Get 20% off StudyMode
Page 1 of 9

Analysis of Hp Financial Statement

Continues for 8 more pages »
Read full document

Analysis of Hp Financial Statement

Page 1 of 9
Table of Contents
Introduction2
How it happened?2
Financial Reporting Issues3
Trading Business and Mark to Marketing3
Reporting Issues for Special Purpose Entities3
Other Accounting Problems4
Governance and Intermediation Failures at Enron4
Role of Top Management Compensation4
Role of Audit Committees4
Role of External Auditors4
Role of Fund Managers5
Role of Accounting Regulations5
The Sarbanes Oxley Act5
Did it help?5
Bibliography6

Introduction
Kenneth Lay formed Enron in 1985, when InterNorth acquired Houston Natural Gas. It was once the seventh largest company the United States of America. Enron branched into many non-energy-related fields over the next several years, including such areas as Internet bandwidth, risk management, and weather derivatives (a type of weather insurance for seasonal businesses). Although their core business remained in the transmission and distribution of power, their phenomenal growth was occurring through their other interests. Fortune Magazine selected Enron as "America's most innovative company" for six straight years from 1996 to 2001. Then came the investigations into their complex network of offshore partnerships and accounting practices. The Enron scandal was revealed in October 2001 that eventually led to the bankruptcy of the Enron Corporation and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was attributed as the biggest audit failure. Several years after it inception when, in 1992, Jeffrey Skilling was hired as the President of the company, he developed a staff of executives that, by the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other...