Enron Paper

This paper examines the Enron Scandal in-depth and delves into both qualifications that distinguish it as accounting fraud, ethical issues that are present, the factors that led to it, and information about the time frame. As a result of the scandal, Enron’s stocks were worth $90.75 before it was declared bankrupt. After 2 months it came down to less than $0.26. As a result, the company went bankrupt (Agrawal & Cooper) on December 2nd of 2001. The company had an annual revenue of almost $100 billion when the scandal was estimated to have happened in 1996.

Some companies use fabricated data to convince investors that their company has the potential for tremendous returns. However, by fabricating reports on their performance, they get investors to buy shares without knowing just how much they’re selling themselves.

After the company grew, it fell into debt and its dark secrets were hidden from the general public. While this was going on, their reputation began to slip.

When Enron was caught in money laundering and other fraud, thousands of people were either laid off or lost their jobs. With public investigator Ken Lay being convicted for evasion of taxes, banks were also involved in shady operations and took millions of dollars meant for their employee’s accounts.

With their attorney’s help, they were able to get everything in order to ensure all of the transactions were legal. The attorneys helped them process each transaction, and they also did a study on all the illegal activities going on when forming SPEs. No one thought that these activities were illegal at all; it was “approved before. But somehow, everyone claims they’re innocent and pleading guilty for a better sentence, which seems like someone is lying.

Market value should always be used in mark-to-market accounting. Accounting fraud can occur when this technique is utilized because it manipulates how the company calculates financial security prices and usually conceals variables from customers or investors.

When screening companies and measuring their revenue, asset acquisition costs should be a critical consideration. For example, when an asset is acquired using borrowed money, there will be some revenue generated. But increasing profits by the debt used to acquire an asset will give the impression that it’s superbly performing.

When paying off debt comes, other financial issues should become clear. Ultimately, mark-to-market accounting didn’t have the miracles we were hoping for. The results were disastrous for the business itself.