Case 1 – Enron: Were They the Crookedest Guys in the Room?(30 points) Read “Enro

Question

Case 1 – Enron: Were They the Crookedest Guys in the Room?(30 points)

Read “Enron: Were They the Crookedest Guys in the Room?” pages 265-283 in Understanding Business Ethics.

Also read the Case Summary located on pg. 607-30-1 thru 607-30-3 in the Study Reference Guide and answer the following questions.

Case 1 Questions:

1. What are “cookie jar” reserves? Explain Enron’s use of this concept.

2. Identify as many stakeholders as you can in this case. For each, explain how they were affected by the events surrounding the demise of Enron.

3. Summarize the main points of this case in one succinct paragraph.

Explanation / Answer

Yes enron used this method to move assets and liabilities off the balance sheet. As a result company transferred its risk and debt. This helps in bringing down the debt levels and hide losses in their financial statements.

Jeffrey skilling the president/ CEO found doing fraud activities.

Richard causey chief accountant as also under this fraud and sentenced 5.6 years of imprisonment.

Andrew fastow CFO was found liable in case of money laundering

David delainey head of wholesale found doing fraud activity and manipulation

Enron was established in 1985, and as one of the world's driving power, petroleum gas, interchanges and mash what's more, paper organizations before it bankrupted in late 2001, its yearly incomes ascended from about $9 billion of every 1995 to

over $100 billion out of 2000. Toward the finish of 2001 it was uncovered that its announced money related condition was supported significantly by regulated, orderly, and inventively arranged bookkeeping extortion. Enron modified its money related proclamation for the past five years and found that there was $586million in misfortunes. Enron tumble to liquidation on December 2, 2001.

One of the lessons of the Internet blast is that it's regularly troublesome for experts to comprehend and assess new sorts of organizations. Furthermore, officials like Mr. Skilling, who once swore at an examiner amid a phone call for making a pointed inquiry about Enron's asset report, don't do much to cultivate the sort of open request that could prompt better data.

Yet, the Enron disaster is additionally meaningful of another issue that has turned into very clear in the last few a long time: Wall Street's loss of objectivity. Speculation banks profit from endorsing or merger bargains than they do from intermediary charges. Experts at these organizations regularly confront clashing loyalties. They can be placed in the position of worrying as much about whether a CEO may discover a report hostile as whether a financial specialist may think that its supportive.

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