Enron Case - 2186 Words

Part B: What role did the CFO play in creating the problems that led to Enron’s financial problems? In order to prevent the losses from appearing on its financial statements, Enron used questionable accounting practices. To misrepresent its true financial condition, Andrew Fastow, the Enron’s CFO, takes his role involving unconsolidated partnerships and â€Å"special purpose entities†, which would later become known as the LJM partnership. Taking advantage from the SPEs’s main purpose, which provided the companies with a mechanism to raise money for various needs without having to report the debt in their balance sheets, Enron’s CFO directly ran these partnerships and designed them to purchase the underperforming assets (such as Enrons poorly†¦show more content†¦The employees tend to view themselves as individuals, focus upon their own needs and without putting extra effort on behalf of the overall company business. The culture was all about how m uch money could be made for many executive through the stock option incentive program. Finally, the culture makes it hard for creating an ethical environment and fraud is almost inevitable. The reason was Enron’s management has less focus to create a relationship of openness and trust with employees. Staff members who saw wrongdoing were either ignored or silenced. As such, it is an essential component in any businesss ultimate success or failure. Part A It is hard to believe Enron, the seventh largest leading corporation in electricity, natural gas and communications based in United Stated filled for Chapter 11 bankruptcy in December 2001. The company with claimed revenues of $101 Billion in 2000 finally ended up when investigations revealed that it had inflated its earnings by â€Å"hiding its debt, committing institutionalized, systematic and well-planned accounting fraud†. The scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. (1) Enron Corporation was born in 1985, a resulting company of Houston Natural Gas and Omaha-based InterNorth. Ken Lay, who had been CEO of Houston Natural Gas, becomes chairman and CEO of the following year. Enron won Fortune Magazines award ofShow MoreRelatedEnron Case1075 Words   |  5 PagesMINI CASE: THE FILURE OF CORPORATE GOVERNANCE AT ENRON 1.Which parts of the corporate governance system, internal and external, do you believe failed Enron the most? In the evaluation of the Enron’s case; by trying to see the very big picture, it is not only about that the internal part of the corporate governance system was failed or but also the external part of the corporate governance system was also failed. As noted on the last paragraph of the mini case, many people from different positionsRead MoreEnron Case1899 Words   |  8 PagesENRON CASE Please read the Enron cases posted on blackboard and the one in your book then answer the following questions based upon the case and Chapter 9. Make sure that your answers are supported by the facts of the case and the concepts you learned from Chapter 5. Please rely only on the case/chapter 9 to answer the questions except for question # 12—requires outside search. Make sure your answers are sufficiently brief, concise, and relevant to the question. Please avoid generalRead MoreEnron Case2402 Words   |  10 Pages Imane Malihi Prof. Fred Friend BLW411/511 March 27, 2014 The Downfall of Enron Corporation â€Å"Ethics and integrity are at the core of sustainable long term success †¦ Without them, no strategy can work and, as Enron has demonstrated, enterprises will fail. That’s despite having some of the ‘smartest’ guys in the room.† by Richard Rudden. As the quotation states, ethics and integrity play a key role in the success of any corporation; through these principles, companies can ensure their complianceRead MoreThe Case Of The Enron Case Essay1197 Words   |  5 Pages1.1. One of the most important fraud cases in the USA was The Enron case because of his criminal activity which involved a big part of USA. Let me give a short introduce about it, â€Å"In 1974, Kenneth Lay joined the Florida Gas Company, eventually serving as president of its successor company, Continental Resources Company. In 1981, he left Continental to join Transco Energy Company in Houston, Texas. Three years later, Lay joined Houston Natural Gas Co. as chairman and CEO. The company merged withRead MoreENRON Case Study1572 Words   |  7 Pages1. The Enron debacle created what one public official reported was a â€Å"crisis of confidence† on the part of the public in the accounting profession. List the parties who you believe are most responsible for that crisis. Briefly justify each of your choices. Following parties are believed to be the most responsible for the crisis. With any big organization going so bad, the blame starts with the top level executives, there was no different in this case. For Enron the blame started with Enron’sRead MoreEnron Case2918 Words   |  12 Pagesseemed eliminate confidence by the business world about the practice of good corporate governance in the United States. Enron was a company that was ranked as seventh out of the five hundred leading companies in the United States and is the largest U.S. energy company that went bankrupt leaving debts amounting to nearly U.S. $ 31.2 billion. In instance with the case of Enron known occurrence of moral threat behavior such as manipulation of financial statements with a record 600 million dollar profitRead MoreCase: 9 Enron928 Words   |  4 PagesCase 9: Enron; Questionable Accounting Leads to Collapse Bruce Smith Minnesota School of Business BS430 Business Ethics MR. Morris November 25, 2012 1. 2. 1. How did the corporate culture of Enron contribute to its bankruptcy? Effective leaders are good at getting followers to their common goals or objectives in the most effective and efficient way; unfortunately for Enron, in the end Ken Lay and Jeffery skilling were too focused on profits that nothing else mattered. In theRead MoreEnron Case Study5921 Words   |  24 PagesEnron Case Study [pic] Part A: Problem Focused Analysis and Recommendations. 1. Brief Case Background. List key events, use timeline. Case Background At one time Enron was one of the world’s largest producers of natural gas, oil, and electricity. It also appeared to be one of the most profitable companies, taking shareholders from $19.10 in 1999 to $90.80 by the end of 2000. Enron’s top management answered to a Board of Directors whose responsibility was to question and challenge new partnershipsRead MoreThe Ethics Of The Enron Case1407 Words   |  6 PagesThe Enron case is a very popular case to show how the profession of accounting is vital to make the corporate world of business flow reliably. Enron was recognized as one of the world’s major electricity, natural gas, communications and pulp and paper’s company. However Enron was found to record assets and profits at inflated, fraudulent and non-existent amounts. Debts and losses were found to be excluded from financial statements along with other major transactions between Enron and other companiesRead MoreEnron Case Study Analysis1699 Words    |  7 PagesBusiness Strategy Enron Case Study 09/08/12 Enron Case Study: From Company to Conspiracy 1. What is the History of Enron, and what current situation does it find itself in? Enron was created by a combination of companies. These companies were Houston Natural Gas and InterNorth. These companies were merged together in July 1985. CEO of Houston Natural Gas, Kenneth Lay became chairman and CEO of the combined company. This happened in February 1986. The company changed its name to Enron on April 10th