Enron Corporation: The Rise and Fall
ACG 4632
INTRODUCTION TO FINANCIAL STATEMENT
AUDITING
Spring 2015 Section 422
Instructor: Devin Williams, CPA
Today
• Introductions – hand out
• Syllabus
• High level – why auditing?
• Enron
Auditing
• Why do we have auditing?
• Lemonade Stand Example
Did ANYONE
Do ANYTHING
WRONG?
CONCLUSION
Did Anyone Do Anything Wrong?
YES!!
ENRON’S RISE
1985 – Internorth, based in Omaha, acquired Houston Natural Gas.
1986 – Changed name to Enron and moved to Houston.
OLD ENERGY SYSTEM
• Electricity
• State-regulated monopolies.
• Stable, but inefficient.
• Natural Gas
• Pipelines transported on fixed delivery routes with set prices.
Enron
Producers
Pipeline
Companies
Utilities
Users
NEW ENERGY SYSTEM
Enron Wholesale Services markets and delivers physical commodities and financial risk management services to customers around the world.
We provide innovative and customized solutions to our customers
-- solutions which few others can match. With our flexible networks and unique capabilities, we deliver the widest range of reliable logistical solutions at predictable prices.
RISK MANAGEMENT SERVICES
MARKET RESULTS
Analysts estimate that at its peak Enron accounted for about one-quarter of the nation's energy trading — not producing much energy itself, but serving mostly as a middleman.
FINANCIAL RESULTS
The ultimate “New Economy” company – movement away from hard assets.
PRESS RELEASE
Tuesday, October 16, 2001
ENRON REPORTS RECURRING THIRD QUARTER EARNINGS OF $0.43 PER DILUTED SHARE;
REPORTS NON-RECURRING CHARGES OF $1.01 BILLION AFTER-TAX;
REAFFIRMS RECURRING EARNINGS ESTIMATES OF $1.80 FOR 2001 AND $2.15 FOR 2002; AND EXPANDS
FINANCIAL REPORTING
HOUSTON – Enron Corp. (NYSE – ENE) announced today recurring earnings per diluted share of $0.43 for the third quarter of 2001, compared to $0.34 a year ago. Total recurring net income increased to $393 million, versus $292 million a year ago.
“Our 26 percent increase in recurring earnings per diluted share
INTRODUCTION TO FINANCIAL STATEMENT
AUDITING
Spring 2015 Section 422
Instructor: Devin Williams, CPA
Today
• Introductions – hand out
• Syllabus
• High level – why auditing?
• Enron
Auditing
• Why do we have auditing?
• Lemonade Stand Example
Did ANYONE
Do ANYTHING
WRONG?
CONCLUSION
Did Anyone Do Anything Wrong?
YES!!
ENRON’S RISE
1985 – Internorth, based in Omaha, acquired Houston Natural Gas.
1986 – Changed name to Enron and moved to Houston.
OLD ENERGY SYSTEM
• Electricity
• State-regulated monopolies.
• Stable, but inefficient.
• Natural Gas
• Pipelines transported on fixed delivery routes with set prices.
Enron
Producers
Pipeline
Companies
Utilities
Users
NEW ENERGY SYSTEM
Enron Wholesale Services markets and delivers physical commodities and financial risk management services to customers around the world.
We provide innovative and customized solutions to our customers
-- solutions which few others can match. With our flexible networks and unique capabilities, we deliver the widest range of reliable logistical solutions at predictable prices.
RISK MANAGEMENT SERVICES
MARKET RESULTS
Analysts estimate that at its peak Enron accounted for about one-quarter of the nation's energy trading — not producing much energy itself, but serving mostly as a middleman.
FINANCIAL RESULTS
The ultimate “New Economy” company – movement away from hard assets.
PRESS RELEASE
Tuesday, October 16, 2001
ENRON REPORTS RECURRING THIRD QUARTER EARNINGS OF $0.43 PER DILUTED SHARE;
REPORTS NON-RECURRING CHARGES OF $1.01 BILLION AFTER-TAX;
REAFFIRMS RECURRING EARNINGS ESTIMATES OF $1.80 FOR 2001 AND $2.15 FOR 2002; AND EXPANDS
FINANCIAL REPORTING
HOUSTON – Enron Corp. (NYSE – ENE) announced today recurring earnings per diluted share of $0.43 for the third quarter of 2001, compared to $0.34 a year ago. Total recurring net income increased to $393 million, versus $292 million a year ago.
“Our 26 percent increase in recurring earnings per diluted share