Enron Corporate Scandal
Ba (honors) in business & management
Offered by Cardiff metropolitan university
Strategic management
Assignment 02 - Enron
Submitted to: Mr. Shane De Silva
M.F.M.M Fazlan
ICBT/ BABM/07
Executive Summary
This report is provides information the Enron scandal which is revealed in 2001. The main reasons for scandal have been described. There are many individuals as well as companies involved in the scandal. The mechanisms in governance chain which could prevent the scandal and the required changes in the corporate governance to prevent from scandal have been explained in order to provide other companies to take into consideration to protect their companies from this kind of scandals.
Table of Contents
Executive Summary 2 1. Introduction 4 1.1 The Reasons for Scandal 4 2. The Mechanisms in the Governance Chain which Could Prevent the Scandal 5 3. The Required Changes in the Corporate Governance to Prevent from Scandal 5 4. Conclusion & Recommendations 6 References 7 Bibliography 7
1. Introduction
Enron was founded as a pipeline company in Houston in 1985. They decided to diversify the business and became an energy broker who traded electricity and other commodities. However at the end of 2001 it was revealed that its reported financial condition was sustained mostly by systematic and creative accounting fraud. Many of Enron’s recorded assets and profits were inflated, fraudulent and non-existent. It was the biggest bankruptcy in US history and cost 4,000 employees their jobs.
1.1 The Reasons for Scandal
Top Level Management & Board of Directors – Enron
Bent the Accounting rules to satisfy their own desires to earn short term profit
SPE Laws
Accounting Laws
The Immoral and unethical actions taken to achieve personal profits
Violated
Top Level Management & Board of Directors –
Offered by Cardiff metropolitan university
Strategic management
Assignment 02 - Enron
Submitted to: Mr. Shane De Silva
M.F.M.M Fazlan
ICBT/ BABM/07
Executive Summary
This report is provides information the Enron scandal which is revealed in 2001. The main reasons for scandal have been described. There are many individuals as well as companies involved in the scandal. The mechanisms in governance chain which could prevent the scandal and the required changes in the corporate governance to prevent from scandal have been explained in order to provide other companies to take into consideration to protect their companies from this kind of scandals.
Table of Contents
Executive Summary 2 1. Introduction 4 1.1 The Reasons for Scandal 4 2. The Mechanisms in the Governance Chain which Could Prevent the Scandal 5 3. The Required Changes in the Corporate Governance to Prevent from Scandal 5 4. Conclusion & Recommendations 6 References 7 Bibliography 7
1. Introduction
Enron was founded as a pipeline company in Houston in 1985. They decided to diversify the business and became an energy broker who traded electricity and other commodities. However at the end of 2001 it was revealed that its reported financial condition was sustained mostly by systematic and creative accounting fraud. Many of Enron’s recorded assets and profits were inflated, fraudulent and non-existent. It was the biggest bankruptcy in US history and cost 4,000 employees their jobs.
1.1 The Reasons for Scandal
Top Level Management & Board of Directors – Enron
Bent the Accounting rules to satisfy their own desires to earn short term profit
SPE Laws
Accounting Laws
The Immoral and unethical actions taken to achieve personal profits
Violated
Top Level Management & Board of Directors –
References: Dr. Stuart Gilman, Dr. Patricia Harned, Frank Navran and Jerry Brown , 2009. Build a robust ethics infrastructure that is self-sustainin. TEN THINGS YOU CAN DO TO AVOID BEING THE NEXT ENRON, [Online]. 1-5. Available at: http://www.ethics.org/resource/ten-things-you-can-do-avoid-being-next-enron [Accessed 30 May 2013]. G. Johnson K. Scholes and R. Whittington, 2008. EXPLORING CORPORATE STRATEGY. 5th ed. England: Pearson Publication. R.Pufky, M. Rollings, J. Buondonno and N David, 2005. ENRON’S ACCOUNTING FRAUD AND MISREPRESENTATION. The Enron Accounting Scandal, [Online]. 1, 8-24. Available at: http://www.scribd.com/doc/37033842/Accounting-Enron-Scandal [Accessed 29 May 2013]. Bibliography Alton B. Harris and Andrea S. Kramer, (2003). CORPORATE GOVERNANCE: PRE-ENRON, POST-ENRON, [Online]. Available at: http://www.uhlaw.com/files/Publication/0478ac3b-512d-4a9b-84fc-00c31e8424c9/Presentation/PublicationAttachment/b5aaa301-8fa0-4d47-b251-0131bfad77a9/Corporate%20Governance%20Article.pdf [Accessed 29 May 2013].