ACC 260 Week 2 Assignment
Enron questions 1, 3, 5, 6, and 9
1. Which segment of its operations got Enron into difficulties?
The first thing that got them into trouble was the fact that Kopper was appointed to Fastow and he was an employee of Enron. I do not believe that he had the best interest involved. Another thing was that over 11 million was supposed to be invested and it never was. I believe that this was the start of the problems! Another thing was the fact that Enron was incorrectly booking revenue for services that was not yet done. Enron stocks were paid by promissory notes and not cash.
3. Did Enron’s directors understand how profits were being made in this segment? Why or why not?
No I do not believe that Enron directors understood how the profits were being made. I think that if they understood something would have been done about it.
5. Ken Lay was the chair of the board and the CEO for much of the time. How did this probably contribute to the lack of proper governance?
With the lack of proper governance was the down fall of the company. Any CEO should know what is going on with the operations of the company. Failure to know what is going on in the company can affect the operation of the company. The CEO should have noticed that the revenue was overstated.
6. What aspects of the Enron governance system failed to work properly, and why?
The aspect of the Enron governance system that failed is basically appears to be all of it. Nothing was done until they were put on the spots. Then at that point they started questioning what went wrong.
9. Identify conflicts of interests in:
• SPE activities
• Arthur Andersen’s activities
• Executive activities
The conflict of interest fell when Kopper was appointed to manage Chewco since we was an employee of Enron. The hedge rhythm was another activity that affects Enron.
Arthur Andersen activities also did not help the matter any. From what I understand they...
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