Enron And The Collapse Of Enron

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Imagine that we were stockholders of one of the biggest company, and our stock value has been on the rise and is now up to almost 100 dollars a share, but one day, our share value drops below one dollar. This happened to shareholders of Enron. The total debt amounted to over $ 16 billion, which was the largest corporate bankruptcy in American history. Shareholders lost 60 billion dollars within a few days, 4500 employees lost their jobs, and the employees lost billions in pension benefits. I had never heard the name of Enron nor Enron’s scandal until I watched a film, “Enron: The Smartest Guys in The Room,” but I realized the Enron scandal affected the whole of the business in the United States. What were the causes of the collapse of…show more content…
When the Securities and Exchange Commission was formally looking into Enron, Andersen employees shredded important documents about Enron 's finances. In fact, Enron had payed huge money to Arthur Andersen every month, and the relationship between Enron and Arthur Andersen was so intimate that Arthur Andersen worked as an auditor. What was the effect of the Enron scandal upon the accounting industry? This Enron 's scandal led to new regulations and lawmaking to promote the accuracy of financial reporting for companies. Sarbanes-Oxley (SOX) was legislation passed by Congress in July of 2002 and then signed by President George W. Bush. SOX requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. Also, SOX made it a criminal offense to falsity financial statement. In it, about half of the language deals with setting up a new regulator for the accounting profession called the Public Companies Accounting Oversight Board (PCAOB) that oversees the audit firms (Financial & Managerial Accounting, P11). The rest of the legislation deals with some important things like ensuring that management is held accountable for the financial reports that they file with the SEC. It improves the independence of corporate boards, as well as the independence of the auditors, and it increased

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