Enron Questionable Transactions Essay

Decent Essays
Enron Questionable Transactions

Question 1
The question which segment of its operations got Enron into difficulties is simple to answer, everything. Almost every all segments of their operation were improper. First of all, they practice unethical and dishonest practices which victimized workers, consumers, taxpayers and stockholders. Enron created partnerships within their own organization which led to them creating new financial instruments, called SPE’s (special purpose entities) which was used to falsify the accounting. The improper financial reporting was to make the company look good, instead of assuring that the figures are accurate and reliable. Enron's legal department wrote up contracts that were irregular. Enron executives
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This was his downfall; he should have been more involved with the decision making; but one of his own board of directors and other senior accounting staff members kept him out of the decisions being made for profit. In reading this segment Ken Lay was not involved until Jeffrey Skilling’s resigned as CEO and he resumed the position.

Question 6
Enron failed all governance system practices. They reported improper equity shares; they did not abide by the GAAP. Enron was a victim of profit and revenue at no cost. The Enron executives accounting staff, accounting firm and law firm made erroneous decisions just to keep their revenue incoming. They reported false financial reporting continuously, stockholders had great losses, employee retirement fund was depleted and they did not honor their code of ethics.

Worldcom : The Final Catalyst

Question 1
WorldCom accountants would overstate their cash flow and income statements. They created excess reserves or provisions for future expenses which they later released or reduced thereby adding profits. The manipulation of profit through reserves or provisions is known as “cookie jar” accounting. Their finance staff would make improper accounting entries related to their expenses for accessing the networks of other telecommunications companies “line costs” which was WorldCom’s major operating expenses. From at least the third quarter of 2000 through the first quarter of 2002 (five quarters) in a scheme
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