her statement, 'why it must have taken significant strength of character to resist getting on
that gravy train' (pg 210).
3

Sergeant, M, .2003. Lawyers in the Perfect Storm, Washburn Law Journal,. pg 3
4
CILM Book Review
0834172
Moreover, the author does not merely conclude her argument, rather deals well with counter
evidence as she considers the few people that did resist and play the role of whistle blowers. Her
point that 'most whistle blowers at Enron were suppressed with downright abuse

Enron Scandal
Introduction I have described the ethical and governance issues of the Enron scandal that took place
in 2001. In this paper, there is information about the way things went the way it did with the Enron
scandal. They hide a lot of documents pertaining to how their profits increase so rapidly. It also
includes the close link Kenneth Lay had with George Bush. The investigators had some help with
what happened in the scandal of Enron.
Enron scandal at a glance
Enron had grew from nowhere to becoming Americas seventh largest company in just 15 years,
employing 21,000 staff in more than 40 countries. They lied about their profits and were accused of
a range of shady dealings, including concealing debts so they didn't show up in the ... Show more
content on Helpwriting.net ...
Bush. They gave U.S Attorney General John Ashcraft $57,499 in campaign cash for his failed 2000
Senate re–election bid in Missouri. Texas attorney general John Comyn also accepted $158,000 in
campaign contributions from the company.
Lessons from the Enron Debacle: Corporate Culture Matters! Enron's collapse has sent shockwaves
all over the financial world raising serious questions about corporate governance. Arthur Andersen
turned a blind eye as the money disappeared. As long as there where a set of off the books,
unregulated private partnerships to take on debts, hide losses and kick off inflated revenues, the
executives were able to keep bond rating agencies happy. Andrew Fastow took the most blame
because he was working on both sides of every transaction manipulating Enron financial statements
to enrich him and other service executives.
Creative Accounting used at Enron Creative accounting is a euphemism referring to accounting
practices that may follow the letter of the rules of standard accounting practices but certainly deviate
from the spirit of those rules. Enron took the idea of extending the market–to–market accounting
over the short term of two or three years. By doing that their earnings were boosted and profits went
up instead of going down in order for Enron to show ongoing growth to the public. Creative
accounting made from Enron look really powerful on paper, but like the say "looks can

Enron Scandal Essay
The Enron Scandal
In a front–page article with no less than four by–lines (7/03, "Enron Triggers a Slew of Proposed
Fixes But What Will Stick?" by Steve Liesman et al.), The Wall Street Journal reports, "As more
than 10 congressional committees pursue inquiries, 32 Enron–related bills have been introduced to
address ills ranging from auditor conflicts of interest to the scams of an unregulated derivatives
market. The Securities and Exchange Commission pledges to reform accounting rules, get tough on
fraud and overhaul auditor oversight. General Electric Co. says it will issue a disclosure statement
the size of a phone book, if that's what investors want." The trouble is that such a phone book, if it
reflected the state economic ... Show more content on Helpwriting.net ...
The "level playing field" catch–word distracts attention from the monstrous discrepancy between the
accountancy practised by the government in its own books and what the large corporations get away
with. The corporations hide their debts by keeping them "off–balance–sheet." The government
buries its investments. The level playing field is the Mother Lie that has birthed the swarm of
distortions and untruths that are now crawling out from under every table and from every crack in
the walls.
It is gratifying that the media and some of our politicians are starting to recognize some of what ER
had warned about for many years. But the most basic lie is still protected by the greatest of taboos. It
goes on being drummed into freshmen's heads in every country of the world. No Finance Minister
can open his mouth without it jumping out at you. The mirage of a self–balancing economy made up
of tiny actors that are all powerless individually to affect prices is the "scientific" version of the
"level playing field."
That could hardly cover an economy dominated by the Microsofts, General Electric, and the Enrons.
Surely you have to deal with that obvious clash between the fine theory and the reality to which it is
being applied. You might as well send

Accounting Scandals And The Enron Corporation
Accounting scandals have happened in numerous companies. In one major case, the firm filed for
bankruptcy, and many of its workers lost their jobs, savings, and investments from stocks. This
major epidemic happen at Enron, an energy firm stationed in Houston, Texas founded by Kenneth
Lay in 1986 (Frontain). On December 2, 2001, the Enron Corporation, an apparently strong and
booming business, fell to an all–time low by shocking the world when it filed for bankruptcy
protection. Many people were left unemployed and without their savings. Because of this scandal,
numerous effects were left on the accounting profession since the scandal was traced to the
company's financial reports, accountants, and auditors (Buckstein Part 2, p.1).
Enron ... Show more content on Helpwriting.net ...
The employees were considered magicians because of their expert ability to handle the numbers in
such a manner which made it look easy and precise. As Enron began to rely on the trading process, a
few changes had to be made to their accounting techniques. Skilling implemented a technique called
mark–to–market accounting where the present value of projected revenue is understood, and the
expected costs of a contract become expenses after the contract is signed (Frontain). As part of the
company's annual report, the losses in market value and unexpected gains of continuing contracts
had to be recorded. In 1999 the stock rose fifty–nine percent, and in 2000 it rose again another
eighty–seven percent. Because of the rise in stock, Enron began to lose operation money by taking
on more companies than they could handle. Nonetheless, with the help from its auditor, Arthur
Andersen, it appeared stable. Enron used prepaid loans which helped the company raise cash flow;
however, these loans were not included on the balance sheets. In 2001 over five billion dollars were
invested in prepaid loans to raise cash flow and eliminate the debt (Frontain).
More investigation began after the discovery of Enron paying Andersen about fifty million dollars in
2000 for his auditing and consultant work. About three–thousand of its partnerships did not make
their way onto the balance sheets leaving

