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Medicine essays Miscellaneous essays Psychology essays Religious studies essays Science essays Sociology essays Essays menu. Auditing - There may have been a possibility that the auditors were mislead into preparing the wrong financials for the company. Often companies pay more to auditors for non-audit fees than for audit fees, which may bring the auditors to compromise their standards.
Accounting - There are several questionable accounting techniques like subsidiary accounting, derivatives and third party investors used by Enron. The loopholes in the accounting system need to be rectified. Such grave scenarios need to be avoided in the future. Corporate Governance - The board of directors is meant to protect the interest of the shareholders. LLP Formation - The ease with which general partnerships can be converted to limited liability partnerships in the US by filing the requisite paperwork with the state department can lead to additional Enron-like disasters.
Securities Analyst - The creditability of analysts came under question following the collapse of Enron stock in November as even the Wall Street analysts failed to predict the Enron disaster. Morgan and Citigroup have both suffered due to their involvement as investment banks and commercial banks for Enron. The reputation of banks is often at stake in events like an Enron collapse. Public Company Accounting - Registrations with board, auditing procedures, public accounting firms, accounting standards, funding, etc.
Auditor Independence - Conflict of interest, audit partner rotation, commission authority, etc. Corporate Responsibility - Fair funding for investors, audit committees, financial reports, conduction of audits, etc. Enhanced Financial Disclosures - Periodic reporting, transactions involving management and principal stockholders, code of ethics, exemptions, etc.
Analyst Conflict of Interest - Treatment and appointment of security analyst Commission Resources and Authority - Authorization of appropriations, appearance and practice before the commission, etc.
Studies and Reports - Study of investment banks, violators and violations, enforcement actions, etc. Corporate and Criminal Fraud Accountability - Criminal penalties, protection of employees, security fraud, etc. White Collar Crime Penalty - Criminal fraud offenses, corporate responsibility, criminal penalties, etc. Corporate Tax Return - Signing of corporate tax return by chief executives Corporate Fraud and Accountability - Tampering with records, persons serving as officers or directors, increased criminal penalties, etc.
Here is what the board of directors must comply with following the Enron scandal and the Sarbanes-Oxley act of : Restructure the directors and audit committees so that the requirements in the Sarbanes-Oxley Act of are met.
Study the revised corporate governance policies and ensure that the same are met in the best possible way. Make certain that the role of any company player does not bring conflict of interest to the company policies and actions Make sure that the management performance and compensation does not compromise the interest of the company.
Give shareholders direct input to the corporate governance measures in place in the company. Educate board members of the responsibility they have towards the shareholders. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices.
As a consequence of the scandal, new regulations and legislation were enacted to expand the accuracy of financial reporting for public companies. Enron first started sliding down the unethical path when the market to market accounting style was introduced. Market to market accounting allowed Enron to book potential future profit on the day a deal was signed.
This is a problem because even if the company did not receive any money that day Enron could make it look anyway they wanted. Due to the large discrepancies of attempting to match profits and cash, investors were typically given false or misleading reports. While using the method, income from projects could be recorded, although they might not have ever received the money, and in turn increasing financial earnings on the books.
Enron also had something in place called PRC the performance review committee. It let employees review each other and people that did not meet the requirement you were let go and the better employees were rewarded. Employees constantly looked to start high-volume deals, often disregarding the quality of cash flow or profits, in order to get a higher rating for their performance review.
Enron paid out multimillion dollars bonuses to top executive based on imaginary profit. Enron had to find real money to fund them so they merged with Portland General Electric Company. Enron became the largest marketer of natural gas and electricity.
Enron and Blockbuster signed a 20 year agreement to introduce video on-demand. After several attempts to get the concept together Enron realized it was not going to work. When the network failed to work, Blockbuster pulled out of the contract. Enron continued to recognize future profits, even though the deal resulted in a loss.
Enron debt was beginning to catch up with them and raise questions so they found different ways to hide it. One ways was hiding the debt in a lot of dummy corporations. At this point Enron had thrown business ethics out of the window. Making people invest their money in a company stock that had false value. Enron started using the electricity needs to their advantages having forced black out for the cost of electricity to raise and to make a profit. They did not care what the lack of electricity was doing to the people.
When Enron went bankrupt the people lost everything there whole savings where gone and they were now without a job. If people had stop to ask there self is this decision ethical or how it well affect others the Enron scandal could have been avoided.
The executive put money over the wellbeing of the company as a whole and the employees. When making the important decisions about your business you should always look at the business, personal and legal side of the deal.
- The Enron scandal was mostly all about how these people that was supposed to be the smartest people in the world that made a stock company increase in so much money by lying and stealing money from .
The Enron scandal was the biggest bankruptcy in United States history which cost 4, employees their jobs. Once it was obvious that something was amiss with Enron's bookkeeping, there was action on behalf of the Securities and Exchange Commission.
Dec 08, · ENRON The Enron scandal was a financial scandal that was revealed in late After a series of discoveries involving irregular accounting procedures which could be turned in as fraud, went on throughout the s, involving Enron and its accounting firm Arthur Andersen. Essay about Enron Accounting Scandal. The Enron Accounting Scandal of There are many accounting scandals that have occurred throughout United States History. Many scandals occur even without outsiders knowing anything that had occurred. Companies try their best to keep many of the accounting scandals quiet.
The Enron scandal, revealed in October , eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. Free Enron Accounting Essay Analyse the corporate governance procedures in place in the U.S. after the fall of Enron, particularly the role of the board of directors Here is what the board of directors must comply with following the Enron scandal and the Sarbanes-Oxley act of