Enron Corporation was an American energy company based in Houston, TX. Before the company went bankrupt in late 2001, Enron had 22,000 employees and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies. In 2000, Enron reported revenues of practically $101 billion. In November 1999, Enron launched their newest project Enron Online which was the first web-based transaction system that permitted buyers and sellers to buy, sell, and trade products globally. This was the first of various web-based businesses. At the end of 2001, a discovery of having high profits were based on an institutionalized, systematic, and creatively planned accounting fraud were acknowledged on Enron reports. Enron’s stock plummeted and Enron employees and investors in pension funds lost over twenty five billion dollars. Enron has since become a widespread representation of willful corporate fraud and corruption. The scandal is a precedent case in the field of business fraud and developed questioning of the accounting practices of many corporations throughout the United States. Enron's failure contributed to the formation of the U.S. Sarbanes-Oxley Act, also known as SOX, signed into law on July 30, 2002 (Healy, 2003). Accounting Ethical Breach
Arthur Andersen served Enron as an auditor and a consultant. For two years Andersen additionally worked as internal auditor for Enron. Andersen reviewed his own work as internal auditor. Andersen assisted Enron by creating creative accounting tools and helping establish numerous special purpose entities. With the help of Andersen, Enron successfully omitted around fifty percent of its assets selling them to numerous fictitious firms. Enron was able to present increased earnings on their financial statements every accounting date. Many of the deals included hidden guarantees of no commercial risk for the entities purchasing the assets. Therefore, Enron guaranteed to...
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