Enron Company : Enron Corporation

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1. What was the case about?
This paper is about the auditing fraud that occurred within the American company called Enron Corporation. Enron seemed to be one of the largest energy companies in America, but in reality, for some years, it was not going very well with the company. Enron had more expenditures, cash going out of the company, than revenues, cash inflows, causing them to experience severe loses. Therefore, the poor numbers of company, which showed that the company was deeply in debt, were removed from their accounting statements in order to make the company seem profitable; however, it was all artificial. As a result, many people bought shares in Enron, because they thought it yielded much, whereas it was actually worth nothing. …show more content…

Lay as a consultant to lead the company (Vermaas). The third man involved was Mr. Andrew Fastow who was hired by Mr. Skilling to be Enron’s Chief Financial Officer (CFO) (Vermaas). Mr. Skilling became the face of Enron and his face appeared for many years on the covers of all major business magazines. He determined the corporate culture of Enron. However, Mr. Fastow was the one that invented the financial structures that made Enron become one of the seven largest companies in the United States. Using Enron’s shares as collateral, Fastow started developing sketchy companies that were set up only to make fictitious business with Enron (Vermaas).
In addition, all major investment banks contributed to Fastows fake companies that took over the poorly performing parts of Enron. As a result, the share price of Enron skyrocketed without a product actually being sold to increase their turnover. No one made it clear that something was not right even when there were visible investments that Enron made, such as a very expensive power plant in India, whereby nothing was virtually gained. The lawyers did not have to agree, the auditors should has said no, and the bankers should not have agreed. Thus, everyone who was supposed to say no to this false representation of the earnings did exactly the opposite. They all raised their share of the money in their own pocket. Not even the top executives of Enron disagreed with this fraud.

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