Impact of Unethical Behavior: The Enron Scandal

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Impacts of Unethical Behavior: Enron Jessica Shutiva XACC/280 September 4, 2013 Jaclyn Strauss Impacts of Unethical Behavior: Enron In 2001 American-based energy natural gas pipeline company, Enron, formed by CEO and Chairman, Kenneth Lay in 1985, made a reinstatement announcement of its earnings beginning from 1997 in order to reflect a reduction of $586 million dollars, after reports of first quarter losses in four years. Enron’s business and accounting practices were made apparent to be unethical controversial practices. Such practices led Enron to its collapse with filing of bankruptcy. Accounting Practices Involved Enron’s complex mark-to-market practices brought forth by the 1990 hire of CEO and Chairman, Jeffrey Skilling, “anticipated future profits from any deal were accounted for by estimating their present value rather than historical cost”, (“Wikipedia”, 2013). However, the accounting practice falsely increased Enron’s revenue which made it the largest U.S. Corporation, ranking seventh while utilizing unconsolidated partnerships, and entities as a special purpose to cover Enron’s debt and substantial losses by manipulation of accounting figures and determine the data appearance on financial statements. Enron’s financial arrangement disclosures that involved also the contingent liabilities also contributed. Action of an Enron Accountant and Prevention As an Enron accountant witnessing unethical practices and improper accounting data reporting, it would have caused me to no longer affiliate with involvement of Enron’s negative actions. Employment resignation would take place to prevent self-harm and accusations of role playing. Filing a report would have followed to reveal the wrongful unethical practices taken by Enron to prevent further harm to other external and internal parties. Had Enron first followed ethical accounting practices

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