Essay About Enron

909 Words2 Pages
bulb-icon

Recommended: Enron ethical scandal

Article Review: Andersen implosion over Enron: an analysis of the contagion effect on Fortune 500 Firms LePorsche Tucker Intro to Business-Columbia Southern University There are many lessons a business owner can learn from the Andersen/Enron scandal, the only lesson would not be that honesty is the best policy, but also that a dishonest action made by a few people can affect many. Enron’s insider trading and failure to report accurate earnings and losses paired with Andersen’s failure to properly audit and report the company’s debts and earnings made for one of the biggest scandals that the business world has ever seen. Enron used SPE’s or Special Purpose Entities to mask the large amounts of debt that they had acquired overtime …show more content…

By placing themselves in the same business area and mixing businesses placed the auditing company in a compromising position. In addition to that, once the SEC started their investigations on Enron Andersen knew that they had not been forthcoming and truthful with their audits of the financial statements of Enron and they decided to shred as much evidence as they could so that when the gavel came down they would not be reprimanded as severely as they should be. According to Thomas Enron later terminated Andersen as their auditor reason being for “document destruction and lack of guidance on accounting policy”. Just as Enron knew the shortcuts that they were taking were morally and professionally wrong, as the reader, it is hard to believe that the company was unaware that their own auditing company had destroyed auditing records of the company’s financial statements. In the end of 2002 the Andersen company was destroyed due to their lack of business morality and all of Enron employees were left without jobs, savings and benefits. Enron’s collapse afforded other businesses in the same line of work to pick up some clientele that was lost during the scandal, however the scandal also made clients more cognizant of the business relationships they started and caused them to pay close attention to the accounting firms that

Show More
Related

  • Enron Scandal: A Study in Corporate Fraud

    774 Words  | 2 Pages

    The Enron Scandal, which unrolled in October 2001, lead to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, a large audit and accountancy partnership firm.

    Read More

  • The Enron Disgrace

    2858 Words  | 6 Pages

    ...FO at the Houston airport. While Mr. Fastow's parents were undergoing a random search, he stopped to chat with Mr. Schwieger. "I never got an opportunity to explain the partnerships to you," he said, according to Mr. Schwieger. Mr. Schwieger replied, "With everything that has come to light, I probably wouldn't like the answer I would have gotten."

    Read More

  • Accounting Fraud, the Investor and the Sarbanes Oxley Act

    1981 Words  | 4 Pages

    Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).

    Read More

  • The Enron Scandal

    608 Words  | 2 Pages

    Enron deliberately created artificial shortages in California for electricity, two days in a row, causing the price to skyrocket. Enron is a natural gas and electricity plant/business that buys and sells energy. The most influential historical event that has happened during the 21ST century is The Enron Scandal because the loss sustained by investors exceeded $70 billion and only a small amount of the lost money was returned.

    Read More

  • Business Ethics: Enron Corporation Scandal

    1594 Words  | 4 Pages

    for rules and regulations. Ethics is the discipline dealing with what is good and bad and with a

    Read More

  • Ethical Scandas And Cons Of Sploying By David G. Friehling

    1634 Words  | 4 Pages

    In today’s business world, accountants and business owners should work together in order to become aware of scandals that occur in corporate companies. Since 2008 a series of corporate scandals and collapses have highlighted the importance of effective board oversight. With the increase in technological advances and people who never invested before, began to invest in companies in the mid 1990’s to early 2000, which increased the demands for many corporate organizations. One of the largest scandals in the corporate world was known as the Madoff’s Ponzi scheme and the scandals that occurred at Enron Corporation and WorldCom.

    Read More

  • The Enron Scandal In American History

    485 Words  | 1 Pages

    The ENRON Scandal is thought to be a standout amongst the most infamous inside of American history; an ENRON outrage rundown of occasions is considered by numerous antiquarians and business analysts alike to have been an informal outline for a contextual investigation on White Collar Crime – White Collar Crime is characterized as peaceful, monetarily based criminal action ordinarily embraced inside of a setting in which its members hold propelled instruction with respect to occupation that is thought to be prestigious. The accompanying occurred amidst the ENRON Scandal:

    Read More

  • Analysis of the Enron/Arthur Anderson Scandal

    1550 Words  | 4 Pages

    Enron and Arthur Anderson were both giants in their own industry. Enron, a Texas based company in the energy trading business, was expanding rapidly in both domestic and global markets. Arthur Anderson, LLC. (Anderson), based out of Chicago, was well established as one of the big five accounting firms. But the means by which they achieved this status became questionable and eventually contributed to their demise. Enron used what if often referred to as “creative” accounting methods, this resulted in them posting record breaking earnings. Anderson, who earned substantial audit and consultation fees from Enron, failed to comply with the auditing standards required in their line of work. Investigations and reports have resulted in finger pointing and placing blame, but both companies contributed to one of the most notorious accounting scandals in history. There remains much speculation as to what steps could and should have been taken to protect innocent victims and numerous investors from experiencing the enormous loses that resulted from this scandal.

