Enron: Questionable Accounting Leads to Collapse
Enron: Questionable Accounting Leads to Collapse
In the case of Enron, it comes down to pure greed and a lack of accountability. From the top, there was illegal activity with Ken Lay, Jeffrey Skilling, and Andrew Fastow who raided the company as though it was their own personal bank. On top of that, the culture of the rest of the company was to make as much money as they could and employees were rewarded by the amount of profit they could make without questioning the ethical means to do so. Sherron Watkins found the issues and reported it to her superiors. However, it stopped there. She should have reported it to the authorities instead of riding it out in the “basement” of Enron. Every other entity was either complicit or in collusion with Enron. So many stakeholders were financially destroyed and good people lost their jobs as a result of the failure of a few people. I worked for Hallmark Cards when the Enron scandal broke and Arthur Anderson had a consulting team working with Hallmark. Shortly after, Hallmark cut their ties with that accounting firm even though the Arthur Anderson team was doing a great job in Kansas City. From a personal standpoint, the lesson to learn is that one must act ethically and report any discovered unethical behavior. From a society standpoint, it is clear that corporate America cannot be trusted to “police” itself. Even today, Americans are suffering from the misconduct of other financial scandals that caused the current recession. This is despite the laws that were enacted after the Enron scandal. It is going to take the strong will of people like you to make a difference.
How did the corporate culture of Enron contributed to its bankruptcy?
Enron’s corporate culture was said to be arrogant. There was an overwhelming aura of pride among the executives and a tense environment within the employees due to the implemented bi-yearly evaluation system which forced out the employees that ranked in the lower 20%. The
In the case of Enron, it comes down to pure greed and a lack of accountability. From the top, there was illegal activity with Ken Lay, Jeffrey Skilling, and Andrew Fastow who raided the company as though it was their own personal bank. On top of that, the culture of the rest of the company was to make as much money as they could and employees were rewarded by the amount of profit they could make without questioning the ethical means to do so. Sherron Watkins found the issues and reported it to her superiors. However, it stopped there. She should have reported it to the authorities instead of riding it out in the “basement” of Enron. Every other entity was either complicit or in collusion with Enron. So many stakeholders were financially destroyed and good people lost their jobs as a result of the failure of a few people. I worked for Hallmark Cards when the Enron scandal broke and Arthur Anderson had a consulting team working with Hallmark. Shortly after, Hallmark cut their ties with that accounting firm even though the Arthur Anderson team was doing a great job in Kansas City. From a personal standpoint, the lesson to learn is that one must act ethically and report any discovered unethical behavior. From a society standpoint, it is clear that corporate America cannot be trusted to “police” itself. Even today, Americans are suffering from the misconduct of other financial scandals that caused the current recession. This is despite the laws that were enacted after the Enron scandal. It is going to take the strong will of people like you to make a difference.
How did the corporate culture of Enron contributed to its bankruptcy?
Enron’s corporate culture was said to be arrogant. There was an overwhelming aura of pride among the executives and a tense environment within the employees due to the implemented bi-yearly evaluation system which forced out the employees that ranked in the lower 20%. The