The Enron Scandal 2001 Case Study
Marcos S. Balce Jr.Genpact – SPFINACCFebruary 29, 2016TITLE : Enron Reaction PaperSUMMARY :The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation. Enron is an American energy company based in Houston, Texas. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure.REACTIONS :The lack of truthfulness by management about the health of the company. As a public entity, one of the responsibilities of the company to its customers is to disclose its Finances. Without the financial report, a company can publish whatever they wish to publish with no data to validate it, and the customers unable to know the true health of the company.
This is what happened to Enron. Enron protected its reputation and stocks by hiding its debts to the public. Eventually, the debt became so great; they can’t hide it anymore which led to the company’s Bankruptcy. Fraudulent activities.To hide its debts, and to attract potential investors, the company published fabricated profit reports to mislead and deceive its customers to buy stocks.Collaborated efforts to hide its bad health.From Enron’s top management, financial analysts, internal and external auditors, to the government, all played a vital role to conceal the true status Enron. Enron, being one of the top companies at that time, paid a huge amount to bribe and to ensure that all its secrets are concealed. Related Experiences : n/a General Position : n/a Agree / Disagree : Agree with the verdict. All involved should be prosecuted. Other Feelings : RECOMMENDATIONS : In order to prevent this from happening in the future, especially for public entities where share holders’ money is greatly at risk, full disclosure of the company should always be followed and implemented. Balance sheet should always be available to easily identify the health of the company and be used as a reference.