Essay on Enron's Fraudulent Accounting and Financial Information

992 Words4 Pages
Published financial information is issued to meet the needs and demands of their users. These range from Shareholders who will check on what direction the company is heading, whether it has achieved healthy profits, that it's solvent, the value of the company and possible signs of failure. Other users are the employees, who will want to check the statements to see whether their jobs are safe and see if possible, whether there could be wage and pension increases. This report offers information on operating results and financial conditions of companies to stakeholders as well as to shareholders. Any fraudulent financial reporting of a company like Enron for example would have a widespread and severe impact on employees, business…show more content…
Incorrect accounting of Special Purpose Entities (SPEs) including failure to consolidate, selective use of equity methods of accounting and failure to eliminate the impact of transactions. 2. Failure to provide complete disclosure 3. Unfair financial reporting. It is apparent that both Enron and Anderson viewed GAAP as rules rather than principles and sought to interpret GAAP in the most aggressive manner. It did not consider the fairness principle and ignored the legal precedent that ensures fairness over detailed rules. So in reality there are no accounting conventions in place to protect correct financial information because Enron and Anderson just bent the rules to suit their needs when it came to the commercial relationships. Auditors are to be independent in both fact and appearance. If it apparent that any auditor has any connection with the company they must drop the audit immediately. Auditors in my opinion should be acting independently by doing the utmost for the company that pays for its services and also act in the interests of the general public, who have the right to receive accurate and current information. In the case of Enron, this did not happen. Anderson, the auditors employed by Enron, had been accused of not exhibiting sufficient independence and objectivity in discharging its duties and responsibilities because it acted as the external and internal auditor for Enron. Even ex auditors from
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