History of Enron What is Fraudulent Financial Reporting

Enron Corporation History of Enron Enron Corporation was founded in Omaha, Nebraska (US), and in 1985 Houston Natural Gas Consolidated with InterNorth to make, what is now established as the energy based company. The corporation based in Houston, Texas (founded in 1985) was known as the better enterprise in North America that accomplished one of the vast natural gas transmission networks. â€Å"Enron was a provider of products and services related to natural gas, electricity and communications to wholesale and retail costumers† (Chary, 112). The company had the position of the â€Å"Most Innovative† corporation for a couple of years. Nonetheless, back in December 2001, its bankruptcy held the biggest fraud scandals in the history of the US. Kenneth Lay the former CEO of Houston Natural Gas became CEO and the chairman of enterprise and that was the time when they named it the Enron Corporation. The company swiftly all over the years increased to different regional areas, and gained a strong character. During the preceding years of Enron’s expansion, they discovered oil traders in New York that crippled the accounts of company to the amount of almost $1 billion. However, the company had treated the loss up to $142 million and due to that loss the corporation started developing various services so that it would reduce the risk of the price fluctuations. The Enron Corporation expanded countries such as South Africa (1992), entered European wholesalers market back in 1995 because theShow MoreRelatedFraud : Fraud And Fraud1551 Words   |  7 Pagesestablishment of the profession. Fraud can be committed against an individual or a business. In order to identify fraud, an auditor must be able to differentiate between what is considered fraud and what is considered error. Fraud as defined in our textbook as â€Å"intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.† On the other hand, error is â€Å"unintentional misstatements or omissions of amounts or disclosures.† This simply means that fraudRead MoreEnron Corporation : The Biggest Gas Transmission System Essay1081 Words   |  5 Pages The Enron Corporation started in 1985 by Kenneth Lay and was the result of a merger between Houston Natural Gas and InterNorth Corporation (Madsen Vance, 2009). Enron had the biggest gas transmission system in the U.S which consisted of a network of 38,000 miles of pipeline (Giroux, 2008). After the addition of Jeffrey Skilling, Enron transformed itself from a producer and distributor of natural gas to a trading company (Chandra, 2003). Enron lobbied hard for deregulation and was capableRead MoreThe Sarbanes Oxley ( Sox ) Act Of 20021617 Words   |  7 Pagesexplored, based on existing research in this area. Brief History of SOX Enactment The Sarbanes-Oxley Act of 2002 was created by Congress in response to financial scandals. There were several incidents which contributed to the need for legislature such as SOX. For purposes of brevity, the focus here will be on two of the largest financial scandals leading up to the passage of SOX, which are of those of Enron and WorldCom. In October 2001, Enron announced it was reducing after-tax net income by approximatelyRead MoreThe Sarbanes Oxley Act2060 Words   |  9 PagesAs the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand. As the complexities of manufacturersRead MoreThe Ethics Of Enron Oxley Act1309 Words   |  6 Pagesbased corporation of Enron was once considered a top company, until its demise from a complex accounting scheme. The company that was forced to declare bankruptcy and lay off many employees; also resulted in thousands of others losing a significant portion of their retirement funds that were invested in the company’s stock (Ferrell, Fraedrich, Ferrell, 2013). Additionally, the perceived scandal propagated concern of accounting practices of corporations and initiated new reporting practices like theRead MoreFraud Examination Enron Paper1140 Words   |  5 Pages1. Define the problem(s) Enron failed to record some of its transactions. Arthur Andersen did not allow the LJM financial statement to stay unconsolidated. 2. Analyze the situation - again, take a lessons learned approach. You might use the following questions as guides: A. What important internal controls were ignored when LJM1 was created? LJM1 ignored some of Enron’s entries in the books that were missing. Outsiders owned less than 3% of the Special Purpose Entities equities. There wasRead MoreEssay on Analysis of the Enron/Arthur Anderson Scandal1558 Words   |  7 PagesEnron and Arthur Anderson were both giants in their own industry. Enron, a Texas based company in the energy trading business, was expanding rapidly in both domestic and global markets. Arthur Anderson, LLC. (Anderson), based out of Chicago, was well established as one of the big five accounting firms. But the means by which they achieved this status became questionable and eventually contributed to their demise. Enron used what if often referred to as â€Å"creative† accounting methods, this resultedRead MoreThe Ethical Dilemma Of Enron Essay1404 Words   |  6 PagesEnron was formed in 1985 following the merger of Houston Natural Gas Co. and InterNorth Co. The C hairman Kenneth Lay, CEO Jeffrey Skilling, and CFO Andrew Fastow were the backbone of Enron during its growth period. These executives exercised their power and expertise to unethically â€Å"increase† Enron’s profits by hiding the company’s debt. The ethical dilemma that Kenneth Lay and Jeffrey Skilling faced was whether to let their stakeholders know how poorly the company was doing, or to hide the debtRead MoreForensic Paper1628 Words   |  7 Pagesoperations. Although forensic accounting is not a new field, it has become more talked about since cases like Enron came to light. For someone interested in the Forensic Accountant profession they should know that this field can be time consuming, but very rewarding. People who work in this career investigate white collar crimes such as company fraud, fraudulent financial record reporting, and illegal investment schemes. In a recent study by the Federal Bureau of Investigation shows that white collarRead MoreThe Ethics Of The Accounting Profession2258 Words   |  10 PagesNot only are there many different accounting functions such as financial reporting, auditing, accounts receivable, budgeting, investments, analysis, or fixed asset accounting (to name a few), but there’s the fact that accountants are needed for almost every business in every industry. So it comes as no surprise that these are positions with great responsibility. Accountants are often called the gatekeepers of a business’ financial system and rightfully so! They are the ones who are responsible