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The Word Enron has now become well-know as a slang reference for hiding the truth or shredding it. Since the ethical scandal that took place in the first years of the 21st century the Enron scandal revealed in October 2001 eventually led to the bankruptcy of the American energy company based in Houston Texas. In the 1990s Enron was once known as the most innovative watch company in America according to fortune magazine yet within the next year Enron’s reputation was quite literally shredded to pieces and its stock prices drastically dropped from record highs to almost zero Enron’s auditor Arthur Anderson company was eventually found guilty in the United States District Court of illegally destroying important documents relevant to the SEC investigation which voided the organization’s license to audit public companies effectively closing its business.
Enron’s business model ranges from a wide variety of many products and services not just in the United States but across borders around the world. This complex strategy intentionally stretched the limits of accounting rules to result in the company’s favor. The market to market practice led to schemes that were designed to hide the losses and make the company appear to be more profitable than it really was. Enron took the legal advantage of certain accounting limitations to manage it profits and balances to make it look successful and make shareholders think they were growing.
After extensive investigation it was discovered that the company had made multiple fake partnerships with fabricated companies and used those made-up partnerships to cover up billions in debt. News stories flooded about shredded documents and claims that Arthur Anderson purposely ignored all the warning signs and the accounting irregularities while they greedily accepted millions of dollars in stock market gains. Just like so many other large US companies Enron’s top corporate management was primarily paid and delegated by their use of the stock market gains. In order to meet shareholders expectations Enron was covering up their debt and creating fake profits where there weren’t any. This is an illegal action known as fraud and misleading the shareholders.
Big-time US companies have their audit committee meet only a few times a year and when they get too large and widespread the auditors that are hired are usually not experts and have only a small amount of knowledge and experience in accounting and finance. If management is not ethically responsible with their handling procedures or the auditors lack the required knowledge and failed their regulatory duties the audit committee most likely will not be able to catch the problem in enough time to fix anything. Many of these fraudulent transactions and unethical decisions went unnoticed for a considerable amount of time it became a never-ending problem within all levels of Enron that inevitably could not be resolved. Enron was able to design illegal transactions that fraudulently portrayed actual federal regulations. The company violated the law by manipulating the balance sheet not showing those fabricated accounts and large amounts of debt. The company created unnecessary detailed cover-ups and linked accounts that were meant to look like legal processes to stay within the ethical and federal guidelines. Enron’s demise was blamed on a range of unethical and fraudulent events. The outcome of Enron was a prime example of what a company without a conscience looks like and how they operate when the public isn’t watching


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