Enron Corporation: Various Classifications Of Crimes
Enron Corporation (former NYSE ticker symbol ENE)
Enron Corporation (former NYSE ticker symbol ENE)
Cierra Gause
Abstract
This paper will describe the legal environment of business, the sources of American law, and the basis of authority for government to regulate business, differentiate between civil law and criminal law and describe the various classifications of crimes as it relates to Enron and the scandal the caused their downfall by using technology and information resources to research issues in business law.
Describe how Enron could have been structured differently to avoid such activities. Skilling changed the way Enron was structured and the way they were doing their accounting methods is what began the downfall of
the company and started one of the biggest scandals of the business world. Enron should have maintained total control of all its finances. The company should have had management in place to ensure the integrity of the financial reports given to the board and an in house auditor to verify the accuracy of the reports given to the board of directors. If the accounting was to be outsourced to Arthur Anderson accounting firm, an in house audit department should have been put in place to establish a checks and balance system. Code of Business Conduct rules should have been established as part of the company’s normal operating practices that would not allow the false reporting of any information or reports to the company or any other entity on the company’s behalf. A compliance department should have been in place to ensure all documents financial or any other company related report, directive or memos are in compliance with the records retention policy.
Discuss whether Enron’s officers acted within the scope of their authority. This really depends on which side of the coin you’re on. Looking at it from the officers’ point of view, they did what they needed to ensure a profitable outcome. This led them to being a formable adversary in the business arena. The officer delivered what was expected of them profits. The other side of the coin, ethically, the scope of the authority is what is legal. The officers of Enron and Andersons accounting firm both exceeded their authority when they knowingly participated in the defrauding of the board of directors and stockholders. Ignoring many of their own rules and regulations put in place to safeguard the company; many decisions were made with the knowledge of its negative impact on the company. Their common practice of mark to market accounting allows them to assume profits today for future transactions. They also exceeded their authority by granting ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses.
Describe the corporate culture at Enron. Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer - and not just shareholder - value. Because the Enron corporate culture was not well grounded, a single scorecard - maximized price per share of common stock - became its reason for being, and even its positive values became liabilities. (www. schulers.solutions.com/enron_s_corporate_culture.html) Enron’s corporate culture as described above also led to more and more aggressive partnerships and arrangements to maximize share value. These practices led to extreme acts such as hiding debt and compromising balance sheets. The company failed to check its “creativity” with an equal commitment to integrity.
Discuss two alleged irregularities in the actions between sellers of securities and Enron.
Enron Corporation (former NYSE ticker symbol ENE)
Cierra Gause
Abstract
This paper will describe the legal environment of business, the sources of American law, and the basis of authority for government to regulate business, differentiate between civil law and criminal law and describe the various classifications of crimes as it relates to Enron and the scandal the caused their downfall by using technology and information resources to research issues in business law.
Describe how Enron could have been structured differently to avoid such activities. Skilling changed the way Enron was structured and the way they were doing their accounting methods is what began the downfall of
the company and started one of the biggest scandals of the business world. Enron should have maintained total control of all its finances. The company should have had management in place to ensure the integrity of the financial reports given to the board and an in house auditor to verify the accuracy of the reports given to the board of directors. If the accounting was to be outsourced to Arthur Anderson accounting firm, an in house audit department should have been put in place to establish a checks and balance system. Code of Business Conduct rules should have been established as part of the company’s normal operating practices that would not allow the false reporting of any information or reports to the company or any other entity on the company’s behalf. A compliance department should have been in place to ensure all documents financial or any other company related report, directive or memos are in compliance with the records retention policy.
Discuss whether Enron’s officers acted within the scope of their authority. This really depends on which side of the coin you’re on. Looking at it from the officers’ point of view, they did what they needed to ensure a profitable outcome. This led them to being a formable adversary in the business arena. The officer delivered what was expected of them profits. The other side of the coin, ethically, the scope of the authority is what is legal. The officers of Enron and Andersons accounting firm both exceeded their authority when they knowingly participated in the defrauding of the board of directors and stockholders. Ignoring many of their own rules and regulations put in place to safeguard the company; many decisions were made with the knowledge of its negative impact on the company. Their common practice of mark to market accounting allows them to assume profits today for future transactions. They also exceeded their authority by granting ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses.
Describe the corporate culture at Enron. Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer - and not just shareholder - value. Because the Enron corporate culture was not well grounded, a single scorecard - maximized price per share of common stock - became its reason for being, and even its positive values became liabilities. (www. schulers.solutions.com/enron_s_corporate_culture.html) Enron’s corporate culture as described above also led to more and more aggressive partnerships and arrangements to maximize share value. These practices led to extreme acts such as hiding debt and compromising balance sheets. The company failed to check its “creativity” with an equal commitment to integrity.
Discuss two alleged irregularities in the actions between sellers of securities and Enron.