Accounting Scandals And Enron Accounting Scandal

1596 Words May 13th, 2015 7 Pages
Introduction:

In this research paper I will be examining accounting scandals, specifically the Enron Accounting Scandal. First, I will be exploring the history of Enron. Then I will be going into further depth on what accounting issues Enron faced and then I will be explaining what a derivative is. Finally yet importantly, I will consider the different types of Accounting Fraud following a conclusion. Accounting Scandals are born due to collective greed and corporate arrogance. In the case of Enron there was a lot of euphoria before the downfall. Stock prices soared and Enron was seen as one of the most innovative companies in the world. However, things seemed too good to be true. Eventually the company was exposed for its wrongdoing which led to the collapse. Many more of such cases were exposed during the 2008/2009 recession such as the Lehmann Brothers scandal. As mentioned earlier, many financial scandals have happened in the past but none of those are nearly as bad as the scandals when it gets to trading in derivatives.

Summary of the Enron Accounting Scandal:

In the year of 1985 after the federal deregulation of natural gas pipelines, Enron was born. The company was formed by merging the following two companies: Houston Natural Gas and InterNorth, a Nebraska pipeline company.

In the process of the merger, Enron incurred massive debt and, as the result of deregulation, no longer had exclusive…

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