Name: Do Minh Tam
Class: MEP 100
Lecture: Karen Bird
Date: December 24, 2010
From the 1980s until now, there have been a lot of accounting scandals which were widely announced on by media. The result of this situation is many companies were bankruptcy protection requests, and closing. One of the most widely reported emulation of accounting scandals is Enron Company. Enron Corporation is one of the largest energy companies in the world. Enron was founded in Houston, Texas, America in July 1985 by the consolidation between Houston Natural Gas and InterNorth of Omaha, Nebraska (“Enron and Enderson: The story”, n.d.). According to Sridhanran, Dickes & Caines (2002, p.1), Enron’s rank number is the seventh in the United States by Fortune magazine in April 2002. Their businesses were sale of nature gas, electricity sector, water, metal, broadband and newsprint. Enron has been altered from the old economy company to the new economy company and focus on HFV (Hypothetical Future value). The profits were grown by buying electric at stable prices from the suppliers and sale the different prices for customers. When the falsehood of their profits was opened, the investors withdraw the capital. Enron start collapse (“Case study: The collapse”, n.d., pp.1-2).
Accounting scandals are political and business scandals using illegal accounting systems and fraud in the financial statements. According to Hanson (2002, p.1), Enron accounting scandal is the most important common failure in the banks during the 1980s in the United States. This leads to changing in business and the law. When Enron was bankrupt, the economy of America was dropped, and many employees were lost their jobs.
Outline and Limitations
The assignment will explain two main reasons and two effects of Enron accounting scandal. The assignment will conclude with review the Enron
References: Sridhanran, U. V., Dickes, L., & Caines, W. R. (2002). The social impact of business failure: Enron Raver, E. (2006). The Enron scandal: The crime, scandal, tragedy, and controversy of the century