the Causes and Effects of the Enron Accounting Scandals Name: Do Minh Tam Class: MEP 100 Lecture: Karen Bird Date: December 24‚ 2010 Introduction Background From the 1980s until now‚ there have been a lot of accounting scandals which were widely announced on by media. The result of this situation is many companies were bankruptcy protection requests‚ and closing. One of the most widely reported emulation of accounting scandals is Enron Company. Enron Corporation is one of the largest
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Enron scandal Enron shocked the world from being “America’s most innovative company” to America’s biggest corporate bankruptcy at its time. At its peak‚ Enron was America’s seventh largest corporation.From the 1990’s until the fall of 2001‚ Enron was famous throughout the business world and was known as an innovator‚ technology powerhouse‚ and a corporation with no fear. The sudden fall of Enron in the end of 2001 shattered not just the business world but also the lives of their employees. Enron
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company’s true economic condition? For external auditors‚ the failures could be largely attributed to the lack of independence between external auditors and Enron and the existence of conflicts of interest. From 1993‚ Enron started to outsource its internal audit functions to Anderson. Besides‚ conflicts of interest gets aggravated when the cross-selling of consulting services by auditors increases a lot. And consulting fees to auditors are much lucrative than the audit fees. As a result‚ Enron could easily
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Economics Definition: Economics is a social Science dealing with the Economic Problem. • Social: Science that deals with human beings. • Dealing: Means facing and not solving. • Economic Problem: The problem of Scarcity (The inability to satisfy all the needs & wants) Economics is giving us the rules of rationality; the ability of taking rational decisions. Economics studies the behavior of the government at the macro level. Micro Economics: It studies the individual choices regarding
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Review of accounting ethics : The Enron Fraud Kemal Cankaya Strayer University Arlington Campus Financial Accounting Prof. Tony Somathiti February 1‚ 2013 The Enron Fraud “Enron‚ a Houston-based energy firm founded by Kenneth Lay‚ transformed itself over its sixteen years lifespan from an obscure gas pipeline concern to the world’s largest energy-trading company (both off and online). Enron has become an interstate and intrastate natural gas pipeline company
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Enron entered the year 2001 as the seventh largest public company in the U.S‚ only to exit the year as the largest company to ever declare bankruptcy in U.S history. a) What were the business risks Enron faced and how did those risks increase the likelihood of material misstatements in the Enron’s financial statements? Enron faces most of the risk ordinarily faced by any energy company‚ including price instability and foreign currency risks. Enron operated in many different areas of the
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1/3/14 What is Positive Economics | What is Normative Economics Positive economics is economics that does not apply objectives to what an economy should be doing or what it “ought to be” doing. It ill describe equilibrium levels at certain prices and quantities but give no opinion on whether that is an appropriate price of quantity‚ It will examine the quantity theory of money and the interest rate while never stating whether an interest rate is good or bad. The “free market” is a system
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Q1- Who were the key stakeholders involved in‚ or affected by the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management? Ans- The key stakeholders affected by the collapse of Enron were its employees and retirees. Stakeholders and mutual funds investors lost $ 70billion market value. Banks were also affected by the meltdown of the company. They included big banks like J P Morgan Chase and Citigroup. Not only the stakeholder and bondholder lose out
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Kovaleva Mary Assignment 3. Enron scandal Rise of the company Enron was an American energy company based in Houston‚ Texas. It was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. In 1985‚ Kenneth Lay merged the natural gas pipeline companies of Houston Natural Gas and InterNorth to form Enron. In the early 1990s‚ he helped to initiate the selling of electricity at market prices and‚ soon after‚ the United States Congress passed legislation deregulating the
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Corporate Governance HIH; What Went Wrong? During 2000 at the Institute of Actuaries annual seminar on general insurance‚ two senior actuaries‚ Peter McCarthy and Geoff Trahair‚ presented a paper that rang alarm bells for HIH Insurance. Even though HIH was not mentioned in the paper [entitled “Lack of industry profitability and other stories”] the insurance industry was accused of under pricing policies‚ pressuring actuaries to reduce the projected level of outstanding claims liabilities and
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