Wednesday, May 6, 2020
Enron Research Paper - 3111 Words
THE COLLAPSE OF ENRON amp; THE INTRODUCTION OF THE SARBANES OXLEY ACT BY TREVOR GARRETT 02/25/2011 Abstract Enron Corporation was one of the largest energy trading, natural gas and Utilities Company in the world that was based in Huston, Texas. The downfall of Enron is one of the most infamous and shocking events in the financial world, and its reverberations were felt around the globe. Prior to its collapse in 2001, Enron was one of the leading companies in the U.S and considered among top 10 admired corporations and most desired places to work at. Its revenues made up US $139 to $184 billion, assets equaled $62 to $82 billion, and the number of employees reached more than 30,000 people in 20 countries around the world.â⬠¦show more contentâ⬠¦Enron used this loop hole and began to take many assets and liabilities off its balance sheet and into that of SPEââ¬â¢s, so as to be able to access more capital and significantly reduce its risks. It specifically used these SPEââ¬â¢s to borrow funds directly from outside lenders by supplying its own credit and using its high stock p rices as guarantees. Enron took full advantage of accounting limitations in managing its earnings and balance sheet to portray a rosy picture of its performance. The company also violated GAAP in the recording or its revenues and expenses. It committed cut-off fraud by recording revenues early and recording expenses/liabilities after the cut off period thereby violating the policy and principle of revenue recognition. Enronââ¬â¢s trading business adopted mark-to-market accounting which made it difficult to estimate the income and expenses for long term contracts. Once the financial mis-representations came to light, Enron restated the previous 4 years of financial statements by recording a $1.2 billion reduction in stockholders equity, adjusting its income statements and balance sheets for the unconsolidated SPEs by $ 569 million, and making prior-period proposed audit adjustments and reclassifications that had originally been considered as immaterial. Following these announcements,Show MoreRelatedEnron Research Paper2224 Words à |à 9 PagesEnron Research Paper In 2001, the world was shocked by the demise of Enron, a multibillion dollar corporation that had thousands of employees and people that had affiliations with the company including The White House itself. Because of the financial chaos and destroyed lives and reputations this catastrophe left in its path, questions arose concerning how exactly it happened, why it occurred, and who was behind it. 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(Anderson), based out of Chicago, was wel l 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 ââ¬Å"creativeâ⬠accounting methods, this resultedRead MoreThe Importance Of Accounting As Well As Ethics1442 Words à |à 6 Pagesknow it would be an honest mistake. They all have the upmost confidence in their accountants to have the professionalism and competence to be able to catch the mistakes that are made. Secondly and perhaps most important and relevant to the case of Enron and Andersen, they all stated the obvious. The easiest way for a scandal like this never to occur is to ensure the people at the top of the organization such as the CEO, CFO, Founders, and COO all have the proper ethical training and moral values.Read MoreReasons for Enrons Business Failure1434 Words à |à 6 PagesEnron - Reasons for Business Failure Abstract Various major companies in the past have witnessed unimaginable growth of their businesses, but some of them eventually had to succumb to downfall as their business models failed. Most of these businesses had been deemed as failures due to the management methods, leadership practices and flawed organizational structures. This research paper aims to focus on Enron, a large entity as a failed model of business. This would be achieved by discussing aboutRead MoreEnron And Its Impact On Enron s Downfall Essay1492 Words à |à 6 PagesAbstract recent collapses of high profile business failures like Enron,Worldcom,Parmlat,and Tycohasbeen a subject of great debate among regulators, investors, government and academics in the recent past. Enronââ¬â¢s case was the greatest failure in the history of American capitalism and had a major impact on financial markets by causing significant losses to investors. Enron was a company ranked by Fortune as the most innovative company in the United States; it exemplified the transition from the productionRead MoreEnron And The Enron Scandal1588 Words à |à 7 PagesEnron was a corporation located in Houston, Texas and in just fifteen years the US energy trading and utilities company grew to become one of Americaââ¬â¢s largest and more successful cooperationââ¬â¢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 frau d committed and who is to blame. The historical development of white collar crime in the
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