Enron Ethical Issue

Topics: Enron, Enron scandal, Business ethics Pages: 30 (8140 words) Published: October 14, 2012
ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES
Lecturer: DR SITI ZELEHA ABDUL RASHID

Prepared by: SAMIRA ALVANDI SHAHRZAD KARIMI HAMED KHAZAEI

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ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

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ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

Table of content:
Abstract……………………………………………………………………………..…...4 1. Introduction ……………………………………………………………………..……5 2. Literature review ……………………………………………………………….….....5 2.1 Accounting failure concept:……………………………………………….…..….5 2.2 Sample of accounting failure in organization………………………………....…6 2.2 Ethical issue concept………………………………………………………….….9 3. Research methodology…………………………………………………………..…...12 4. An insight Case Study Analysis: ENRON Corporation…………………………..….12 4.1 company background……………………………………………………………13 4.2 company vision …………………………………………………………………13 4.3 company mission ……………………………………………………………….13 4.4 company value…………………………………………………………………..13 4.5 Enron organization chart………………………………………………………...14 4.6 Enron`s and Main division of work,………………………………………….….15 5. Enron performance analyzing and finding………………………………………...…20 5.1SWOT analysis………………………………………………………………..….20 5.2 financial performance analyses…………………………………………….….…21 5.3 Non-Financial and Ethical Issues Analysis………………………………………27 6.0. Causes of Collapse...........................................................................................29 7.0 Enron`s collapse Improvement Proposal………………………………………….…32 8.0 Conclusion …………………………………………………………………………..36 References ………………………………………………………………………………38

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ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

Abstract:
The purpose of this paper is to understand the cause and affect of accounting failure in an organization which ultimate to bankruptcy and propose solution to address these issues .The company that has chooses for evaluate and assessment of accounting failure names Enron company which was largest producer natural gas and oil in United State of America. Enron has chosen because this is the clear illustration in term of conflict accounting system up to bankruptcy. This paper includes discussion and understanding the cause of accounting failure within an organization and applies many approaches such as: primary research which is include survey, secondary research, literature review, final evaluation of accounting issues of Enron and recommendation.

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ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES

1.0 Introduction:
Enron was one of the well-regarded domestic energy Companies in the “United States” by its revenues which it was near to $100,789billion in 2000. It was founded in Houston, Texas in 1985by merging of natural companies which were called Houston Natural Gas and InterNorth. Their revenues were almost $10 billion. The word was shocked by Enron bankruptcy in 2001 and it was due to its successes in all financial letters such as high capital and low leverage. In particular, Enron hide the exact information about its assets and liabilities in the balance sheet by using “Special Purpose Entities” (SPE). SPE is one of the foremost tools which were used by management and administrative at Enron in order to hide their ups and downs of the basis liabilities, entity and assets so they made their Company far from risk and they hedged their stocks min the marketplace with considerable price (Hamilton, 2004). They also applied innovative methods like '' volumetric production payments'' (VPPs). By this method

producers are able to purchase new facilities to explore for new reserve and company payback its money in gas instead of cash. This was win-win contract which leads to Enron find new long-term suppliers.

2.0 Literature review:
2. 1 Accounting failure concept:
Accounting failure or accounting scandals occur with the disclosure of malfunction which happened by trusted executive managers or top manager in a public or private company. Malfunctions can be includes...

References: 1.Coleman, R., & Wilkins, L. (2004). The moral development of journalists: A comparison with other professions and a model for predicting high quality ethical reasoning. Journal “of Mass Communications Quarterly”, 81(3), 511-527. 2.Enron annual report from 2000. Available at: http://picker.uchicago.edu/Enron/EnronAnnualReport2000.pdf. 3.Enron: The Fall from Grace/ The World’s Biggest Fraud available at: http://www.efham.net/Uploads/EfhamElborsa/Enron.pdf 4.Enron website, Available at: http://www.enron.com/index_option_com_content_task_section_id_1_Itemid_2.htm. Hamillton, Stewart. (2004). “The Enron Collapse”. 5.Frank Cavico, B. Mujtaba and C. Jones (2010). Business Ethics: A Cross-Cultural Comparison betweenHong Kong and the United States. Journal of Business, 2010. 6.George J Benston, Al L Hartgraves (2002). Enron: what happened and what we can learn from it Original Research Article. Journal of Accounting and Public Policy, Volume 21, Issue 2, Summer 2002, Pages 105-127.
7. Harold Bierman (2008)."ACCOUNTING/FINANCE LESSONS OF ENRON - A Case Study". Purplish by: World Scientific Publishing Co. Pte. Ltd.ISBN-10 981-279-030-6. PP.12-29. Available at: http://www.worldscibooks.com/etextbook/6706/6706_chap02.pdf
8. Lamming, R., 1993.”Beyond Partnership, Strategies for Innovation and Lean Supply”. Prentice Hall, New York.
9. Michael A. Crawford, D. Scot Loyd(2008). "CPA 's Multistate Guide to Ethics and Professional Conduct". publish by CCH, ISBN: 978-08080-9176-9.
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ENRON ACCOUNTING FAILURE AND ETHICAL ISSUES
10 .Michael T. Steffes and Scott Thompson(2011)."Impact of the Enron Implosion Short-Term Shame - Long-Term Pain". Online magazine, Available at:http://www.electricenergyonline.com/?page=show_article&mag=4&article=30
11 . Moran, michaeal. (June 2001). “Enron Corporation”. Partony, Frank. (January,24.2003). “Enron and a Derivatives World”. Sims, R.R. (2002). Teaching Business Ethics for Effective Learning. Westport, CT: Quorum Books. 12. Todd Haberly, 2002. "The Enron Bankruptcy" Available at:http://www.plu.edu/~enron/Haberly.pdf 13. “From collapse to convictions: a timeline” Available at: http://www.cbc.ca/news/background/enron . 14. “Privatization: Successes and Failures” Available at: http://cup.columbia.edu/book/978-0-231-14160-4/privatization
15.” Lessons from Enron: just say 'sorry ' “Available at: http://money.cnn.com/2006/10/25/magazines/fortune/pleabargains/index.htm 16 . “Top 10 accounting problems in organization” Available at: http://www.thomasandalex.com/articles/finance-accounting/top-10-accounting-problems-inorganization
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