The Enron Scandal Of A Company

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To invest your whole savings in a company through stock is an important risk almost everyone will do in their lifetime. When investing in a company you see their financial records and can see if the company’s stock value will go up if you invest in them making your money increase as well. What if this company falsifies their records and in a couple of days the company and its stock value go from $90 per share to just a penny per share. You lose your money just because a company cheated and stole your money. This is what the Enron scandal did to thousands of people. It could have been stopped if more forensic accountants in the world are checking on the companies. This way they don’t lie about their stock value. Forensic accountants are in…show more content…
This also shows the terrible affect it has had on the stock market, the people who are tied with these companies, and how forensic accountants are badly needed to prevent future problems with false financial records. To be informed on the problems and solutions you must first look into the company that started the fraud in the first place. 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
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