Enron Corporation began as a small natural gas distributor and‚ over the course of 15 years‚ grew to become the seventh largest company in the United States. Soon after the federal deregulation of natural gas pipelines in 1985‚ Enron was born by the merging of Houston Natural Gas and InterNorth‚ a Nebraska pipeline company. Initially‚ Enron was merely involved in the distribution of gas‚ but it later became a market maker in facilitating the buying and selling of futures of natural gas‚ electricity
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obscure its true financial position? This paper attempts to answer these questions by examining the two financial reporting issues that contributed to Enron’s most significant accounting restatements: the consolidation of special purpose entities (SPEs) and the issuance of stock for notes receivable. 1 The authors gratefully acknowledge the financial support and resources provided by Villanova University’s College of Commerce and Finance. The authors also thank Noah Barsky for comments and
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Auditing a Publicly Traded Company As a Staff I assigned to the audit of a publicly traded company‚ your senior has asked you to evaluate both share-based payment reporting and special purpose entities (SPE) reporting for the company. Research share-based payment reporting and SPE reporting individually. Write a 700- to 1‚050-word executive memo as a team that includes a description of what you will look for to see if the client is consistent with the generally accepted accounting
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eliminates an alternative accounting method; consequently‚ similar economic transactions will be accounted for similarly” (para. 4). Special purpose entities or SPEs are defined by Crawford and Fredericks (2003) as “A separate legal structure created by a firm to provide liquidity and/or obtain favorable external funding” (para. 4). SPEs are often used to reduce larger risk by corporations. These structures assist corporations to obtain financing as well as assets. It appears that with this rule
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Describe the ecclesiology of Sacrosanctum concilium Sacrosanctum concilium‚ the constitution on the liturgy of the Church‚ brought about the liturgical reform post-Vatican II. Though it was the reform of the liturgical practices of the church it had much to say about what the Church is‚ the ecclesiology. Massimo Faggioli says that “the combination of liturgical reform and ecclesiological renewal in the Catholic Church represents the beating heart of Sacrosanctum concilium” (Faggioli 59). The renewal
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Enrons Fall Kenneth Lay – CEO Auditors – Arthur Anderson Jeffrey Skilling – Consultant‚ Hired as a young consultant‚ as due to deregulation‚ Enron incurred massive debts. Jeffrey skilling was hired to come up with innovative new ideas. His revolutionary idea for Enron was to ‘create a gas bank in which Enron would buy gas from a network of suppliers and sell to a network of consumers‚ contractually guaranteeing both the supply and the price‚ charging fees for the transactions and assuming the
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Beaman‚ and Roger T. Kelem (1976)‚ researchers found that children either in a costume‚ concealing their identity‚ or within a group were more likely to steal when left alone with a bowl of candy‚ than those who went trick-or-treating alone. In the SPE guards were given reflective sunglasses to wear throughout the experiment‚ which‚ according to the aforementioned study‚ increases their sense of anonymity. This may form an explanation for their abusive and facist actions towards the prisoners. Furthermore
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drive to maintain reported earnings growth‚ however‚ had led Enron to aggressive accounting policies to accelerate earnings. In particular‚ the ‘special purpose entities’ (SPEs) Enron used to move assets and liabilities off the balance sheet attracted most attention. The financial involvement of Enron officers and employees in the SPEs led to further questions. Enron executives regarded themselves as an elite. The company had largely left behind the Texan ‘good ol’ boy’ culture – and certainly the
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management kept finding ways to go around the system. Finally‚ the collapse can also be attributed to management integrity and Andersen’s failure to detect accounting irregularities. Auditors should have looked closer at the complex and complicated SPEs transactions in whish the company was venturing. What is the Emerging Issues Task Force (EITF)? Is it the same as FASB? Does a Consensus of the EIFT have the same power of GAAP as an FASB Statement? No they are not the same. The EITF was formed
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employees‚ but also the shareholders‚ U.S Citizens and also the impact that it had on other countries that Enron was affiliated with. The focus of this paper is on the creation of Enron’s business model that resulted in the fall of Enron. Also‚ how the SPEs and the Raptors come to play in assisting Enron. After the Enron scandal broke out‚ a new legislation was introduced and passed to prevent similar scandals from erupting again. In investigating Enron on their deregulatory schemes‚ it will help other
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