Essay on Enron: Questionable Accounting Leads to Collapse

705 Words Feb 20th, 2013 3 Pages
ENRON: QUESTIONABLE ACCOUNTING LEADS TO COLLAPSE

CRYSTAL RUFF

GLOBE UNIVERSITY

ABSTRACT

This paper summarizes the article listed in reference that reported on the demise of Enron and the contributing factors that led to the financial downfall of a great company. The roles of the corporate culture, Enron’s financial staff, and even the chief financial officer are all to blame for the events that lead to the finality of the company that resulted in bankruptcy.

While Enron boasted about being “The World’s Leading Company”, it was anything but that. The corporate culture of a company is supposed to describe how the stakeholders and employees, think, feel, and act. If Enron’s financial record is example of that, then the
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. (L. Ferrell, O.C. Ferrell, & Fraedrich, 2011). Enron’s lawyers, Vinson & Elkin, were well aware of the scandal that was about to rock the company. In fact, claims allege that Vinson & Elkin helped to create the special purpose partnerships that Enron so needed to cover up losses. . (L. Ferrell, O.C. Ferrell, & Fraedrich, 2011). Even though fault was not admitted, the law firm paid out millions to settle claims of any wrongdoing. Merrill Lynch went under scrutiny when it allegedly made a deal with Enron on the procurement of barges, which were falsely reported in earnings. Merrill Lynch was also involved in a situation where a research analyst had findings that Enron was not happy with, and with a push from Merrill Lynch, the analyst rewrote his findings so they were advantageous to Enron. . (L. Ferrell, O.C. Ferrell, & Fraedrich, 2011). As Enron’s auditor, Arthur Anderson was responsible for the financial statements and bookkeeping for the company. However, he was found guilty of obstructing justice for destroying auditing documents. . (L. Ferrell, O.C. Ferrell, & Fraedrich, 2011). As the CFO of Enron, Andrew Fastow defrauded the company out of $30 million by using partnerships created to show Enron as being debt free, when in fact it owed approximately $1 billion. Fastow took money that should have gone to other entities and when he was found guilty, he surrendered almost $30 million in cash and property. . (L.