Scandal Of Enron Scandal
Enron was a Houston Based natural gas Pipeline Company formed by merger in 1985.The
corporation Enron was effectively involved in energy broker, electronic energy training, global
commodity and options trading. Enron was long viewed as star of the stock market. Enron was
America's seventh largest corporation. Enron was steady company with good revenue, a large part of
Enron case was made up of paper.
Enron employed approximately 20,000 staffed workers in an organization and was one of the major
electrical, natural gas, communicators and pulp and paper companies, with claimed revenues of
$111billion during 2000.
From 1990's until fall 2001 Enron was known as one of the best America's energy, commodities and
services company. Enron was the largest ... Show more content on Helpwriting.net ...
Special purpose was created to mark more of the significant liabilities from Enron's financial
statements. These transactions seem more profitable than it actually was a danger. The corporate
officers were creating more and more money of billions and dollars in profit while the company was
actually losing money. The executives and insiders at Enron knew about the increased the accounts
that were hidden loss for the company but the investors knew nothing of it.
The fate of Enron shook the entire US economy and its global perception of a well monitored and
ethical economy. The scandal made the authorities realize the importance of internal control in
business enterprises. It also helped understand the real meaning of share holder's wealth
maximization and the boundaries within which this key objective is to be achieved.
Initially, skilling and other CEO's responded to questions by insulting reporters and lying to
employees when pressure mounted executives sold his Enron shares at massive profit and resigned
the company declared bankruptcy its formerly golden stock now worthless because of its silent
complicity in the Enron scandal the company was also offered to close its

Accounting Scandals And Enron Accounting Scandal
Introduction:
In this research paper I will be examining accounting scandals, specifically the Enron Accounting
Scandal. First, I will be exploring the history of Enron. Then I will be going into further depth on
what accounting issues Enron faced and then I will be explaining what a derivative is. Finally yet
importantly, I will consider the different types of Accounting Fraud following a conclusion.
Accounting Scandals are born due to collective greed and corporate arrogance. In the case of Enron
there was a lot of euphoria before the downfall. Stock prices soared and Enron was seen as one of
the most innovative companies in the world. However, things seemed too good to be true.
Eventually the company was exposed for its wrongdoing which led to the collapse. Many more of
such cases were exposed during the 2008/2009 recession such as the Lehmann Brothers scandal. As
mentioned earlier, many financial scandals have happened in the past but none of those are nearly as
bad as the scandals when it gets to trading in derivatives.
Summary of the Enron Accounting Scandal:
In the year of 1985 after the federal deregulation of natural gas pipelines, Enron was born. The
company was formed by merging the following two companies: Houston Natural Gas and
InterNorth, a Nebraska pipeline company.
In the process of the merger, Enron incurred massive debt and, as the result of deregulation, no
longer had exclusive

Ethical Scrapbook In the three excerpts that will be discussed in this report there is a theme. That
theme is ethics or the lack there of. What all three of these cases have in common is that people were
willing to trade in their reputations, their livelihood and in some cases their personal freedom to get
what they wanted. In two of the examples, the prize they sought was money, pure and simply a case
of greed. Importantly, these people already had significant wealth, and they were willing to take the
chance on losing what they had already attained to get more. In the other case, the defendant's ethics
are what initiated his behavior.
Enron
The first story is without a doubt one of the most serious cases of its kind. The Enron ... Show more
content on Helpwriting.net ...
The investigation revealed a network of partnerships designed to hide Enron's debt. Unfortunately,
by November 2001 the company's stock had gone from a high of $90. to $1. investors had lost
billions of dollars (Silverstein, 2013). The company filed for bankruptcy protection in December
2001 and around 5,600 employees lost their jobs.
The U.S. Justice Department began an investigation and by January of 2004 Fastow accepted a deal
to plead guilty to one count of conspiracy to commit wire fraud and conspiracy to commit securities
fraud in exchange for his cooperation with the Justice Department (Silverstein, 2013). In February
2004, Jeffrey Skilling pled not guilty to charges of wire fraud, securities fraud, conspiracy, insider
trading and making false statements on financial reports (Silverstein, 2013). In addition, Kenneth
Lay was charged with fraud and making misleading statements, he pled not guilty. The trial began in
January 2006, in the end Mr. Lay and Mr. Skilling were found guilty of lying to investors,
employees and regulators in an effort to conceal the loses of the company (Silverstein, 2013).
Eventually, Mr. Skilling was sentenced to twenty–four years in prison however, in July 2013 his
sentence was reduced by ten years. Although, Mr. Lay was also found guilty, he died July 5, 2006 at
his home in Aspen Co. before being sentenced. This scandal epitomized the excesses of the 1990's
and the management failures of

The Enron Corporation Scandal

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