Lessons Learned from the Enron Scandal Term Paper

Lessons Learned from the Enron Scandal - Term Paper ExampleThe bankruptcy of much(prenominal) a big organization is regarded as the greatest setback in American history. The dissolution of Enron was the dissolvent of its own false practices illegal dealings of projects and not showing their debts on their phoners accounts. (Project 2000_25_Corporate) It was regarded as the greatest failure in terms of audit. Enron was established in 1985 by Kenneth Lay after the union of Houston Natural Gas and Inter North. This merger created the largest gas pipeline system in America. In the 1990s Kenneth Lay took an initiative to sell the electricity at market prices and the resulting markets helped him to sell the electricity at high rates as a result increasing their income. Enron not only delivered natural gas only also became a market middleman for energy and brought the buyers and sellers of energy on one platform. Enron in just now 15 years reached such a position where it became Amer icas seventh biggest company which engaged 21,000 employees in more than forty countries. (Enron scandal-at-a-glance, 2002) Enron became dominant in the trading of energy contracts and financial instruments cognise as Derivatives. By 1992, Enron became the largest seller of natural gas in North America with earnings of $122 million. In the upstart 1990s Enron was considered as the best in the world as it controlled twenty five percent of entirely electricity and natural gas contracts. In November 1999, Enrons online website was established which helped the company to manage its contracts more efficiently. This website of the stool in no time became the largest e-business site of the world. Enron also invested in physical facilities. Enron in the beginning was an policy company. For further development of the company, Enron getd a number of assets which included gas pipelines, electricity plants, water plants and broadband go all over the world. The company also incurred reven ue by dealing in the same products and function in which it had been involved. The stock of Enron rose from the beginning of the 1990s until 1998 by 311% which was a remarkable increase in the rate of growth. Apart from that Enron was rated as the most innovative corporation in America, in the survey of percentages most Admired Companies. After many years Jeffery Skilling was hired who developed the idea of utilise such an accounting system which could hide debts in billions from the failed deals. Not only him but Andrew Fastow Chief pecuniary Officer and many other executives misguided the board of directors of the Enron company. The shareholders of the Enron Company lost 11$ billion which was as high as US$90 per share in the middle of 2000 but fell to little than 1$ at the end of Nov 2001.As a result of which the U.S. Securities and Exchange Commission started to investigate the matter. The decline of Enron started when its investors became known of the off balance sheet par tnerships that were hiding billions of dollars of debts. One of the deals with Blockbuster Inc. which was a video rental company to provide movies on the internet was also cancelled in March. Moreover the rival company Dynegy offered to purchase the company and the deal was finalized on December 2, 2001. The Enron Company finally filed for the bankruptcy of the company. In the U.S. history Enron was the largest corporate bankruptcy until WorldComs was declared bankrupt the next year. Moreover there were many executives who were blamed for a number of charges and were then sentenced to prison. Moreover, Arthur Andersen the auditor of the corporation