When Accounting Out Analysis

Accounting Accounting is a very important part of the business world today. It helps protect, defend, and keep businesses running. Accounting regulates businesses and makes sure everything balances out, so that things are not unfair. The role of accounting in a business is to control activities and expenditures, improvement of operational plans, accountability, reporting on project outcomes, and the writing of bids for new funds. There are many jobs that the accounting system accomplishes. Accounting has to do with the profitability of a business. It relays vital operating information to managers who need to analyze the information and make important decisions. Accountants are the "middle men" between workers and managers. They analyze the …show more content…
Obviously, the path that those auditors took was the wrong path. Auditors need to start to catch the problem at an early stage. This will prevent problems from escalating into the size of the Enron scam. Both sections of accounting, financial and managerial are to blame for the collapse of Enron. The financial statement called the balance sheet did not really balance out. The auditors forced it to balance out, allowing the scam to seem right and succeed. But the balance sheet was based on false information given by management. The false information caused the huge mistake on the balance sheet, leading to the lie of profitability. The executives and CEOs agreed to this scam to benefit themselves. They can only hold their spot for three to four years. So they hoped to trick the stockholders, giving them a big profit. Then they would sell all their shares at the high price and leave the company. "The changes in executive compensation in the 1990s, designed to align executive interests with those of shareholders, provided an irresistible incentive to managers to inflate earnings, even if this was not sustainable, as they could bail out before the inevitable reality confronted the shareholders" (Clarke). This is the basis of the Enron scam. Even though the accountants failed, they still caught the mistake and helped save it from becoming a bigger disaster than it actually was. The Securities and Exchange Commissions caught the mistake. Most people in the business world also blame the success of the scam on lack of education of the accountants. "The Department of Labor estimates that only about 15 percent of the 5.5 million people in finance and accounting are actually CPAs involved in public accountancy" (Miller). The Enron case is an example of how the accounting field is used in huge corporations. Although it did lead to the biggest