    Read More

  • Enron Ethical Dilemmas

    722 Words  | 2 Pages

    Because of the executive’s choice, the employees lost their entire pension fund and any other money they had invested in the company. As soon as the Securities and Exchange Commission announced that it was investigating the Enron scandal, Enron began to shred any documents relevant to the investigation. Even the accounting firm that provided auditing for Enron, Andersen LLP, began to shred files as well. The best ethical solution for this case is obviously to not commit a crime at all. The Enron executives should have taken a step back and looked at what they were doing and gathered their facts.

    Read More

  • Essay On The Enron Corporation Scandal

    2377 Words  | 5 Pages

    “When a company called Enron… ascends to the number seven spot on the Fortune 500 and then collapses in weeks into a smoking ruin, its stock worth pennies, its CEO, a confidante of presidents, more or less evaporated, there must be lessons in there somewhere.” - Daniel Henninger.

    Read More

  • What Are The Ethical Issues In Enron

    874 Words  | 2 Pages

    Enron was on the of the most successful and innovative companies throughout the 1990s. In October of 2001, Enron admitted that its income had been vastly overstated; and its equity value was actually a couple of billion dollars less than was stated on its income statement (The Fall of Enron, 2016). Enron was forced to declare bankruptcy on December 2, 2001. The primary reasons behind the scandal at Enron was the negligence of Enron’s auditing group Arthur Andersen who helped the company to continually perpetrate the fraud (The Fall of Enron, 2016). The Enron collapse had a huge effect on present accounting regulations and rules.

    Read More

  • Fall Of Enron Essay

    1519 Words  | 4 Pages

    Prior to 2000, Enron was an American energy, commodities and service international company. Enron claimed that revenue is more than 102 millions (Healy & Palepu 2003, p.6). Fortune named Enron “American most innovative company” for six consecutive years (Ehrenberg 2011, paragraph 3). That is the reason why Enron became an admired company before 2000. Unfortunately, most of the net income for the years 1997-2000 is overstated because of unethical accounting errors (Benston & Hartgraves 2002, p. 105). In the next paragraph, three main accounting issues will identify for what led to the fall of Enron.

    Read More

  • The Rise and Fall of Arthur Andersen

    1602 Words  | 4 Pages

    A month after the twin towers fell in New York City the nation's focus was shifted to the Enron scandal. Kenneth Lay and Jeffery Skilling were names in the press almost every day. Enron filed bankruptcy and thousands lost their jobs and pensions. Another company involved in the scandal was Arthur Andersen, an accounting firm; Enron was their client. Arthur Andersen continued to perform bad audits even after a warning from SEC. If Arthur Andersen employees had been ethical, after the warning, the Enron Scandal would not have had led to the conviction and dissolution of the Arthur Andersen accounting firm.

    Read More

  • What Are Enron Wrongful And Unlawful Practices

    410 Words  | 1 Pages

    My company would also potentially engage within the wrongful and unlawful accounting practices like those adopted by Enron. Enron adopted these wrongful and unlawful practice in financial accounting in the pursuit of an inflated business image that features success and innovation. For example, by trying to shift the loss of the company at the meantime to the future, Enron’s balance sheet looks much better. In addition, the profit that belongs to the future term could also be integrated into the reporting of the current terms’ revenue and profit Therefore, these practices managed to benefit the company in the short term. Our company would also make use of special purpose entities as vehicles to hide the company’s debt level so that the reported

    Read More

  • The Enron Corporation Case Study

    1339 Words  | 3 Pages

    The Enron Corporation was an American energy company that provided natural gas, electricity, and communications to its customers both wholesale and retail globally and in the northwestern United States (Ferrell, et al, 2013). Top executives, prestigious law firms, trusted accounting firms, the largest banks in the finance industry, the board of directors, and other high powered people, all played a part in the biggest most popular scandal that shook the faith of the American people in big business and the stock market with the demise of one of the top Fortune 500 companies that made billions of dollars through illegal and unethical gains (Ferrell, et al, 2013). Many shareholders, employees, and investors lost their entire life savings, investments,

    Read More

More about Essay About Enron

Open Document