Essay on Enron: Questionable Accounting Leads to Collapse

Good Essays
Enron: Questionable Accounting Leads to Collapse
In the case of Enron, it comes down to pure greed and a lack of accountability. From the top, there was illegal activity with Ken Lay, Jeffrey Skilling, and Andrew Fastow who raided the company as though it was their own personal bank. On top of that, the culture of the rest of the company was to make as much money as they could and employees were rewarded by the amount of profit they could make without questioning the ethical means to do so. Sherron Watkins found the issues and reported it to her superiors. However, it stopped there. She should have reported it to the authorities instead of riding it out in the “basement” of Enron. Every other entity was either complicit or in
…show more content…
If so, what was their contribution?
The Bankers: Three British bankers were indicted in Huston on wire-fraud charges related to a deal at Enron. They were able to use secret investments to take $7.3 million in income that belonged to their employer, according to the department of justice. (Page 423)
In addition, the brokerage and investment-banking firm Merrill Lynch, allegedly bought the barges from $28 million, of which Enron financed $21 million. Fastow gave his word that Enron would buy Merrill Lynch’s investment out in six moth with a 15 percent guaranteed rate of return. Merrill Lynch proceeded despite an internal document that suggested that the transaction might be construed as aiding and abetting Enron’s fraudulent manipulation of its income statement. (Page 425)
The Auditors: Arthur Andersen, LLP, was responsible for ensuring the accuracy of Enron’s financial statements and internal bookkeeping. Potential investors used Andersen’s repots to judge Enron’s financial soundness and future potential before they decided whether to invest. These investors expected that Andersen be independent and without any conflict of interest. If Andersen’s repots were in error, inventors could be seriously misled. However, Andersen was found guilty of obstruction of justice for destroying Enron-related auditing
Get Access