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The Enron - Case Study Example

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At the height of the scandal, the company was the seventh largest corporation by revenue in the United States. Enron employed about 20,000 staff making it one of the largest…
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The Enron case
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Download file to see previous pages d the corporation and it was realized that their reported financial condition was sustained considerably by an institutionalized, methodological, systematic and crafted planned accounting fraud, which was to be known as the Enron scandal. The corporation did this through a complicated arrangement of special purpose entities they referred to as the Raptors. The Raptors were expected to cover their expenses if the stocks in their start-up businesses collapsed. Most surprising is the fact that the corporation took spent 16 years to grow from about $9 billion assets to $60 billion, but only spent about a month to go bankrupt. The Company collapsed so fast and so entirely. In fact it made history as the largest bankruptcy and accounting scandal in American.
The absence of truthfulness by management about the company led to their downfall. The overriding benefits and public trust ended immediately. For years the management lied about the financial reporting thus worsening the economic ability. They made employees loos job and lack of investors trust was evident. The senior management team believed Enron had to be perfect in everything it did and that they had to safeguard their reputations and their compensation as the most successful management in the US.
Three most common forms of accounting frauds above where witness that led to the downfall of the company. The corporation followed these illegal accounting practices in financing which subsequently ensure the company be valued more attractively and appealing to the investors by the by Wall Street analysts and rating agencies. Most notably was the fact that Enron as a company used various related parties in increment of equity and crafted its financial arrangements using various loopholes in laws. All these was surprisingly was conducted trying to not consolidate into its reports and accounts by at will not fulfilling certain ethical conditions.
This was a principle and a plan that proposed by both Andrew Fastow and ...Download file to see next pagesRead More
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