Accounting played a big role in the collapse of Enron. With controversial accounting practices being used, Enron perceived there finances being much bigger then what they actually were. One of the major accounting practices was decentralizing operations and putting them into shell corporation, this allowed Enron to hide huge loses. Another accounting practice that led to the Enron collapse was Enron accountants and managers were holding off losses and putting them into shell companies then only stating assets. “The Enron Corp. used undisclosed reserves to keep as much as $1.5 billion in trading profits off its books during the California energy crisis, according to six former managers and executives who handled or reviewed the accounts (Barboza, 2002). ” Accounting played a huge role in the collapse of Enron as well as the financial backlash that f...
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...nd if there is unethical officers leading the company, then the whole company is doomed to fail. It’s sad to see that a few people have caused such a stain on the idea of American Capitalism.
BARRIONUEVO, A. (2006, May 25). Enron Chiefs Guilty of Fraud and Conspiracy. Retrieved October 13, 2014, from http://www.nytimes.com/2006/05/25/business/25cnd-enron.html?pagewanted=all&module=Search&mabReward=relbias:w
Barboza, D. (2002, June 23). THE ENRON COLLAPSE / Questionable Accounting Practices / Huge profits from California hidden away / Feds investigating reserves totaling as much as $1.5 billion. Retrieved October 13, 2014, from http://www.sfgate.com/news/article/THE-ENRON-COLLAPSE-Questionable-Accounting-2805132.php
Follow The Enron Money. (2002, January 12). Retrieved October 13, 2014, from http://www.cbsnews.com/news/follow-the-enron-money/
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