Enron And The Collapse Of Enron - 1254 Words

Imagine that we were stockholders of one of the biggest company, and our stock value has been on the rise and is now up to almost 100 dollars a share, but one day, our share value drops below one dollar. This happened to shareholders of Enron. The total debt amounted to over $ 16 billion, which was the largest corporate bankruptcy in American history. Shareholders lost 60 billion dollars within a few days, 4500 employees lost their jobs, and the employees lost billions in pension benefits. I had never heard the name of Enron nor Enron’s scandal until I watched a film, â€Å"Enron: The Smartest Guys in The Room,† but I realized the Enron scandal affected the whole of the business in the United States. What were the causes of the collapse of†¦show more content†¦When the Securities and Exchange Commission was formally looking into Enron, Andersen employees shredded important documents about Enron s finances. In fact, Enron had payed huge money to Arthur Andersen every month, and the relationship between Enron and Arthur Andersen was so intimate that Arthur Andersen worked as an auditor. What was the effect of the Enron scandal upon the accounting industry? This Enron s scandal led to new regulations and lawmaking to promote the accuracy of financial reporting for companies. Sarbanes-Oxley (SOX) was legislation passed by Congress in July of 2002 and then signed by President George W. Bush. SOX requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. Also, SOX made it a criminal offense to falsity financial statement. In it, about half of the language deals with setting up a new regulator for the accounting profession called the Public Companies Accounting Oversight Board (PCAOB) that oversees the audit firms (Financial Managerial Accounting, P11). The rest of the legislation deals with some important things like ensuring that management is held accountable for the financial reports that they file with the SEC. It improves the independence of corporate boards, as well as the independence of the auditors, and it increasedShow MoreRelatedEnron And The Collapse Of E nron1303 Words   |  6 PagesEnron, a company which originated in Huston, Texas, was one of the largest American energy trading corporations in the nation. Although it was one of the most well known companies, it was also one that crashed and burned the fastest, shocking many people when it did. Not only did it end fast, the company caused quite a scandal which is still being discussed and reviewed in today’s world. Enron’s bankruptcy scandal was so widely known because of the many people who associated themselves with the companyRead MoreEnron : The Collapse Of Enron1644 Words   |  7 PagesEnron was once one of the world s leading energy companies by reshaping the way natural gas and electricity were bought and sold. They filed the largest corporate bankruptcy in American history in 2001. Enron Corporation was an energy company running out of Texas that was started when two companies, Houston Natural Gas and InterNorth, merged together in 1985. By 1992, Enron b ecame the largest seller of natural gas in North America and began to offer other services like wholesaler trading and riskRead MoreThe Collapse Of Enron And Enron1365 Words   |  6 PagesTwo organizations that will live on in infamy in the business world are World Com and Enron. These names are synonymous with the largest corporate scandals in US history. 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Undoubtedly, Enron is the biggest example of the audit failure. It is ever the most famous company in the world, but it also is one of companies which fell down too fast. In this paper, it describe the reason why Enron became an admired company in the world, the story of Enron s rise and fall, the iss ues of internal and external auditing in Enron, the breachesRead MoreCollapse of Enron4178 Words   |  17 PagesTHE COLLAPSE OF ENRON August 11 2008 [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.] FROM PERSPECTIVE OF CORPORATE GOVERNANCE â€Æ' TABLE OF CONTENTS CONTENTS PAGE NO. 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The documentary was just not giving the name â€Å"The Smartest Guys in theRead MoreThe Collapse Of Enron Corporation1787 Words   |  8 Pagesâ€Å"When a company ascends to the number seven spot on the Fortune 500 and then collapses in weeks into a smoking ruin, its stock worth pennies, its CEO, a confidante of presidents, more or less evaporated, there must be lessons in there somewhere.† -Daniel Henninger, The Wall Street Journal The collapse of Enron Corporation has created many discussions about the structure of corporate governance. The question of this essay first calls to examine some of the strengths and weaknesses of theRead MoreFinancial Collapse : The And Enron1320 Words   |  6 PagesOneTel and Enron were huge technology companies, dominating the competition that they faced although - everything changed. Both of these companies operated in the same era, coincedently both suffering financial collapse. The reasons were mainly because of the failure to follow major accounting principles, lacking morals and lacking strong work ethics. If even a major corporation can fall into this â€Å"trap†, then avoiding doesn’t sound easy, although accountants can easily avoid scandals by following