Enron Scandal Essay

985 Words4 Pages
Keller graduate school of management | You Decide –Week 5 | Enron Scandal | | While there were many problems that caused the demise of Enron Corporation, the Enron problems can basically be summed up in one statement, “complicated financial record keeping of the organization”. A couple of issues come to mind when recalling the company’s down fall. The organization started out on the right track and then with the desire for rapid growth, things quickly turn complicated, scandalous, and fraudulently. Another area of concern would be the improper to non-existence internal controls. There were many top executives as well as employees that were under no specific guidance, and were ultimately running the business as they saw fit. Employees were scared and pressured to perform, which in itself caused additional stress for the employees, which caused problems for the company. Finally, what finally brought the company crumbling down was the creation of several separate entities that were created with the intent of aiding the corporation which ultimately led the company into insolvency and eventually bankruptcy. With the creation of LJM1, several internal controls were ignored. For starters, Andrew Fastow was given the responsibility of putting together several SPE’s (special purpose entities) which lacked the proper controls to adequately detect and prevent fraud. These newly formed entities were also lacking the proper record keeping procedures, thus leaving vital transactions off of Enron’s books providing very little to no audit trails. Several accounting methods and financial reporting procedures were manipulated and although documents do not prevent fraud, documents do help to provide some accountability. Segregation of duties and independent checks are other areas that were clearly lacking in this scenario, not only was Fastow in charge of putting

More about Enron Scandal Essay

Open Document