Essay on Enron Scandal Of The Sarbanes Oxley Act

Essay on Enron Scandal Of The Sarbanes Oxley Act

Length: 2335 words (6.7 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Jamie Dimon once said that “doing first class business in a first class way” has led to all of his success at J.P. Morgan because building a business does not only mean to build on profits, but also to make sure business is being done in an ethical way. Enron Corporation, once a great accounting firm, fell under its own weight as it was reaching for greatness. Former CEO Kenneth Lay, made a commitment to business ethics based on communication, integrity, respect, and excellence. However, a once successful American energy, commodities, and financial risk service company made questionable financial practices that ultimately led to their downfall. This essay will focus in the details of ENRON Scandal, how the corporate culture influenced the employees, enactment of the Sarbanes Oxley Act of 2002, the impact Enron has made to the current markets, and ultimately leading to the question whether another Enron scandal can occur again in the future.

I. Summary of ENRON
It began when Enron started the merging of Houston Natural Gas (HNG) and InterNorth. HNG provided gas to retailers in Houston and InterNorth was a national premier pipeline networks. A deal to merge the two companies together was officially announced in 1985 under the management of Kenneth Lay, who became the CEO and chairman of this new company that would soon be the second largest pipeline network in the nation with over 36,000 miles of pipes stretching across the continent (Texas State Historical Association,” 2002). Jeff Skilling, later became ENRON CEO in 2001, played a large role in helping set a strong foundation for Enron to grow and expand. He was a consultant at Mckinsey & Co who developed a concept known as “the Gas Bank” in 1984, which allowed buyers and seller...

... middle of paper ...

...enforcement laws like SOX are in place to prevent another ENRON Crisis. For instance, the Reform Act of 1995, was passed with the help of lobbies and corporations to reduce the power of the Securities and Exchange Commission and created loopholes to prevent SEC from enforcing certain financial regulations (“CBC”, 2006). The effects of ENRON have encouraged board of directors to pay closer attention to a corporation’s management and playing a bigger role in reading fine prints in proposals. While strict and detailed regulations in place, it is important they are being enforced by upper leadership. As the world continue to advance in technology and businesses continue to expand in global sectors, investors have to ask the right questions to ensure the company they are investing is one that will ultimately put ethical standards on the same level as monetary successes.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Events Leading Up to the The Sarbanes-Oxley Act Essay

- ... This act covered many important issues such as auditor independence, enhanced corporate disclosure, corporate and criminal board accountability, corporate fraud and accountability, and many more. Sarbanes-Oxley Act is very extensive, but Section 802 ‘Criminal Penalties For Altering Documents’ under Title VIII “Corporate and Criminal Fraud Accountability” is one the most important part of the act. This act mainly regulates corporations from altering the documents. Under section 802, Chapter 73 of title 18, United States Code, is amended by adding at the end section 1519 and 1520....   [tags: investment, scandal, accounting]

Better Essays
1213 words (3.5 pages)

Enron And The Sarbanes Oxley Act Essays

- 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....   [tags: Enron, Enron scandal]

Better Essays
975 words (2.8 pages)

Essay about The Sarbanes Oxley Act ( Sox )

- On July 30, 2002, the passage of the Sarbanes-Oxley Act (SOX) was enacted to introduce major changes to accounting practices in the United States. The act was enacted in reaction to a number of accounting scandals committed by major companies such as Enron and Worldcom. The act is named after Sarbanes–Oxley was named after sponsors U.S. Senator Paul Sarbanes, a Democrat from Maryland, and U.S. Representative Michael G. Oxley, a Republican from Ohio. The House of Representatives agreed upon the act, with a vote of 423 in favor, 3 opposed, and 8 abstaining....   [tags: Enron, Fraud, Arthur Andersen, Kenneth Lay]

Better Essays
1494 words (4.3 pages)

Essay on The Sarbanes-Oxley Act

- Introduction The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcy....   [tags: government, accounting, auditing]

Better Essays
1172 words (3.3 pages)

The Sarbanes-Oxley Act: Protecting Corporate Assets Essays

- Internal Controls. Kind of like a brick wall, or a fire wall on a computer. Internal controls act as a way to keep a company and its assets safe, as well as make sure that the company maintains complete and accurate accounting records. Internal controls are in charge of the overall well being of a company from its assets to its employees, even to its sales and reputation. A lot of things are involved with internal controls such as; Sarbanes-Oxley Act, stock well being, well being and safety of assets and accounting accuracy....   [tags: SOX Act, Internal Controls]

Better Essays
1024 words (2.9 pages)

The Sarbanes Oxley Act Of 2002 Essay

- The field of financial reporting tends to bore many people, until it makes the front page in a typically catastrophic fashion due to one scandal or another. While we are happy ignoring the important accounting function of reporting and auditing while that function works properly, as soon as it fails, we turn on corporations and the accountants that keep them running to call for justice and perhaps reform. Today, the accounting practices of publically-traded companies are governed by numerous regulations and requirements, among them the Sarbanes-Oxley Act of 2002 (SOX), a piece of legislation introduced following a number of headline accounting scandals at companies like Enron and WorldCom (H...   [tags: Internal control, Auditing, Audit]

Better Essays
851 words (2.4 pages)

Enron And The Sarbanes Oxley Act Essay

- 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....   [tags: Fraud, Audit]

Better Essays
1634 words (4.7 pages)

About the Sarbanes-Oxley Act Essay

- Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars....   [tags: Corporate Fraud, Business Ethics ]

Better Essays
2065 words (5.9 pages)

The Detrimental Effects of the Sarbanes-Oxley Act Essay

- In 2002, Senator Paul Sarbanes (a Democrat from Maryland) and Congressman Michael Oxley (a Republican from Ohio) crossed the aisle to develop a new law to further regulate the accounting, auditing and financial reporting of companies publicly traded in United States. The Sarbanes-Oxley Act of 2002 (SOX) (also known as the Public Company Accounting Reform and Investor Protection Act of 2002) passed because of the demand of the American people to see reform in response to the widely publicized instances of fraud and corruption in large US companies....   [tags: fraud, corruption, financial scandals]

Better Essays
1741 words (5 pages)

Essay on Accounting Fraud, the Investor and the Sarbanes Oxley Act

- Accounting Fraud, the Investor and the Sarbanes Oxley Act 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)....   [tags: Business Finance]

Better Essays
1981 words (5.7 pages)