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Enron
Abstract
The financial collapse of Enron had substantial and far-reaching ramifications throughout the financial investment field, tax compliance professions and the accounting profession. Intense Congressional scrutiny resulted in a new era of transparency in financial reporting, stricter reporting standards as provided in Sarbanes-Oxley and substantial penalties for failure to comply with new financial reporting and tax compliance standards in the Internal Revenue Code (Bottiglieri et. al., 2009)

Enron Assignment

The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure (Bratton, 2002). Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives were able to mislead Enron 's board of directors and audit committee of high-risk accounting issues as well as pressure Andersen to ignore the issues.

Enron 's stock price, which hit a high of US$90 per share in mid-2000, caused shareholders to lose nearly $11 billion when it plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and Dynegy offered to purchase the company at a fire sale price. When the deal fell through, Enron filed for bankruptcy on December 2, 2001 under Chapter 11 of the United States Bankruptcy Code, and with assets of


References: Ackman, D. (2004).Causey may put GAAP on trial. Forbes. Retrieved from http://www.forbes.com/2004/01/23/cx_da_0123topnewse.html on April 11, 2010. Alexander, D., Burns, G., Manor, R., McRoberts, F. & Torriero, E.A. (2002). The fall of Anderson. Hartford Courant. Retrieved from http://www.courant.com/news/nationworld/chi-0209010315sep01,0,2343149.story on April 12, 2010. Axtman, K. (2005). How Enron awards do, or don’t, trickle down. The Christian Science Monitor. Retrieved from http://www.csmonitor.com/2005/0620/p02s01-usju.html on April 9, 2010. BBC News (2006).Enron witness found dead in park. BBC News. Retrieved from http://news.bbc.co.uk/2/hi/uk_news/5173228.stm on April 12, 2010. BBC News (2007). Q&A: The NatWest three. BBC News. Retrieved from http://news.bbc.co.uk/2/hi/business/5164652.stm Retrieved on April 12, 2010. Benston, G.J. (2003). The quality of corporate financial statements and their auditors before and after Enron. Policy Analysis (Washington D.C.: Cato Institute) (497): 12. Retrieved from http://www.cato.org/pubs/pas/pa497.pdf. on April 9, 2010. Bottiglieri, W., Reville, P., & Grunewald, D. (2009). The Enron collapse -the aftershocks. Journal of Leadership, Accountability and Ethics, 1-9. Retrieved April 9, 2010, from ABI/INFORM Global. (Document ID: 1864838831). Bratton, W. W. (2002). Enron and the dark side of shareholder value. Tulane Law Review, New Orleans, May 2002 p.61 Chhaochharia, V Clark, A. (2007). NatWest three plead guilty to wire fraud. Retrieved from http://www.guardian.co.uk/business/2007/nov/28/2 on April 13, 2010. Davis, T. (2008). UC begins distributing Enron settlement money. University of California. Retrieved from http://www.universityofcalifornia.edu/news/article/19211 on April 11, 2010. Deakin, S., & Konzelmann, S. (2003). Learning from Enron. . ESRC Centre for Business Research. University of Cambridge. Working paper no. 274): 1. Retrieved from http://www.cbr.cam.ac.uk/pdf/wp274.pdf on April 15, 2010. DeBare, I. (2008). Billions to be shared by Enron shareholders. San Francisco Chronicle. Retrieved from http://www.sfgate.com/cgi- bin/article.cgi?f=/c/a/2008/09/09/BUCI12QRVE.DTL on April 14, 2010. Doran, J. (2004). Enron staff wins $85m. The Times (London). Retrieved from http://business.timesonline.co.uk/tol/business/article423518.ece on April 14, 2010. Eichenwald, K. (2004). Enron inquiry turns to sales by Lay’s wife. The New York Times. Retrieved from http://query.nytimes.com/gst/fullpage.html?res=9806EED8123FF934A25752C1A9629C 8B63&sec=&spon=&pagewanted=all on April 15, 2010. FoxNews (2005). Supreme Court overturns Arthur Andersen conviction. Associated Press. Fox News. Retrieved from http://www.foxnews.com/story/0,2933,158160,00.html on April 15, 2010. Guardian (2002).Ex-Enron executive pleads guilty. Retrieved from http://www.guardian.co.uk/business/2002/aug/21/corporatefraud.enron1 on April 17, 2010. Hays, K. (2004). Fastow’s wife pleads guilty in Enron case. USA Today. Retrieved from http://www.usatoday.com/money/industries/energy/2004-05-06-lea-fastow-plea_x.htm on April 15, 2010. Hays, K. (2006). Lay, Skilling convicted in Enron collapse. The Washington Post. Retrieved from http://www.washingtonpost.com/wp- dyn/content/article/2006/05/25/AR2006052500857.html on April 14, 2010. Hays, K. (2007). Source: British bankers to plead guilty in Enron case. Houston Chronicle. Retrieved from http://www.chron.com/disp/story.mpl/special/enron/5333449.html on April 15, 2010. Johnson, C. (2006). Skilling gets 24 years for fraud at Enron. Washington Post. Retrieved from http://www.washingtonpost.com/wp- dyn/content/article/2006/10/23/AR2006102300287_pf.html on April 16, 2010. Johnson, C. (2006). A Woman of conviction. The Washington Post. Retrieved from http://www.washingtonpost.com/wp- dyn/content/article/2006/06/09/AR2006060901922_pf.html on April 16, 2010. Leung, R. (2005).Enron’s Ken Lay: I was fooled. 60 minutes. (CBS News). Retrieved from http://www.cbsnews.com/stories/2005/03/11/60minutes/main679706.shtmlon April 16, 2010. McCoy, K. (2005).Former Enron executives pleads guilty.USA Today. Retrieved from http://www.usatoday.com/money/industries/energy/2005-12-28-enron-causey_x.htm?POE=NEWISVA on April 16, 2010. McLean, B. & Elkind, P. (2003). The smartest guys in the room. p. 153. Murphy, K. (2008). NatWest sentenced to 37 months each. The New York Times. Retrieved from http://www.nytimes.com/2008/02/22/business/worldbusiness/22iht- natwest.5.10317714.html?_r=1 on April 17, 2010. New York Times (2003) Porretto, J. (2007). Ex-Enron broadband head sentenced. USA Today. Retrieved from http://www.usatoday.com/money/economy/2007-06-18-3270186548_x.htm on April 17, 2010. Said, C. (2004). Ex-Enron chief Ken Lay enters not guilty plea. San Francisco Chronicle. Retrieved from http://www.sfgate.com/cgi- bin/article.cgi?file=/c/a/2004/07/09/MNGQQ7J31G1.DTL on April 17, 2010. Thomas, C. B. (2002). Called to account. Time. Retrieved from http://www.time.com/time/business/article/0,8599,263006,00.html on April 11, 2010. Vogel, C. (2003). Enron’s art to be auctioned off. The New York Times. Retrieved from http://www.nytimes.com/2003/04/16/business/enron-s-art-to-be-auctioned-off.html on April 11, 2010. USA Today (2009). Enron’s tilted E-sign goes for $44,000 at auction. USA Today. Associated Press. Retrieved from http://www.usatoday.com/money/industries/energy/2002-09-25- enron-auction_x.htm on April 12, 2010. Wall Street Journal, (2004). Key witnesses in the Enron trial. The Wall Street Journal. Associated Press. Retrieved from http://online.wsj.com/article/SB113838648001558434.html?mod=googlewsj on April 13, 2010.
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