Enron And The Sarbanes Oxley Act Essays

Enron And The Sarbanes Oxley Act Essays

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Prior to watching the movie "The Smartest Guys in the Room" and learning in class in depth about the Enron scandal and the counterparts that had hands in it I didn 't know much about it nor the effects it had on the way companies are regulated today. Prior knowledge of the Enron case was learned in my auditing class but only briefly to provide an introduction to the Sarbanes-Oxley Act passed in 2002 by Congress to protect investors from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud. Overall it was made to address systematic flaws in the way of corporations had been reporting their numbers. How did Enron get caught? -- the answer would relate to greed.
Enron was the world 's biggest and richest company in the late nineteen-nineties. It 's net value reached 70 billion dollars over the course of a decade and crashed and burned in a lone year of ferocious media coverage and pitiless criminal investigations. It 's important to understand how individual arrogance, the corporate unruliness, and U.S. greed cohesively cost the biggest economic scandal of its kind. Enron was founded in nineteen eighty-five by Kenneth Lay as a natural gas company in the Pacific Northwest. Around that time the energy markets of the US were being deregulated, transitioning from government control to free-market. Lay hired imaginative Jeffrey Skilling. Enron became a nationwide middle-man for the electricity market in the newly deregulated States. Companies sold electricity to Enron, who then sold the electricity to individual customers. This inventive approach led to broad critical acclaim for Enron with m...

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...ations that made Enron 's fraud possible. Arthur Andersen, a highly-regarded auditing corporation, was tasked with reviewing and corroborated all of Enron 's books and records. Instead, Arthur Anderson concealed Enron 's mistakes and was later charged with obstruction of justice for shredding and burning Enron 's most criminalizing documents and soon dissolved. Wholly conveyed, the question who should we blame does not have a simple answer. Enron 's top executives were certainly corrupt and contributed to the company 's fall, yet so many other people entities had a role in causing it. Lay, Skilling, and Fastow were encouraged by the market 's competitive profit focused and immoral environment, and all perpetrated these ideas within Enron. The individuals, the company 's culture, and the systemic problems of the US market all played a part in this monumental scandal.

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