Enron was one of the
major auditing companies in the world which had its roots dating in
1985 and had its headquarters in Houston Texas. The company which was
a merger between two a natural gas pipeline companies and created a
lot of revenue in 1990s when the company diverged to selling of
electricity instead of gas. An essay on Enron scandal
will definitely talk about the non-transparent accounting practices
that the company experienced since its early rise as North America’s
leading gas distributor. Enron Company which was listed in stock
exchange made a lot of money where by mid 2000s the company’s share
stood at a high trading price of ninety dollars per share.
With such success
the number of shareholders increased tremendously, little did they
know that the company would plunge into the world’s unseen scandal
because of few individuals who had personal interest rather than the
interest of the company. The fall of the company was also associated
with complex business practices that some analyst considered
unethical where the company used accounting limitations to
misconstrue the earnings of the company and to alter the balance
sheet to reveal positive performance of the company.
The most interesting
aspect with the Enron company scandal that any book has written about
is that the scandal in the company grew steadily and went from being
a single act into a habit. This means that the scandal started long
time ago and went undetected for a long period of time with high
number of audits being done in the company as well as highly
experienced and professional accounting officers who were being
employed to work for the company because of its growth. One author at
a particular time described the scandal as involving smart
individuals who knew what they were doing in front of the management.
The actions of the
executive led to the bankruptcy of the company where the Enron’s
accounting and financial transactions only revolved around reported
cash flow, reported income, the asset values were also inflated to
meet the perceptions of the shareholders and lastly the liabilities
off the books. Majority of these actions were accelerated by the
executive board via indirect knowledge and or direct actions.
The bankruptcy of
Enron Company led to mixed reactions which involved the federal
government to intervene the whole accounting process of every public
company. The resultant repercussions were tightening of the already
existing laws as well as development of new by-laws to reduce the
level of fraud to the public. Eventually the whole executive board
was sentenced to jail as they were accused to steal from the company.
