Enron Questionable Transactions Essay - 765 Words

Enron Questionable Transactions Question 1 The question which segment of its operations got Enron into difficulties is simple to answer, everything. Almost every all segments of their operation were improper. First of all, they practice unethical and dishonest practices which victimized workers, consumers, taxpayers and stockholders. Enron created partnerships within their own organization which led to them creating new financial instruments, called SPE’s (special purpose entities) which was used to falsify the accounting. The improper financial reporting was to make the company look good, instead of assuring that the figures are accurate and reliable. Enrons legal department wrote up contracts that were irregular. Enron executives†¦show more content†¦This was his downfall; he should have been more involved with the decision making; but one of his own board of directors and other senior accounting staff members kept him out of the decisions being made for profit. In reading this segment Ken Lay was not in volved until Jeffrey Skilling’s resigned as CEO and he resumed the position. Question 6 Enron failed all governance system practices. They reported improper equity shares; they did not abide by the GAAP. Enron was a victim of profit and revenue at no cost. The Enron executives accounting staff, accounting firm and law firm made erroneous decisions just to keep their revenue incoming. They reported false financial reporting continuously, stockholders had great losses, employee retirement fund was depleted and they did not honor their code of ethics. Worldcom : The Final Catalyst Question 1 WorldCom accountants would overstate their cash flow and income statements. They created excess reserves or provisions for future expenses which they later released or reduced thereby adding profits. The manipulation of profit through reserves or provisions is known as â€Å"cookie jar† accounting. Their finance staff would make improper accounting entries related to their expenses for accessing the networks of other telecommunications companies â€Å"line costs† which was WorldCom’s major operating expenses. From at least the third quarter of 2000 through the first quarter of 2002 (five quarters) in a schemeShow MoreRelatedA Summary On Corporate Governance1227 Words   |  5 Pagesdirectors to interpret. In the case of Enron, the rule had been bent so hard that it finally broke. The company was originally established as an energy provider in the US. In 1970s, the CEO of Enron seized the chance of US energy market deregulation and navigated the company into a new and attractive business – energy trading. Despite the disagreement of operational strategy relocate that happened inside Enron for several years, in 1996, Jeff Skilling, the COO of Enron, decided to apply â€Å"Asset light† asRead MoreArthur Andersen: Failure to Report Accurately Essay1214 Words   |  5 PagesEnron Corporation has been accused of cooking the books and overstating company profits in its financial reports. In addition, Enron’s trading business adopted mark-to-market accounting, which meant that once a long-term contract was signed, income was estimated as the present value of net future cash flows, even though in some cases there were serious questions about the viability of these contracts and their associated costs. Author Andersen provided both consulting and auditing services whichRead MoreEnron And Its Impact On Corporate Business Practices1124 Words   |  5 PagesEnron Enron is a company infamous for one of the largest scandals in American corporate history. 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Although some behaviors are legal they may not be heldRead MoreThe Downfall of Enron1573 Words   |  6 Pagesï » ¿Enron: The fallout from the accounting scandal Determine the primary factors that contributed to the downfall of Enrons financial practices Corporate managers are expected to maximize investor returns while complying with regulatory standards, avoiding principal-agent conflicts of interest, and enhancing the reputational capital of their firms (Patrick Shearer 2002). Before its demise, the energy company Enron was envied for its burgeoning balance sheets. However, gradually it emerged thatRead MoreEnron: What Caused the Ethical Collapse?882 Words   |  4 PagesKenneth Lay, former chairman and chief executive officer (CEO) of Enron Corp., claimed to be a moral and ethical leader and exhorted Enron’s officers and employees to be highly ethical in their decisions and actions. In addition, the Enron Code of Ethics specified that â€Å"An employee shall not conduct himself or herself in a manner which directly or indirectly would be detrimental to the best interests of the Company or in a manner which would bring to the employee financial gain separately derivedRead MoreEssay on Enron: Questionable Accounting Leads to Collapse784 Words   |  4 PagesEnron: Questionable Accounting Leads to Collapse In the case of Enron, it comes down to pure greed and a lack of accountability. From the top, there was illegal activity with Ken Lay, Jeffrey Skilling, and Andrew Fastow who raided the company as though it was their own personal bank. On top of that, the culture of the rest of the company was to make as much money as they could and employees were rewarded by the amount of profit they could make without questioning the ethical means to do so. Read MoreThe Influence of a Companys Leadership and Culture on Its Business Ethics1541 Words   |  6 Pagescustomers with reference to the development of an effective image or reputation (Free et al, 2007). Enrons sense of business ethics business operations in relation to organizations culture Enrons sense of business ethics indicates that the transaction ethics is a question of organizational deep culture instead of the cultural artifacts in the form of ethics codes, ethics officer, and other relevant aspects. This enabled the organization to transform to a thriving business entity rather than theRead MoreThe Ethics Of Enron Oxley Act1309 Words   |  6 PagesThe Houston based corporation of Enron was once considered a top company, until its demise from a complex accounting scheme. The company that was forced to declare bankruptcy and lay off many employees; also resulted in thousands of others losing a significant portion of their retirement funds that were invested in the company’s stock (Ferrell, Fraedrich, Ferrell, 2013). Additionally, the perceived scandal propagated concern of accounting practices of corporations and initiated new reporting practicesRead 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 the