Enron Was A Publicly Traded Energy Company

Enron was an energy trading and communications company located in Houston, Texas. During 1996-2001 Enron was given the name of America’s Most Innovative Company by Fortune magazine as it was the seventh-largest corporation in the US. The problem that led this company to bankruptcy was due to the fact that fraudulent accounting practices took place allowing Enron to overstate their earnings and tuck away their high debt liabilities in order to have a more appealing balance sheet (Forbes.com, 2002). Enron’s accounting team “cooked” the books to every meaning of the word so that their investors would not see anything wrong with the failing organization. This poorly structured company led people to jail time, unemployment, and caused retirement stocks to be dried up. Enron had a social responsibility to its stockholders and rather than being up front and honest about the failing company they hid every financial flaw in order to keep receiving money from its investors. By Enron not keeping a social

Enron had the largest bankruptcy in America’s history and it happened in less than a year because of scandals and manipulation Enron displayed with California’s energy supply. A few years ago, Enron was the world’s 7th largest corporation, valued at 70 billion dollars. At that time, Enron’s business model was full of energy and power. Ken Lay and Jeff Skilling had raised Enron to stand on a culture of greed, lies, and fraud, coupled with an unregulated accounting system, which caused Enron to go down. Lies were being told by top management to the government, its employees and investors. There was a rise in Enron 's share price because of pyramid scheme; their strategy consisted of claiming so much money to easily get away with their tricky ways. They deceived their investors so they could keep investing their money in the company.

In 2001, Enron, the largest energy company in the U.S., collapsed after a vast creative-accounting scandal. Enron practiced a type of accounting called mark-to-market practice which it used to hide losses. Mark-to-market accounting it not illegal on its own but it was used improperly by Enron. The CFO and CEO of Enron were able to write off any losses to an off-the-book balance sheet and made the company appear financially healthy (Seabury, 2008). Investors lost $74 billion while thousands of employees lost their jobs and

It was 13 years ago that the announcement of bankruptcy by Enron Corporation, an American energy, commodities and service firm at the time, would unravel a scandal resulting in what is regarded as the most multifaceted white-collar crime FBI investigation conducted in history. High-ranking officials at the Houston-based company swindled investors and managed to further their own wealth through intricate, shifty accounting practices such as listing assets above their true value to increase cash inflows and earnings statements. This had the effect of making the company and its shares look more enticing than they really were to potential investors. Upon their declaration of negative net worth in December 2001, shareholders filed a $40 billion lawsuit against the company, citing a drop of shares from around $90 per share to around $1 per share within only a few months. In light of these events, officials at the Securities and Exchange Commission (SCE) were prompted to initiate further investigation to figure out how such a drastic loss occurred.

The tale of Enron presents a unique perspective on success. In the short span of 24 months, Enron transformed from being the top firm in its industry to one that filed for bankruptcy. The reflection about how the tides changed in such a short period uncovers many surprising truths. In its glory days Enron beamed billion dollar profits each quarter, however this success was all a part of an elaborate scheme. Behind the veil of smoke and mirrors was a series of deceptive and unethical accounting practices. For Jeff Skilling and Kenneth Lay it was always about outward perception and to them this revolved around the stock price. If the stock price kept rising, as far as they were concerned Enron was doing just fine. The case of Enron is the

Enron Corporation was an American energy trading company who committed the largest audit fraud alongside Arthur Andersen and filed for one of the largest bankruptcies in history in 2001 after producing false numbers and committing fraud for years (“Enron’s Questionable Transactions” page 93). Enron failed to run an ethical business in multiple aspects. The executives of the company abused their powers by having board members not properly oversee its employees. Enron committed accounting malpractice by producing false financial reports to hide the debt from failed projects and deals. Using a mark-to-market accounting method, Enron would create assets and claim the projected profit for the books immediately even if the company had not made any profit yet. In order to hide its failures, rather than reporting their loss, they would transfer the loss to an off-the-books account, ultimately leading the loss to go unreported. Along with Enron hiding losses and creating false profit for the

The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. Their stock prices fell dramatically. Eventually, Enron filed for bankruptcy protection. This caused many investors to lose money they had invested in the company and employees to lose their jobs and their investments, including their retirement funds. The filing of bankruptcy and the resignation of one of the top executives, also led to an investigation by the U.S. Securities and Exchange Committee, which proved to be one of the biggest scandals in U.S. history. (News, 2006). All former senior executives stood trial for their illegal practices.

