Accounting Scandals And The Enron Corporation

1721 Words Dec 2nd, 2014 7 Pages
Accounting scandals have happened in numerous companies. In one major case, the firm filed for bankruptcy, and many of its workers lost their jobs, savings, and investments from stocks. This major epidemic happen at Enron, an energy firm stationed in Houston, Texas founded by Kenneth Lay in 1986 (Frontain). On December 2, 2001, the Enron Corporation, an apparently strong and booming business, fell to an all-time low by shocking the world when it filed for bankruptcy protection. Many people were left unemployed and without their savings. Because of this scandal, numerous effects were left on the accounting profession since the scandal was traced to the company’s financial reports, accountants, and auditors (Buckstein Part 2, p.1).
Enron was a formed by the combination of two companies: Houston Natural Gas and InterNorth. HNG started as a gas provider for retail customers of Houston, Texas in the 1920s, and by 1984 it had resources of $3.7 billion, over $2 billion in sales, and about $123 million in profits. In 1930, InterNorth was Northern Natural Gas Company in Omaha, Nebraska. By 1984, it had revenues of $7.5 billion, and its CEO, Sam Segnar, planned to buy out HNG. He succeeded with his plan in May 1985 and bought HNG for $2.4 billion combining the two companies as HNG/InterNorth with their main station in Omaha. The company was later changed to Enron and moved to Houston Texas when Segnar retired in 1968 leaving Kenneth lay as the new CEO of the company…

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