Enron Froud

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Review of accounting ethics :
The Enron Fraud
Kemal Cankaya
Strayer University
Arlington Campus

Financial Accounting
Prof. Tony Somathiti
February 1, 2013

The Enron Fraud

“Enron, a Houston-based energy firm founded by Kenneth Lay, transformed itself over its sixteen years lifespan from an obscure gas pipeline concern to the world’s largest energy-trading company (both off and online). Enron has become an interstate and intrastate natural gas pipeline company with approximately 37,000 miles of pipe. Enron was largely credited by creating market trading in energy, allowing energy to be traded in the same way as other commodities such as oil.” (Kandemir, C., & Kandemir, S., 2012, p.86)

1.1

“The US Securities and Exchange Commission didn’t file more cases for accounting and disclosure fraud in fiscal year 2012. In fact, the Commission filed less.

Only 79 accounting fraud and disclosure cases were filed, 11% less than in 2011 when there were 89.

Eighty-nine SEC enforcement cases for accounting fraud and disclosure violations in 2011 was the lowest number in ten years.” (McKenna, 2012)

As seen above, US Securities and Exchange Commission statistics, accounting frauds are decreasing year after year. Current business and regulatory environment have been affecting avoid from accounting fraud.

1.2

Before Enron scandal, organization was not allow to control relation between company and account firm. Arthur Andersen, is an accounting firm, winked at Enron accounting fraud. Thus the biggest accounting fraud was accrued in the history. (Kandemir, C., & Kandemir, S., 2012, p.106)

Because of Enron fraud loss, according report of Association of Certified Fraud Examiners (ACFE), gross profit of Enron was almost equal to the USA’s internal revenue. Enron fraud caused distrustfulness on investors that was earlier premonitory for economic crisis which was accrued in 2008. (Kandemir, C., & Kandemir, S., 2012,...
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