Questions and Answers About the Enron Scandal Essay examples

Questions and Answers About the Enron Scandal Essay examples

Length: 784 words (2.2 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

The Enron scandal
Question 1: What happened to Lay, Skilling and Fastow?
Kenneth Lay created in 1985 after assimilation InterNorth and Houston Natural Gas . Later, he employed the likes of Jeffrey Skilling and Andrew Fastow, who were to be involved with him in committing gross accounting misconducts. Together with these men and many others, Lay hid huge sums of cash in debt from unsuccessful contracts and plans. This was possible through the use accounting loopholes, poor financial reporting and special purpose entities.
Andrew Fastow, the Chief Financial Officer, and other Enron executives often misled the Enron’s audit committee and the board of directors regarding these high-risk accounting practices. Furthermore, they put immense pressure on Lay that he could not give attention to the details.
It is through these schemes that Enron became the main firm dealing in natural gas in the continent as at 1992. Natural gas trade brought became the second leading benefactor to Enron's net earnings. For instance, Enron achieved an earnings before interest and taxes (EBIT) totaling to $122 million owing to the natural gas trade. The formation of the online trading model, Enron Online, in November 1999 enabled Enron to further expand and expand its abilities to consult and run its trading business
It was not until November 2001 that the shareholders of Enron filled a complaint worth $40 billion. These shareholders could not understand how Enron’s share prices would flop from $90.75 per split in mid-2000 to $1 as at the close of the month, November 2001. According to these shareholders, this was beyond the logics of stock market, which even in the most risky moments would not yield such poor results. This suit prompted the Securities a...


... middle of paper ...


... of the benefits. Numerous empirical studies and surveys have indicated that SOX has improved the reliability of financial reporting, effectiveness of corporate governance, corporate and investor liquidity and has resulted in a reduction of financial statement fraud.
Consistency of Financial Information:
The innovative reason behind the effort that produced SOX was to restore public assurance in the financial statements organized by public companies. One of the main of objectives of the internal control must be to produce reliable financial information as the more effective internal controls are, the more reliable the information produced will be. As one of SOX’s necessities is the continuation of efficient internal controls one should sensibly suppose that consistent information would be produced. Support for this expectation can be found in several studies.



Need Writing Help?

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

Check your paper »

Essay on Enron, Ethics, And Organizational Culture

- Jennifer Lee Serna MGMT 3362- 90L Enron, Ethics, and Organizational Culture 04/15/2016  Introduction Enron Corporation was based in Houston, Texas and participated in the wholesale exchange of American energy and commodities (ex. electricity and natural gas). Enron found itself in the middle of a very public accounting fraud scandal in the early 2000s. The corruption of Enron’s CFO and top executives bring to question their ethics and ethical culture of the company. Additionally, examining Enron ethics, their organization culture, will help to determine how their criminal acts could have been prevented....   [tags: Enron, Ethics, Business ethics, Andrew Fastow]

Better Essays
1213 words (3.5 pages)

Essay on Analysis Of Enron 's Collapse And Enron Scandal

- Analysis of the Enron’s Collapse The Enron scandal reveals the darkest side of the business world. Within twenty-four days, the seventh-largest company on the Fortune 500 went bankrupt. Millions of people lost their properties and jobs because of the horrifying acts that Kenneth Lay, Jeffrey Skilling, and Andrew Fastow committed. Enron’s toxic culture, both the internal and external regulation failures, and conflicts of interest between the two roles played by Arthur Andersen are the causes of the Enron’s collapse....   [tags: Enron, Enron scandal, Arthur Andersen]

Better Essays
1679 words (4.8 pages)

Enron And The Enron Scandal Essay

- Enron Corporation was an American commodities, energy, and services company that was based out of Houston, Texas. This corporation was founded in 1985, resulting from the merger between InterNorth and Houston Natural Gas, these were both moderately small businesses in the United States. Before Enron’s bankruptcy on December 2, 2001, it had nearly 20,000 employees and was one of the global leaders in the communications, electricity, natural gas, and pulp and paper market, with declared earnings of approximately $101 billion during 2000....   [tags: Enron, Jeffrey Skilling, Kenneth Lay]

Better Essays
791 words (2.3 pages)

Enron Scandal Of Enron Corporation Essay

- Enron Scandal Extra Credit Enron Corporation was a company founded in 1985 when InnerNorth and Houston Natural Gas Company merged. Enron marketed natural gas, electricity and broadband. According to “Enron: The Smartest Guys in the Room”, Enron was once on Forbes where they were named “America’s Most Innovative Company,” for six consecutive years. Enron was a company that kept growing but no one wonder how. At one point their stock was worth $90.75, but they filed for bankruptcy which caused the stock to drop to $0.67....   [tags: Enron, Kenneth Lay, Jeffrey Skilling, Fraud]

Better Essays
884 words (2.5 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)

The Scandal Of Enron Corporation Essay examples

- The Scandal of Enron Corporation Enron Corporation was an American commodities, energy, and services company that was based out of Houston, Texas. This corporation was founded in 1985, resulting from the merger between InterNorth and Houston Natural Gas, these were both moderately small businesses in the United States. Before Enron’s bankruptcy on December 2, 2001, it had nearly 20,000 employees and was one of the global leaders in the communications, electricity, natural gas, and pulp and paper market, with declared earnings of approximately $101 billion during 2000....   [tags: Enron, Arthur Andersen, Jeffrey Skilling]

Better Essays
1450 words (4.1 pages)

Essay on Enron Scandal Of The Sarbanes Oxley Act

- 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....   [tags: Enron, Kenneth Lay, Jeffrey Skilling]

Better Essays
2335 words (6.7 pages)

Corporate Governance Of The Enron Scandal Essay

- In the Enron scandal there have been many failures and the outcome to this is a practical standpoint which included a moral hazard in the company where managers where elaborating and not managing the companies risks. Take in to account the risks that had not been managed properly to certain extent in the company. Anglo-American system of corporate governance is centered as the ownership of an establishment and it is extensively circulated between the differences in shareholders than the ownership of being focused on the Sarbanes Oxley Act of 2002....   [tags: Management, Corporate governance, Enron]

Better Essays
1036 words (3 pages)

Enron Was An American Energy And Service Company Essay example

- Enron was an American energy and service company which was located in Houston, Texas. It’s net value reached up to 70 billion dollars over the course of a decade. With this topic, it is important to understand how independent arrogant, corporate recklessness, and US greed collaborative could cause the biggest economic scandal. Enron was founded in 1985 by Kenneth Lay as a natural gas company in the pacific northwest. Lay later then became the CEO of Enron, with a salary of $200 million. Enron benefit from the energy markets of US since they were being deregulated, which means it was being transmitting from government control into free market....   [tags: Enron, Jeffrey Skilling, Enron scandal]

Better Essays
1189 words (3.4 pages)

The Enron Scandal Essays

- The Enron Scandal In a front-page article with no less than four by-lines (7/03, "Enron Triggers a Slew of Proposed Fixes But What Will Stick?" by Steve Liesman et al.), The Wall Street Journal reports, "As more than 10 congressional committees pursue inquiries, 32 Enron-related bills have been introduced to address ills ranging from auditor conflicts of interest to the scams of an unregulated derivatives market. The Securities and Exchange Commission pledges to reform accounting rules, get tough on fraud and overhaul auditor oversight....   [tags: Papers]

Better Essays
605 words (1.7 pages)