According to the movie "Gibney, A. (2005). Enron: The Smartest Guys in the Room" the practices that allowed Enron to achieve such success started with manipulation of earnings by Traders who were destroying daily trading records and gambling beyond their limits to a point where they lost in 5 days an amount of $90 million, losing with it all of the company’s reserves. To cover this up they mis-reported the company´s net worth. They needed a new idea and Jeff Skilling proposed to convert Enron into a stock market for natural gas, treating it as a commodity and with it granting the possibility to trade it like bonds and stocks.

As a new accountant employed by Enron one of the first red flags would have been their mark to market accounting method. This method allowed the company to value an asset or liability at the current market price. In doing this, they were able to pick any value that would make their books look good. Executives at Enron were able to speculate and record projected earnings from natural gas and record these unrealized earnings as revenue. This accounting method is subjective and easily manipulated. As the recording of

    When Enron got started it was an natural gas and electricity company was produced, transmitted and sold by state-regulated monopolies. Enron had used Wall Street to move energy supplies into financial instruments that could be traded online like stocks and bonds. These contracts told and  guaranteed customers a steady supply at a predictable price. (citation)Which was the lie behind it. They started losing money and getting debt, so instead of them telling the truth they had hid the losses through accounting tricks because they did not want Enron’s stock prices to go down.

Enron was firstly a natural gas pipeline company that combine as the combination of Nebraska and Omaha’s natural gas company, Houston Natural gas and InterNorth. It took 15 years from 1985 to 2000 to climb up into the one of the largest gas company in North America. Behind the successful of the company, it was a story of betrayal and

In 2001, the world was shocked by the demise of Enron, a multibillion dollar corporation that had thousands of employees and people that had affiliations with the company including The White House itself. Because of the financial chaos and destroyed lives and reputations this catastrophe left in its path, questions arose concerning how exactly it happened, why it occurred, and who was behind it. It is essential to understand how this multibillion dollar corporation rose to power and later imploded. Enron itself was born as the result of Houston’s Natural Gas and InterNorth, a gas based pipeline company from Nebraska in 1985. In the final analysis, the conspiracy of Kenneth Lay, Jeffery Skilling, and others, including

Enron was a major natural gas company, which was created in 1985. Enron was audited by the public accounting firm Arthur Andersen. It has not been confirmed when Enron began falsifying its records, but it is roughly around 1995 (Douglas O. Linder). Enron falsified its records by taking past assets and claiming them as current. This made the company 's financial records look very good with a large income coming into the company. These reports made Enron the fifth largest company in the Fortune 500. The report was shown to the public stock and shareholders. From this report many people would invest into Enron because of its large source of income. As people invested in the company it increased the company 's value. Enron then decided to use its employees 401(k)’s to its advantage and invest these 401(k)’s into the stock of Enron. Although the company 's records were in great shape, the company was losing lots of money to its ever increasing competition from the market. People got suspicious of how the company became so big. This is what began the

Enron was founded in 1985 by Kenneth Lay and by the mid 90s under the tutelage of Jeff Skilling, it was being touted as a revolutionary company that was destined to change the face of business and the energy industry. However, by 2001 it became clear that Enron’s astronomical growth and sustained profitability was built upon fraudulent grounds. The company was stashing debt but continued to report profits. Employees were taking huge risk and gambling exorbitant amounts and many were outright stealing from the company for their own personal gains. By the end of 2001, Enron’s downfall resulted in the largest corporate bankruptcy in United States history at the time, and more than 20,000 employees were laid off. The company’s fall from grace wasn’t a result of incompetence, instead it was the inevitable consequence of the toxic culture which was incubated and disseminated by Enron’s top management to all other aspects of the company. Enron’s strong culture became a liability because culture defines what is important to the organization and informs employees about how things are meant to be done. As I will demonstrate through various examples of Enron’s questionable business tactics, its potent corporate culture was low on attention to detail while being high on aggressiveness, risk taking and outcome orientation. This combination of factors created the climate for unethical behavior to become a deep-rooted norm within the organization.

recent collapses of high profile business failures like Enron,Worldcom,Parmlat,and Tycohasbeen a subject of great debate among regulators, investors, government and academics in the recent past. Enron’s case was the greatest failure in the history of American capitalism and had a major impact on financial markets by causing significant losses to investors. Enron was a company ranked by Fortune as the most innovative company in the United States; it exemplified the transition from the production to the knowledge economy. Many lessons can we learn from its collapse. In this paper we present an analysis of the factors that contributed to Enron’s rise and failure, underlying the role that energy deregulation and manipulation of financial statements played on Enron’s demise. We summarize some lessons that can be learned in order to prevent another Enron and restore confidence in the financial markets, as well as in the accounting and auditing professions.