Essay About Enron

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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
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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

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