1. The segment of Enron’s operations that got them into difficulties had several parts. They published misleading financial reports. They could not meet their bridge financing commitment with Barclay Bank because outside investors were not found. Because of this‚ they restated activities of JEDI and Chewco SPEs so they could be retroactively consolidated into Enron’s accounts. The SPEs helped to hide the inaccurate accounting records. Enron’s legal department wrote contracts that
Premium Enron
hiding debts and making transactions with other companies‚ primarily banks and investment banking companies‚ that were allowing them to seem profitable on paper‚ although they were not. There were many companies that were participating in these transactions with Enron‚ and these companies were making loans or buying assets from Enron‚ and Enron’s financial statements showed these transactions as revenue‚ when they were actually debts. They even created companies to make transactions with‚ that allowed
Premium Business ethics Ethics Enron
The atmosphere at Enron was highly competitive. Enron rewarded cleverness and pushing the envelope. Enron’s former president and CEO Jeffery Skilling encouraged employees to be "independent‚ innovative‚ and aggressive.") The aggressiveness of the culture at Enron was increased by a rigorous and threatening evaluation process for all employees that became known as "rank and yank." "Enron’s employees annually ranked their fellow employees on a 1 (best) to 5 (worst) scale. Each of the company’s divisions
Premium Enron Enron scandal Business ethics
pre-tax earnings resulted from a transaction with an LJM1 affiliate related to Enron’s equity investment in Rhythms Netconnections‚ Inc. As previously stated‚ Enron now believes‚ based on current information‚ that the financial activities of the LJM1 affiliate should have been consolidated into its financial statements in 1999 and 2000 and will be restating prior years’ financial statements to reflect this change. The pre-tax earnings / (loss) impact of this transaction was approximately $119.5 million
Premium Enron
contribution to this disaster is the approval of the structure of Special Purpose Entities (SPEs) that were used to generate false profits‚ hide losses and keep any unfavourable information out of Enron’s consolidated financial statements. 2) Which Arthur Andersen decisions were faulty? During auditing of Enron’s documents‚ AA has made many decisions which led to their downfall. AA has approved for the structure of Special Purpose Entities (SPEs) which generate
Premium Enron Auditing Audit
Reaction Paper on Enron Case September 9‚ 2013 Summary: Enron’s origins date back to 1985 when it began life as an interstate pipeline company through the merger of Houston Natural Gas and Omaha-based InterNorth. Kenneth Lay‚ the former chief executive officer of Houston Natural Gas‚ became CEO‚ and the next year won the post of chairman. From the pipeline sector‚ Enron began moving into new fields. In 1999‚ the company launched its broadband services unit and Enron Online‚ the company’s website
Premium Enron
Business Ethics Decision-Making Cases Write-ups Arthur Andersen: Questionable Accounting Practices Name: Wen Jiangshan Student ID:2011008274 Part I. Summary of the case Case 2 mainly introduces how Arthur Andersen‚ who used to be one of the “Big Five” largest accounting firms in the United States‚ strayed away from accepted policies and stuck in a string of accounting scandals‚ finally closed its doors after 90 years of business. The firm’s name was synonymous with
Premium Audit Enron Business ethics
The Enron scandal A brief on Enron’s history Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. In the early 1990s‚ he helped to initiate the selling of electricity at market prices‚ The resulting markets made it possible for traders such as Enron to sell energy at higher prices‚ thereby significantly increasing its revenue. As Enron became the largest seller of natural gas in North America by 1992‚ Enron pursued a diversification strategy
Premium Enron
1. Define the problem(s) Enron failed to record some of its transactions. Arthur Andersen did not allow the LJM financial statement to stay unconsolidated. 2. Analyze the situation - again‚ take a "lessons learned" approach. You might use the following questions as guides: A. What important internal controls were ignored when LJM1 was created? LJM1 ignored some of Enron’s entries in the books that were missing. Outsiders owned less than 3% of the Special Purpose Entities equities. There was
Premium Enron
April 4‚ 2006 0 1 Introduction: The Nigerian Barge Deal Enron Corporation was an energy company based in Texas and created when InterNorth acquired Houston Natural Gas Company in 1985. Enron’s growth was fast‚ it was named \America’s Most Innovative Company" for six consecutive years and it soon became the seventh largest company in the United States‚ until its bankruptcy was declared in 2001. Accounting fraud‚ money laundering and conspiracy are some of the charges which Enron stood accused of in
Premium Contract Enron