Essay on The Beginning of the End of Enron - 1828 Words

The mission of the Financial Accounting Standards Board (FASB) is to establish and improve standards of financial accounting and reporting for the guidance and education of the public. Accounting standards assist analysts, potential investors, and corporate figures in determining and comparing the financial performance of a corporation. In recent years, a wave of accounting scandals broke, and a number of companies admitted to following fraudulent accounting procedures to defer attention from the company’s financial performance. Enron Corporation, a natural gas provider, led the pack with dubious accounting practices, a series of off-balance sheet transactions, and a series of investigations that ultimately led to beginning of accounting†¦show more content†¦It appeared Enron had created a successful business through diverging itself into different areas of energy and service markets; Enron was trading pulp, paper, fertilizer, plastics and other commodities in additio n to natural gas. By 1999, Enron had grown so much that it was involved in about a quarter of all energy deals. In late 2000 Enron reported earnings tripled since 1998; however, this event would mark the sudden fall of a great empire. In May 2001, the energy market took a tumble as Californians struggled with the soaring prices of energy. California politicians blamed Enron for manipulating the energy market. In 2001, Californians were hit with skyrocketing energy prices, rolling blackouts, and one of the leading utility companies, Pacific Gas and Electric Company, filing for bankruptcy. Enron was hit with a change of CEO’s; Lay resigned as CEO and Skilling replaced him (for only a short time). In October 2001, the energy crisis took a turn for the worst and marked the beginning of the end of Enron. On October 12, 2001, Enron disclosed a $638 million loss in its third quarter for the fiscal year. This monetary disclosure sparked an interest by the US Securities and Exchange C ommission (SEC), who began to inquire about Enron’s financial statements. Shortly after, Enron fired Andrew Fastow, the organization’s CFO, due to what Enron calls losing investor confidence (Swartz). The termination of Fastow increasedShow MoreRelatedEnron: from the Beginning to the End2542 Words   |  11 Pageshear the word Enron, they immediately associate it with the most important accounting scandal of our lifetimes. Enron was an American gas company that began as the Northern Natural Gas Company in 1931. Internorth, a holding company in headquartered in Omaha, Nebraska, purchased the Northern Natural Gas Company and reorganized it is 1979. Enron arose from the 1985 merger of Houston Natural Gas and Internorth. After building a large, new corporate headquarters in Omaha, the new Enron named formerRead MoreExecutive Office Of Houston Natural Gas1689 Words   |  7 Pages Enron was created in 1985 when Houston Natural Gas and InterNorth merged together. Houst on Natural Gas was a utility company based in Houston, Texas before being taken over by InterNorth. InterNorth was a very large energy company based out of Omaha, Nebraska. They specialized in natural gas pipelines, but also were successful in the plastic industry, coal and petroleum exploration and production. In the beginning Kenneth Lay, who was the Chief Executive Office of Houston Natural Gas, becameRead MoreRelationship Between Ethics And Business Performance1181 Words   |  5 PagesAlthough the relationship between ethics and business performance is still the subject of controversy, the Enron case is a demonstration that the lack of ethical behavior is inseparable from the competitive disadvantage. 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Although it was one of the most well known companies, it was also one that crashed and burned the fastest, shocking many people when it did. Not only did it end fast, the company caused quite a scandal which is still being discussed and reviewed in today’s world. Enron’s bankruptcy scandal was so widely known because of th e many people who associated themselves with the companyRead MoreThe Ethics Of The Enron Scandal861 Words   |  4 Pagesmodern American history filed for bankruptcy. Enron, a seemingly invulnerable company would eventually provoke sweeping changes in regulation that controls the management and accounting of public companies even to this day. The Enron scandal has come to be known as one of the prime audit failures of all time and serves as a classic example of corporate greed and corruption. However, for the generation that watched in horror as corporations such as Enron fell along with the stock market, this scandalRead MoreCase Analysis : Enron Corporation891 Words   |  4 Pagesknowing how this money came from. This is how the employees in Enron Corporation felt at the time when the company was the biggest energy company in the nation, and was having the best stock in the market. â€Å"You could feel the excitement at 6 a.m. You walked in the door and got energized, all thos e creative juices flowing. You worked with the best, the most brilliant. It was a great, great company, says one of the employees in Enron for New York Times (Turnage and Keyton). Therefore, it is obvious