Enron Case

2918 WordsJan 14, 201312 Pages
Executive Summary The United States that have been considered as a super power country and also the direction of science disciplines including accounting must felt bitterness. Business scandals that happened seemed 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 profit when the company…show more content…
Enron started to have a dangerous game because of this accounting strategy and after a couple years, Enron fall little by little. Enron’s corporate culture shifted because of Skilling command, he transforms the company image as a trading business. He started to hire the best and brightest traders, he recruiting associates from the top MBA schools in the country and competing with the largest and most high-status investment banks for talent. In exchange for exhausting schedules, Enron spoiled its associates with a long list of corporate bonuses, also increase company facilities including concierge services and a company gym. Skilling rewarded production with performance-based bonuses, permitting traders to “eat what they killed.” For the energy trading business, Enron has changed their accounting method to “mark-to-market accounting” in the mid-1990s and used it for the first time scale for its trading transaction activities. Under this accounting method, no matter how outstanding energy related or other derivative contracts such as assets or liabilities that companies have on balance sheets of Enron at the end of a particular quarter, they must adjust them to fair market value, booking unrealized gains or losses to the income statement of the period. Application of these rules in accounting for long-term futures contracts in commodities such as gas is that there are often no quoted prices upon which to base valuations as a difficulties. According

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