Enron Was A Publicly Traded Energy Company - 2856 Words

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled â€Å"EnterOn†, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled â€Å"mark-to-market accounting,† which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employeesShow MoreRelatedSarbanes Oxley Act Of 20021410 Words   |  6 Pagesresult of some major accounting frauds such as Enron and WorldCom. The main objective of this act is to recover the investors’ trust in the stock market, and to prevent and detect corporate accounting fraud. I will discuss the background of Sarbanes-Oxley Act, and why it became necessary in the first section of this paper. The second section will be the act’s regulat ions for the management, external auditors, and companies, mainly publicly-traded companies, and the cost and benefits of the act. The lastRead MoreThe Sarbanes Oxley Act Of 20021015 Words   |  5 Pagesresult of some major accounting frauds such as Enron and WorldCom. The main objective of this act is to recover the investors’ trust in the stock market, and to prevent and detect corporate accounting fraud. I will discuss the background of Sarbanes-Oxley Act, and why it became necessary in the first section of this paper. The second section will be the act’s regulations for the management, external auditors, and companies, mainly publicly-traded companies, and the cost and benefits of the act. The lastRead MoreThe Accounting And Auditing Industry916 Words   |  4 PagesBefore SOX was established, the public trusted and depend the auditors wholly for the publicly-traded companies to accurately complete audits of the companies’ financial statements which they relied upon in making investment decisions. The accounting and auditing industry was self-regulated (Cunningham Harris, 2006). Company managers had little accountability when accounting and auditing problems arose. Everything was changed after there were many high-profile cases of accounting fraud, particularlyRead MoreEnron : Enron And Enron1298 Words   |  6 PagesIntroduction Enron lead the American energy, commodities, Enron Services was based in Houston, TX. During the turn of the 21st century Enron had an employee base of 20,000 people on payroll. Enron made profits by selling electricity, natural gas, communications, and pulp and paper. Enron’s revenues totaled over $101 billion in 2000. Due to Enron’s earning Fortune named Enron as the America Most Innovative Company. Enron was one of the biggest publicly traded companies and highly trustedRead MoreEnron : Enron And Enron1298 Words   |  6 PagesIntroduction Enron lead the American energy, commodities, Enron Services was based in Houston, TX. During the turn of the 21st century Enron had an employee base of 20,000 people on payroll. Enron made profits by selling electricity, natural gas, communications, and pulp and paper. Enron’s revenues totaled over $101 billion in 2000. Due to Enron’s earning Fortune named Enron as the America Most Innovative Company. Enron was one of the biggest publicly traded companies and highly trustedRead MoreThe Rise And Fall Of Enron Essay860 Words   |  4 PagesThe Rise and Fall of Enron The objective of every company is to maximize profit, become a big player and remain viable. Enron was no exception the key players at the time were Kenneth Lay CEO, Jeffery Skilling who was hired by Lay in 1990 to head the Enron Finance Corporation and by 1997 Skilling was made President and Chief Operating Officer. Andrew Fastow, CFO who was the chief financial officer of Enron. Enron merged Houston Natural Gas in 1985 with another natural gas pipelineRead MoreEnrons Impact On Enron1417 Words   |  6 Pagesâ€Æ' Many questioned how Enron made its money as no one could verify their revenue that they continually raised each quarter. Even with these questions in the back of people s minds, they continued to believe Enron s executives. Enron was an U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron s executives employed accounting practices that falsely inflated the company s revenues, which, at the height of the scandal, made the firm becomeRead MoreWhy Enron Collapsed?1143 Words   |  5 Pagesare the reasons why Enron collapsed? * Investments Enron dealt in energy. According to Infinite Energy, the first and main cause of Enrons collapse was failed investments. Enron invested money in fiber-optic networks, a power plant in India and water distribution in the United Kingdom, to name a few. While a company the size of Enron could afford occasional losses, the mounting, failed investments added up and created a plethora of debt. * Hidden Losses Infinite Energy states that the secondRead MoreThe Sarbanes Oxley Act Of 20021600 Words   |  7 Pagesfinancial statement fraud was rampant, as companies such as Enron and WorldCom used shady accounting practices to inflate their revenues and hide losses. This led to the introduction of the Sarbanes-Oxley Act of 2002, the most extensive form of accounting reform legislation ever passed. It had many consequences for publicly traded companies and public accounting firms, some of which were positive, while others were detrimental. One of the detrimental impacts, the cost of compliance, was alleviated at leastRead MoreThe Sarbanes Oxley Act ( Sox )1728 Words   |  7 PagesIn 2002 the telecommunication company, WorldCom committed one of the biggest accounting scandals of all time. They perpetrated over *1 $3.8 billion in fraud, leading to a loss of 30,000 jobs and $180 billion losses for investors . This is one of the several accounting scandals that led to the passing of Sarbanes-O xley Act, which introduced the most comprehensive set of new business regulations since the 1930’s. The Sarbanes-Oxley Act (SOX) is an act that was passed by United States Congress in