Enron Froud Essay Sample free essay sample

â€Å"Enron. a Houston-based energy house founded by Kenneth Lay. transformed itself over its 16 old ages lifespan from an vague gas grapevine concern to the world’s largest energy-trading company ( both away and online ) . Enron has become an interstate and intrastate natural gas grapevine company with about 37. 000 stat mis of pipe. Enron was mostly credited by making market trading in energy. leting energy to be traded in the same manner as other trade goods such as oil. † ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 86 ) â€Å"The US Securities and Exchange Commission didn’t file more instances for accounting and revelation fraud in financial twelvemonth 2012. In fact. the Commission filed less. Merely 79 accounting fraud and revelation instances were filed. 11 % less than in 2011 when there were 89. Eighty-nine SEC enforcement instances for accounting fraud and revelation misdemeanors in 2011 was the lowest figure in 10 old ages. † ( McKenna. 2012 ) As seen above. US Securities and Exchange Commission statistics. accounting frauds are diminishing twelvemonth after twelvemonth. We will write a custom essay sample on Enron Froud Essay Sample or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Current concern and regulative environment have been impacting avoid from accounting fraud. Before Enron dirt. organisation was non allow to command relation between company and history house. Arthur Andersen. is an accounting house. winked at Enron accounting fraud. Thus the biggest accounting fraud was accrued in the history. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 106 ) Because of Enron fraud loss. harmonizing study of Association of Certified Fraud Examiners ( ACFE ) . gross net income of Enron was about equal to the USA’s internal gross. Enron fraud caused mistrust on investors that was earlier premonitory for economic crisis which was accrued in 2008. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 104 ) â€Å"While Enron boasted about the value of merchandises that it bought and sold online around $ 880 billion in merely two old ages. the company remained soundless about whether these trading operations were really doing any money. † ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 106 ) â€Å"It is believed that Enron began to utilize sophisticated accounting techniques to maintain its portion monetary value high. raise investing against its ain assets and stock and keep the feeling of a extremely successful company. These techniques are referred to as aggressive net incomes direction techniques. † ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 91 ) So company was developed twenty-four hours by twenty-four hours and stock monetary values was increased. That growing was non overlooked by investor. They invested their money to the Enron stock therefore they helped out to develop the Enron. That was all Enron’s directors want from the market. Before the fraud 13 % of Enron stocks was Enron’s direction squad. Enron was one of the 100 biggest companies harmonizing to Fortune in America in 2000. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 97 ) â€Å"Enron besides set up independent partnerships whereby it could besides lawfully take losingss from its books if it passed these â€Å"assets† to these partnerships. † ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 101 ) Enron’s directors envisaged the company is traveling to be fall shortly. And they sold their stocks and company’s stock monetary values started to diminish. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 106 ) Most of the large companies which Credit evaluation bureaus like Moody’s. Standard A ; Poor’s and Fitch IBCA. accounting house Arthur Andersen. investing Bankss like Credit Suisse First Boston ( CSFB ) and JP Morgan Chase are affected because of the clang of Enron. Beside losing million dollars they lost investors’ trust. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 95 ) In short. on 2 December 2001. Enron’s entire planetary investing exposure to major fiscal establishments amounted to at least $ 4 billion. ( Yuhao. 2010 ) Beginning: World Wide Web. ccsenet. org/icbm Because of Enron dirt. new accounting ordinances were came into force which is called as Sarbanes-Oxley Act ( SOA ) at 2002. ( Kandemir. C. . A ; Kandemir. S. . 2012. p. 89 ) â€Å"The Sarbanes-Oxley Act of 2002 is statute law The Sarbanes-Oxley Act of 2002 ( frequently shortened to SOX ) is statute law enacted in response to the high-profile Enron and WorldCom fiscal dirts to protect stockholders and the general populace from accounting mistakes and deceitful patterns in the endeavor. † ( Rouse. 2007 ) Alternatively of authorising to a private history house for to inspect accounting records. Government should inspect records of the companies. That was the biggest lesson earned from Enron dirt. Enron dirt has both positive and negative effects. Positive effects of dirt. new ordinances are came into force to protect companies and investors’ rights. earthly possible frauds are prevented. Negative sides of dirt. it caused an economic crisis which is accrued in 2008. companies and investors lost million dollars. Besides Enron dirt gave a mark to European Union. ( Cernusca. 2011 ) Mentions Cernusca. L. L. ( 2011 ) . Ethical motives in accounting: the consequances of the Enron Scandal. Agricultural Management / Lucrari Stiintifice Seria I. Management Agricol. 13 ( 3 ) . 35-42. Kandemir. C. . A ; Kandemir. S. ( 2012 ) . Enron olayini dogru okumak-I: Bir cozumleme denemesi. ( Turkish ) . Accounting A ; Auditing Perspective Magazine / Muhasebe Ve Denetime Bakis. 12 ( 37 ) . 103-123. Kandemir. C. . A ; Kandemir. S. ( 2012 ) . Enron olayini dogru okumak-II: Kissadan hisseler. ( Turkish ) . Accounting A ; Auditing Perspective Magazine / Muhasebe Ve Denetime Bakis. 12 ( 38 ) . 85-106. McKenna. F. ( 2012 ) . The SEC And Accounting Fraud Enforcement: No â€Å"There† There. Retrieved from hypertext transfer protocol: //www. forbes. com/sites/francinemckenna/2012/11/29/the-sec-and-accounting-fraud-enforcement-no-there-there/ Nicole. N. . ( 2010 ) . Accounting Fraud Continues to Plague U. S. Economy. Retrieved from hypertext transfer protocol: //www. care2. com/causes/ac counting-fraud-continues-to-plague-u-s-economy. hypertext markup language Rouse. M. ( 2007 ) . Sarbanes-Oxley Act ( SOX ) . Retrieved from hypertext transfer protocol: //searchcio. techtarget. com/definition/Sarbanes-Oxley-Act Yuhao. L. ( 2010 ) . The Case Analysis of the Scandal of Enron. International Journal Of Business A ; Management. 5 ( 10 ) . 37-41.