The Enron Collapse

Heather Timmons, Emily Thornton, and Lorraine Woellert in Business Week (2003) suggest that there is always pressure on senior managers to look for ways to manipulate accounting rules in order to report more sales and higher profits. Aggressive accounting techniques can be used to enhance earnings, but there is a limit to how far accounting rules can be bent. Enron executives did not bend the rules, they broke them. The key to bending without breaking these rules can be likened to understanding the difference between tax avoidance and t

. . .
rotects investors and the public by requiring full and accurate disclosure of financial information. The Securities and Exchange Act, a federal law, prohibit misrepresentation, deceit or fraud in the sale of stocks and bonds. Thus, this federal law encourages ethical behavior by criminalizing unethical behavior (Dennis, 2002, 188). During the investigation of Enron, it was revealed that Enron's CPA firm, Arthur Anderson, was not just Enron's auditors. The firm was one of the company's most important consultants. In fact, the CPA firm of Arthur Anderson and Company earned more in consulting fees from Enron than it did in auditing fees causing Anderson's auditors to lose their independence. Anderson and Company were not simple scorekeepers; they were active participants in creating and covering up the accounting fraud. Anderson pled guilty to shredded documents to cover its knowledge of and involvement in the accounting scandal. Charlotte Bahin writing in Community Banker notes that in light of the lessons learned at Enron, the SEC created the Public Company Accounting Oversight Board. The PCAOB oversees the auditors of public companies in order to protect the interests of investors, and it was created in response to the mass
. . .

Some common words found in the essay are:
David Batstone, Journal Accountancy, Thornton Woellert, Business Week, Dynergy Incorporated, Workforce Management, Board Directors, Ford Explorer, Exchange CommissionáPenalties, Economic Quarterly, accounting fraud, journal accountancy, business week, public companies, board directors, publicly traded, timmons thornton woellert, timmons thornton, thornton woellert, senior executives, independent auditors, publicly traded companies, credit collection handbook, cpa firm arthur, covering accounting fraud,
Approximate Word count = 3056
Approximate Pages = 12 (250 words per page)

More Essays on The Enron Collapse