The Enron Scandal
Business scandals are so insightful that become a symbol of deliberate corporate fraud and corruption in the history of our country. This profound and intentional act of fraud has impacted our most deeply beliefs in honesty, integrity, and confidence in the corporate world. The integrity of business in our culture is crucial to the success of our economic system. When companies maintain the essential of business law and ethical practices, it provides stability and success in any corporation. The Enron Scandal was the biggest disgrace of Fraud, Greed, Bankruptcy, Misguidance, and Imprisonment.
Enron was an American energy corporation based in Texas. Enron overtook ...view middle of the document...
Those losses and subsequent profit and debt restatements caused Enron's stock price to drop, triggering the unraveling of the partnership and resulting in a sudden and dramatic financial collapse that led to bankruptcy in Dec., 2001. The pensions of some 20,000 Enron employees were devastated in varying degrees as well; 62% of the company pension plan was in now worthless. (Columbia Encyclopedia, 2008)
Although success required a substantial investment many investors believed that this business was working extraordinarily well. And during 2001, Enron shares fell from eighty-five dollars to thirty cents. The devastating results occurred after it was revealed that many of its profits and revenue were the result of deals with special purpose. Enron’s accounting firm turned their heads while Enron’s management created special deals. The disproportion balance sheet kept hundreds of millions of dollars of losses and debt off the balance sheet. This lack of information and misunderstanding led to an overstatement of profits to millions of individual’s investment decisions. As expected Enron collapsed and soon spread to other business. The Enron scandal destroyed that portion of the industry, and engaged its employees in poor and deceptive accounting practices. It hided it’s financial losses and burdens; as a result the scandal brought into question the accounting practices of many others corporations throughout the United States.
It's been eight years since Enron collapsed into bankruptcy, but memories linger in corporate boardrooms, where directors are charged with preventing a reprise of the self-dealing and accounting scandals that sunk the energy company.” “Enron was a factor in the creation of the Sarbanes-Oxley Act of 2002. (Engel, E., Hayes, R., & Wang, X 2010).
Enron was also accused of manipulating the electricity markets in California energy crisis during 2000-2001. There is evidence that its subordinators engaged in fraudulent trading among to drive up the price of electricity. The large profits made during the crisis were in part hidden by manipulating Enron's financial reserves with the help of their accountants. Enron is a corporate crime that comes to the mind of everyone who immediately associates it with the most significant accounting scandal of our lifetime. There is no doubt that scandals are deceiving unethical practices by corporations giving accountants a bad name and dragging the economy into a bigger recession.
It seems that even the most respected names in the business have been caught in fraud. When mishandling the accounting and corporation business and face the wrath of the judicial system in the United States. These scandals are political and business scandals that brings mistrust and wrongdoing from executives of large corporations. They represent the visual catastrophic failures of the executives who have the power to accelerate or delay accounting according to their needs. It’s fair to say that the...