The Fall of Enron The History Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price. That change with the deregulation of electrical power markets‚ a change due in part to lobbying from senior Enron officials. Under the direction of former Chairman Kenneth L. Lay‚ Enron expanded into an energy broker‚ trading electricity and other commodities. The Business of Enron
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stockholders. These mentioned stakeholders seem to be Enron’s most recognizable as the essential contributors to its organization. They dared of giving up an available alternative in order to take a risk with Enron in hoping of some benefits in return. But once its bankruptcy has happened‚ these mentioned stakeholders were in a severe case. For instance‚ its employees would lose their job and became unemployed‚ this‚ in turn‚ could eventually effect on Enron’s non-market stakeholders in term of unemployment
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What happened in Enron and Arthur Andersen? United States ’ seventh largest company Enron‚ with the slogan "Ask Why" was admired for its innovation‚ but it all ended up in bankruptcy and criminal matters. The company filed for bankruptcy in December 2001. This was one of the world ’s biggest corporate scandals in history. USA ’s seventh largest firm had in over sixteen years increased its assets from 10 billion to 70 billion U.S. dollars‚ and was by the stock market analysts from Wall Street
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TABLE OF CONTENTS Introduction..........................................................................................1 Who Committed Fraud?.....................................................................1 - 2 How Was Fraud Committed?...............................................................2 - 4 Why Was Fraud Committed?...............................................................4 - 5 Penalties Of Committing Fraud.............................................................. 6
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investors‚ prior to Enron’s demise in 2001‚ analysts and other stake holders were mesmerized by the scope of Enron’s “vision”. At the time the money losing Broadband Division was said to be worth $29 Billion or $37 a share. Excitement among investors and share holders and false accounting drove the share prices up. To support their false rate of growth Enron had to borrow more to fund capital projects. More borrowing meant higher debt levels which in turn weakened their earnings. Enron’s creative accounting
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financing with investments of an outside investor that was never found. Documents were later forced to be restated with activities of other companies that had to be consolidated into Enron’s accounts. 3. Did Enron’s directors understand how profits were being made in this segment? Why or why not. No. Enron’s directors did not know how the profits were being made because they were kept in the dark about everything until it went public. 5. Ken Lay was the chair of the board and the CEO for
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118] ……………………………………... 4 2.2. Impairment of Asset (AASB 116) ………………………………………. 4 2.3. Foreign Currency Transactions (AASB 121) …………………………… 5 2.4. Employee Benefits (AASB 119) ………………………………………... 5 3. Degree of flexibility ……………………………………………………... 5 3.1. Revenue Recognition – Moderate ………………………………………. 5 3.2. Foreign currency Transactions –Low …………………………………… 5 3.3. Employee Benefits – Moderate …………………………………………. 6 3.4. Impairment of assets –
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executive officer and other executives of the modern corporation. Its failure has also produced discussion of further regulations that will‚ it is hoped‚ prevent another collapse similar to that of Enron. This article argues that the central reason for Enron’s crash was not a lack of regulations or the deceptions of executives but rather a failure of the board of directors of Enron to function in a morally and ethically responsible manner. Introduction he stock of publicly held companies rises and falls
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Enron’s Company 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 for trading commodities‚ which soon
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to invoke the substance-over-form principle when accounting for its large real estate transactions. Briefly describe the substance over form concept and exactly what it requires. What responsibility‚ if any‚ do auditors have when a client violates this principle? Substance-over-form is an accounting principle used to ensure that financial statements give a complete‚ relevant‚ and accurate picture of transactions and events. If an entity practices substance-over-form‚ then the financial statements
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