Enron’s Management
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Enron’s Management- Within this case it was made clear that Enron’s management was focused on growing from “the largest natural gas company in the United States” to the world’s greatest company. With internal pressure to produce strong and impressive results and gain additional financing capital, Enron’s management chose to jeopardize stockholders’ interest by creating paper gains and publishing falsely inflated financial information. Enron’s actions were unethical and illegal and contributed greatly to the crisis that resulted. Enron’s Internal Audit Group- An internal audit group is put in place to provide professional accounting and reporting judgement to the company and to ensure the legitimacy of internal processes and controls that are ultimately audited by an external party. In contrast to this description, Enron’s internal auditors ignored their purpose and allowed for numerous accounting and financial errors to go unquestioned and ultimately uncorrected. These included withholding large amounts of liabilities from the balance sheet through the manipulation of SPEs and misusing the mark-to-market accounting method. This was done in effort to make Enron’s financial statements look better, perpetuating management’s goal of continuing growth at all costs. Further, Enron’s internal audit department produced financial statements containing inadequate and obscure disclosures regarding their SPE transactions. These disclosures were indecipherable and misleading to the public.
Andersen’s Auditors-  External auditors are responsible for providing an independent opinion on the financial statements produced by an organization. However, contrary to their responsibilities, Andersen’s auditors failed to maintain professional skepticism, professionalism and compliance with relevant ethical requirements. Although Andersen’s auditors were aware of  Enron’s questionable SPE transactions they chose to ignore them. Further, Andersen provided Enron with consulting services in efforts to manage their SPE relationships. These actions call into question Andersen’s independence as they aided in the production and issuance of the company’s financial statements. FASB, SEC & Other Regulators- Regulatory bodies such as the SEC and FASB were put in place to prevent abusive accounting and reporting practices by enforcing laws and procedures to be followed by accountants and auditors. In the case of the Enron debacle, many of the financial processes that led to the company’s misleading financial statements were not illegal under the guidelines of these two entities. In fact, the majority of Enron’s SPE transactions were legitimate. Similarly, it was not until after the downfall of Enron and Andersen that the SEC formalized the limitations on the scope of services an accounting firm can provide its clients. Although regulatory bodies are not entirely to blame for this financial catastrophe, stronger regulations could have potentially prevented such a disastrous outcome.