Case 9 Enron
Case 9 Enron: Questionable Accounting Leads to Collapse
How did the corporate culture of Enron contribute to its bankruptcy? The corporate culture at Enron was centered on a twisted lack of ethical behavior based on greed and profit seeking. Top management set a tone in the workplace that encouraged risk and rule breaking in the name of revenue. Employees were compensated for unethical behavior that brought money into the company and terminated if they did not reach the monetary levels of other employees. This created a cutthroat atmosphere which further encouraged unethical behavior. Enron management and its employee’s actions were not in the best interest of their shareholders, but in lining their own pockets.
Did Enron’s bankers, auditors, and attorneys contribute to Enron’s demise? If so, what was their contribution? Absolutely, the bankers, auditors and attorneys contributed to the demise of Enron. The attorneys aided in establishing SPE’s or special-purpose entities, in order to manipulate the books and conceal losses for Enron, presenting a different financial picture than was the reality. The banking firm, Merrill Lynch, allegedly participated in suspicious dealings with Enron, ignoring reports that showed the actions might be considered aiding and abetting the fraudulent representation of funds by Enron. The auditor, Arthur Anderson, taxed with the responsibility of ensuring the soundness of Enron’s financial statements, knowingly destroyed relevant auditing documents during a SEC investigation, trying to protect Enron and his own company’s financial gain.
What role did the chief financial officer play in creating the problems that led to Enron’s financial problems? CFO Andrew Fastow was the facilitator of the unethical partnerships used to conceal the high debt of Enron. Furthermore, he used these dealings to monetarily enrich himself through gifts and kickbacks to the tune of approximately $30 million. Fastow admitted to
How did the corporate culture of Enron contribute to its bankruptcy? The corporate culture at Enron was centered on a twisted lack of ethical behavior based on greed and profit seeking. Top management set a tone in the workplace that encouraged risk and rule breaking in the name of revenue. Employees were compensated for unethical behavior that brought money into the company and terminated if they did not reach the monetary levels of other employees. This created a cutthroat atmosphere which further encouraged unethical behavior. Enron management and its employee’s actions were not in the best interest of their shareholders, but in lining their own pockets.
Did Enron’s bankers, auditors, and attorneys contribute to Enron’s demise? If so, what was their contribution? Absolutely, the bankers, auditors and attorneys contributed to the demise of Enron. The attorneys aided in establishing SPE’s or special-purpose entities, in order to manipulate the books and conceal losses for Enron, presenting a different financial picture than was the reality. The banking firm, Merrill Lynch, allegedly participated in suspicious dealings with Enron, ignoring reports that showed the actions might be considered aiding and abetting the fraudulent representation of funds by Enron. The auditor, Arthur Anderson, taxed with the responsibility of ensuring the soundness of Enron’s financial statements, knowingly destroyed relevant auditing documents during a SEC investigation, trying to protect Enron and his own company’s financial gain.
What role did the chief financial officer play in creating the problems that led to Enron’s financial problems? CFO Andrew Fastow was the facilitator of the unethical partnerships used to conceal the high debt of Enron. Furthermore, he used these dealings to monetarily enrich himself through gifts and kickbacks to the tune of approximately $30 million. Fastow admitted to