Case Study Accounting for Enron - 4415 Words

Case Study 9 Kim Chau California Southern University MKT 86519 Dec 19, 2014 N. Papazian Accounting for Enron Introduction In the case of Accounting for Enron, the case concerned one of the largest corporate bankruptcies in the US history at the turn of the 21st century. It was Enron Corporation, a one time seventh largest most successful US company, sixth largest energy company in the world, valued at over $70 Billion; they filed for chapter 11 on December 2, 2001. Just the year before, Enron posted a 57% increase in sales between 1996 and 2000. And Enron shares hit a 52-week high of $84.87 per share in the last week of 2000 (O’Leary, 2002). As the story unfolds, investors lost billions of dollars and thousands of people lost†¦show more content†¦Backstabbing, cunning, unscrupulous and individual-focused were the ways to behave and to be rewarded. In the Enron culture, there was no significant counterbalance, says Jon R. Katzenbach (Businessweek.com, 2002), a consultant and former McKinsey colleague of Skilling who has studied the company. The lesson is you cannot rely solely on individ ual achievement to drive your performance over time. Companies with only that one path overemphasize it and run into trouble, switching over to vanity and greed. A ruthless culture was brewing at all levels of the organization, which set the stage for Enron’s unethical business dealings. Combine the cold-bloodedness of the company culture with Skilling’s relentless risk taking to drive growth; Enron was primed for an epic financial accounting deception. By 2000, trading operations accounted for 99 percent of income, 88 percent of income before tax and 80 percent of identifiable assets, while reported revenue increased from $11,904 million in 1996 to nearly $100,000 million in 2000 – a tenfold increase (Epstein and Lee, 2009). Skilling shifted Enron’s business model from a gas trading and pipeline company to become a Wall Street-like financial trading machine dealing with all sorts of commodities, derivatives, options and hedges. With the diversification, Enron was betting on too many horses and too many risky horses. To offsetShow MoreRelatedEnron Essay1433 Words   |  6 Pagesthe Causes and Effects of the Enron Accounting Scandals Name: Do Minh Tam Class: MEP 100 Lecture: Karen Bird Date: December 24, 2010 Introduction Background From the 1980s until now, there have been a lot of accounting scandals which were widely announced on by media. The result of this situation is many companies were bankruptcy protection requests, and closing. One of the most widely reported emulation of accounting scandals is Enron Company. 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Introduction Accounting scandals are political or business scandals which arise with the disclosure of financial misdeeds by trusted executives of corporations or governments. These days, not too often, these scandals are splashed as headlines across media. Why? Because there are complex groups of stakeholders who might be seriously affected by the scandals. Enron scam was the most remarkable scandal in 20 centuries by their institutionalizedRead MoreEnron Was Formed In 1986 By Ken Lay (â€Å"Enron Case Study†,1439 Words   |  6 PagesEnron was formed in 1986 by Ken Lay (â€Å"Enron Case Study†, n.d). It was an energy and service company based in Houston. â€Å"The early years of Enron were modest, and despite suffering financial woes and tremendous debt for several years, Enron survived.† (Rafraf Haug, 2013). Enron was the 7th largest company on the Fortune 500 in the year 2000 with assets of $65 billion and revenue of over $100 billion (â€Å"Enron: Quality Assuranceâ⠂¬ , 2016, p 17). 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