Enron Case - 2918 Words

Executive Summary The United States that have been considered as a super power country and also the direction of science disciplines including accounting must felt bitterness. Business scandals that happened seemed eliminate confidence by the business world about the practice of good corporate governance in the United States. Enron was a company that was ranked as seventh out of the five hundred leading companies in the United States and is the largest U.S. energy company that went bankrupt leaving debts amounting to nearly U.S. $ 31.2 billion. In instance with the case of Enron known occurrence of moral threat behavior such as manipulation of financial statements with a record 600 million dollar profit when the company†¦show more content†¦Enron started to have a dangerous game because of this accounting strategy and after a couple years, Enron fall little by little. Enron’s corporate culture shifted because of Skilling command, he transforms the company image as a trading busine ss. He started to hire the best and brightest traders, he recruiting associates from the top MBA schools in the country and competing with the largest and most high-status investment banks for talent. In exchange for exhausting schedules, Enron spoiled its associates with a long list of corporate bonuses, also increase company facilities including concierge services and a company gym. Skilling rewarded production with performance-based bonuses, permitting traders to â€Å"eat what they killed.† For the energy trading business, Enron has changed their accounting method to â€Å"mark-to-market accounting† in the mid-1990s and used it for the first time scale for its trading transaction activities. Under this accounting method, no matter how outstanding energy related or other derivative contracts such as assets or liabilities that companies have on balance sheets of Enron at the end of a particular quarter, they must adjust them to fair market value, booking unrealized g ains or losses to the income statement of the period. Application of these rules in accounting for long-term futures contracts in commodities such as gas is that there are often no quoted prices upon which to base valuations as a difficulties. AccordingShow MoreRelatedEnron Case1075 Words   |  5 PagesMINI CASE: THE FILURE OF CORPORATE GOVERNANCE AT ENRON 1.Which parts of the corporate governance system, internal and external, do you believe failed Enron the most? In the evaluation of the Enron’s case; by trying to see the very big picture, it is not only about that the internal part of the corporate governance system was failed or but also the external part of the corporate governance system was also failed. As noted on the last paragraph of the mini case, many people from different positionsRead MoreEnron Case1899 Words   |  8 PagesENRON CASE Please read the Enron cases posted on blackboard and the one in your book then answer the following questions based upon the case and Chapter 9. Make sure that your answers are supported by the facts of the case and the concepts you learned from Chapter 5. Please rely only on the case/chapter 9 to answer the questions except for question # 12—requires outside search. Make sure your answers are sufficiently brief, concise, and relevant to the question. Please avoid generalRead MoreEnron Case2186 Words   |  9 PagesPart B: What role did the CFO play in creating the problems that led to Enron’s financial problems? In order to prevent the losses from appearing on its financial statements, Enron used questionable accounting practices. To misrepresent its true financial condition, Andrew Fastow, the Enron’s CFO, takes his role involving unconsolidated partnerships and â€Å"special purpose entities†, which would later become known as the LJM partnership. Taking advantage from the SPEs’s main purpose, which providedRead MoreEnron Case2402 Words   |  10 Pages Imane Malihi Prof. Fred Friend BLW411/511 March 27, 2014 The Downfall of Enron Corporation â€Å"Ethics and integrity are at the core of sustainable long term success †¦ Without them, no strategy can work and, as Enron has demonstrated, enterprises will fail. That’s despite having some of the ‘smartest’ guys in the room.† by Richard Rudden. As the quotation states, ethics and integrity play a key role in the success of any corporation; through these principles, companies can ensure their complianceRead MoreThe Case Of The Enron Case Essay1197 Words   |  5 Pages1.1. One of the most important fraud cases in the USA was The Enron case because of his criminal activity which involved a big part of USA. Let me give a short introduce about it, â€Å"In 1974, Kenneth Lay joined the Florida Gas Company, eventually serving as president of its successor company, Continental Resources Company. In 1981, he left Continental to join Transco Energy Company in Houston, Texas. Three years later, Lay joined Houston Natural Gas Co. as chairman and CEO. The company merged withRead MoreENRON Case Study1572 Words   |  7 Pages1. The Enron debacle created what one public official reported was a â€Å"crisis of confidence† on the part of the public in the accounting profession. List the parties who you believe are most responsible for that crisis. Briefly justify each of your choices. Following parties are believed to be the most responsible for the crisis. With any big organization going so bad, the blame starts with the top level executives, there was no different in this case. For Enron the blame started with Enron’sRead MoreCase: 9 Enron928 Words   |  4 PagesCase 9: Enron; Questionable Accounting Leads to Collapse Bruce Smith Minnesota School of Business BS430 Business Ethics MR. Morris November 25, 2012 1. 2. 1. How did the corporate culture of Enron contribute to its bankruptcy? Effective leaders are good at getting followers to their common goals or objectives in the most effective and efficient way; unfortunately for Enron, in the end Ken Lay and Jeffery skilling were too focused on profits that nothing else mattered. In theRead MoreEnron Case Study5921 Words   |  24 PagesEnron Case Study [pic] Part A: Problem Focused Analysis and Recommendations. 1. Brief Case Background. List key events, use timeline. Case Background At one time Enron was one of the world’s largest producers of natural gas, oil, and electricity. It also appeared to be one of the most profitable companies, taking shareholders from $19.10 in 1999 to $90.80 by the end of 2000. Enron’s top management answered to a Board of Directors whose responsibility was to question and challenge new partnershipsRead MoreThe Ethics Of The Enron Case1407 Words   |  6 PagesThe Enron case is a very popular case to show how the profession of accounting is vital to make the corporate world of business flow reliably. Enron was recognized as one of the world’s major electricity, natural gas, communications and pulp and paper’s company. However Enron was found to record assets and profits at inflated, fraudulent and non-existent amounts. Debts and losses were found to be excluded from financial statements along with other major transactions between Enron and other companiesRead MoreEnron Case Study Analysis1699 Words    |  7 PagesBusiness Strategy Enron Case Study 09/08/12 Enron Case Study: From Company to Conspiracy 1. What is the History of Enron, and what current situation does it find itself in? Enron was created by a combination of companies. These companies were Houston Natural Gas and InterNorth. These companies were merged together in July 1985. CEO of Houston Natural Gas, Kenneth Lay became chairman and CEO of the combined company. This happened in February 1986. The company changed its name to Enron on April 10th