Enrons Fall Essay Example for Free

Enrons Fall EssayState the facts of the case. Enron is the Seventh- largest company in the united states but after six months, Enron filed for bankruptcy, the egress of what has been called the greatest accounting phoney of the 20th century. Twelve thousand employees lost non only their jobs but their entire retirement and life savings, which had been invested in Enron Stocks. other(a) owners of Enrons stocksincluding thousands of ordinary Americans whose pension were also invested in Enrons Stocklost a total of $70 billion when the value of their stocks collapsed to zero. . What are the systemic, embodied and individual issues raised by this case? Systemic Issues The Enrons greatest accounting fraud was done by the person inside the company who was and then in a higher position. This is not only a crime in the point of view of law but also an organizational fraud which affect everyone in the organization, including the shareholders, stockholders, and employees. Corporate I ssuesThe accounting frauds was done by creating the Special settle Entity that covers the debt and failing investment in the company and turn it into sales gross in the financial statement. In simplest way, they turn their liabilities to an asset. This is done through some executives of Enron with the help of Arthur Andersen, the chief auditor of Enron. Andersen violated the Public Accountant practices. Individual Issues A moral Hazard caused by individual of Enron and the public revelation of Sherron Watkins in everything she knew about the malpractices in the company. . If the value of Enrons Stock had not fallen, the Special Purpose Entities perhaps could have continued to operate indefinitely. Suppose that Enrons stocks did not fall, and suppose that its accounting adhered to the letter, if not the spirit, of GAAP rules. In that case in your view, was there anything with what Enron did? Explain. If the practice was allowed by GAAP and the Enron did not fall is still consider a s unethical behavior for the only purpose resulting for this action is fraudulence.If fraudulence is not the purpose of some person in Enrons, then it would be Sherron Watkins who behave unethically for revealing the company information without the authorization of the company itself. 4. Who in your judgment, was chastely responsible for the collapsed of Enron? Andrew Fastow, Enrons former CFO, for setting up limited partnership called Special Purpose Entity and Arthur Andersen for being an accessory to the crime of Andrew Fastow.