Enron Reaction Paper

651 Words3 Pages
Nestor Riel P. Cruz Jr. Reaction Paper-1 MBA/ Accounting 1 & 2 Dr. Diana dela Vega The Enron Company started as an interstate pipeline company dating back from 1985. From the pipeline industry Enron started to move into other fields such as broadband services unit and Enron online (a website for trading supplies and merchandises). In 2000, the development of Enron swiftly began and its annual revenue reached up to an astonishing $100 billion US. Sky rocketing the company as the sixth-largest energy company in the whole world. However during 2001, due to unstable leadership and financial mistakes. Enron began to collapse and filed for bankruptcy. Labeled as one of the biggest case of bankruptcy the U.S. Justice Department released an investigation regarding the company’s transactions. During the investigation, CEO and former CEO Lay and Skilling faced up to 40 charges including conspiracy, making false statements on financial reports, securities fraud and wire fraud.…show more content…
There can be a lot of factors as to why companies file for bankruptcy and closure. In the case of Enron, the first set of problems in the company manifested when traders reluctantly gambled with company assets in the oil market. They lost $90 million in a period of five days. Since then company reserves disappeared and auditors saved the company by reporting fake net worth and imprecise trading revenues resulting to accounting scandals in the company. Due to the company’s compound business model and unethical practices, they required that the balance sheet is to be modified accordingly to illustrate satisfactory
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