In October of 2001, it was revealed of their creatively planned accounting fraud, known as the “Enron scandal” led the company to bankruptcy. Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn’t show up in the company’s accounts. This scandal was one of the five largest audits and accountancy partnerships in the world. It was also the largest bankruptcy reorganization in American history. How it all started Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth of Omaha in Nebraska.
Not for good reasons though. The company had earned the dubious distinction of being involved in the largest accounting scandal ever to hit the US corporate history. WorldCom had reportedly misrepresented its financial statements to an extent of around $ 4 billion. The company admitted that it had resorted to fraudulent accounting practices for five quarters (four quarters of 2001 and the first quarter of 2002). Soon after, WorldCom terminated the services of some of its top executives including Scott Sullivan (Sullivan), the Chief Financial Officer and David Myers, the Senior Vice President and Controller.
Adoption of the Sarbanes-Oxley Act of 2002 as an Important Piece of Legislation. Introduction In 2001-2002, the business and finance world was rocked, by the Enron and WorldCom scandals. These two scandals alone led to billions of dollars being lost to share holders, because of misleading financial reports. “Enron Corporation was an American energy, commodities, and Services Company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.” (Enron, n.d., para.
HealthSouth was involved in corporate accounting scandal in which his founder, the chairman and the CEO, Richard M. Skrushi, were accused of the direction of employees, in a false manner report, considerably exaggerated profit of the company to equal hopes of the shareholder. HealthSouth accounting problems at first appeared at the end of 2002 after the executive director Richard M. Skrusha, sold $100 million in a stock how the company declared big loss. HealthSouth was accused by the American Commission on securities and the exchanges (SEC) of accounting scandal where the income of the company was in a false manner exaggerated for $1.4 billion. In 1996, allegedly ordered high-ranking officials of Skrusha and accountants to forge reports on profit of the company to equal hopes of investors and to control the price of the share of the company. Fraud lasted seven years.
Because of Enron’s shady accounting and false representation of itself, their stock price dropped dramatically, and they became one of the biggest companies to ever go bankrupt. Who is Responsible, and What Did They Do? Kenneth L. Lay was Enron’s Chief Financial Officer during the time of the collapse. He was a part of one of the biggest energy trading companies in the world. “…using the Internet to buy and sell natural gas and electric power supplies for utilities and industrial power users and helping them hedge against fluctuations in power prices.” (Oppel 2001) Through a Security and Exchange Commission formal investigation, Enron had shifted billions of dollars of debt that it owed into several different partnerships.
These financial settlements were immense and a huge hit to the company, and directly impacted their product quality. Since the merger, GSK racked up over $5 billion dollars in lawsuits. Despite being such a lucrative industry, getting hit with such fines could drive any company’s corporate responsibility down. 2. When Glaxo Wellcome initially merged with SmithKline, immediately arose a management dilemma.
This number expanded to store number 2,000 in 2005. The corporation consists of several entities, including Home Depot, Home Depot Supply, Home Depot Landscaping Supply, EXPO Design Center and Home Depot Floor Store with a combined total of 345,000 associates. Annual sales reached $81.5 billion in 2005 with earnings per share more than doubling from $1.10 in 2000 to $2.72 in 2005. After co-founder Arthur Blank retired as President and CEO in 2000, Robert L. Nardelli took over the reins as the new CEO. Nardelli was a successful executive at General Electric and appeared to be a great fit with Home Depot’s culture.
| The Lessons of the Enron Debacle | by Huck Gutman | | The fall of Enron, and its subsequent bankruptcy, may well be the largest scandal in the history of American business and politics. If we ask, "What went wrong with Enron?" the answer would be, "Everything. "Enron's rise from a small Texas gas company to the seventh largest American corporation was spurred, at every juncture, by political influence and political decisions. Whether they were changes in government policy, loosening of federal regulations, staffing of key positions which supported or monitored energy issues: The government of the United States and the state government of Texas, looked out for Enron's interests.
Effect of Unethical Behavior Article Analysis Wayne B. Alves ACC291 September 10, 2012 Cameo Christopher Effect of Unethical Behavior Article Analysis The 2001 Enron scandal--its financial collapse, criminal trials and bankruptcy, rocked corporate America. As a result, safeguards have been put in place to detect signs of unethical business behavior and accounting practices. While not all unethical business behavior results in falsified accounting documents and securities fraud, there remain many undesirable and unethical behaviors that should be monitored and averted. According to Debra Bacon, an eHow Contributor, states that unethical behavior covers a wide range of deeds, however, the more common include: sexual harassment, falsifying documents, using company resources for personal use, taking or misusing company property, basically stealing from the company. Workplace violence is on the rise and can lead to other unethical behavior like bullying or discrimination.
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.