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The case of Enron is a fascinating 1. United States can be described as country wherever auditing and accounting concepts are so strong. How can a thing take place about such a high level in the United States? The Enron circumstance demonstrates the necessity to reform the accounting and corporate governance methods in the United States.

Moreover, the Enron case built government representatives to absorb deregulated strength market. A few of the aspects that struck me are discussed below. Among the aspects that struck me was the perspective of the top rated management.

Enron was in the company of energy, nevertheless Kenneth Lay down built the management team of MBAs, not individuals specialized in gas and strength field. My own view is that top managing has to have a definite vision. That seemed that Kenneth Put vision from the company was distorted. Enron transformed via an energy firm into a great investment company. Consequently, the administration team was comprised of dealers and expenditure bankers who had very little knowledge of the energy business.

As the business model of Enron changed thus did the organization culture. The culture was “Get it done. Take action now. Enjoy the advantages. The new organization was the selling and buying of products. The employees were rewarded for people who do buiness deals regardless of long-term outcomes. I feel this type of reward system is not beneficial to companies, it is extremely short-term look at of business. Moreover, experts were derided when they asked questions regarding the earnings-report. These actions points that the corporate lifestyle was of Enron was disruptive. This kind of raises the questions for the role of boards of directors. It appears like the planks of company directors of Enron had almost no knowledge about the activities of Fastow and Place.

It’s interesting that the boards of owners had so little knowledge of factor happening inside the company. The takeaway out of this is that boards of administrators should pay close attention to management tendencies and money-generating strategies. The boards of directors need to take active participation in the firm not only when things are awful, but also when things are good. One other aspect was the business methods of the Arthur Andersen organization. It’s stunning to see probably the most prestige companies to engage in this big scams. The firm played a role of not merely as a great auditor, yet also like a consultant intended for Enron.

The conflict of interest was sure to occur. The firm saw the opportunity to make money by simply hiding Enron’s financial data. Basically, the firm helped Enron to cook ebooks. I believe that some management of Andersen firm were driven simply by greed and lack of ethical sense that made all of them act within a fraudulent activities. Moreover, it seems that Andersen had weak interior control when it comes to auditing. The practices of the firm increased questions about the accounting and auditing system of america. The our elected representatives was speedy to repond by using set of reforms.

For example , the Sarbanes-Oxley expenses was exceeded to reform the accounting and auditing industries. Quite part of the expenses was the separating of roles: the splitting up of asking and examine business. But, another aspect was the impact on the economy, specially the energy market. This was interesting because it reveals how Enron impacted the economy and business environment. The financing intended for energy firms dried up because of the Enron scandal. As a result of limited financing choices, many companies proceeded to go bankrupt. The confidence of investors was shaken. Many investors hesitated to invest in strength corporations.

I really believe that the Enron incident prompted many analysts and investors to question the economic reporting and long term wealth creation strategies of companies. Furthermore, the professional problem also minted me. The management applied financial cleverness as a monetary strategy. It of assets and revenue that were filled with air or nonexistent showed professional corruption. Additionally , the participation in dishonest accounting procedures was only too much. Furthermore, the interviews for recruiting took place in strip golf clubs. The whole corporate and business culture was somewhat damaged.

The aspect that dived out from the case was the constant pursuit of profits. Yes, the main goal of any organization is to generate profit, nevertheless social ideals should be considered. I believe that the compensation program at Enron was as well to blame. People involved in the scandal were producing huge amount of money. The interesting aspect, in such a case, was how Fastow could create unique purpose entities (SPE). Fastow was creating these SPEs to segregate financial actions from Enron’s balance sheet. The SPEs provided Enron ways to move debts from the balance sheet so the credit score could remain high.

The commodities changing mechanism essential high credit rating. The SPEs allowed Enron to undercover dress debt and loss since revenue. Enron deceived investor and credit card companies. Furthermore, Enron invested in others. Once the opportunities began to display losses, these people were transferred to SPEs. This method allowed the sale of investment to SPEs. Consequently, the sale of investment was shown since gain to Enron. An additional interesting reality was that experts didn’t raise red virtually any flags. I am sure that many experts recommended the buying of Enron stocks. This scandal manufactured investors and analysts more cautious.

Analysts and traders began to ask questions:

1. how can company make money?
2. Can firm sustain strategy over the permanent?

Essentially, the laws got rigid and analysts were even more observant. These are generally some of the aspects that were intriguing to me or struck me. The case of Enron will still be a lesson in values and corporate responsibility. The government firms should not relax and should make sure that industries will be regulated when it comes to reporting financial information. The incident of Arthur Andersen serves as an illustration for various other accounting organizations.