Enron scandal Wikipedia. Enron Corporation. Enron logo. Public. Traded as. NYSE ENEIndustry. Energy. Fate. Bankruptcy. Predecessor. Successor. Founded. Omaha, Nebraska, United States 1. Founder. Kenneth Lay. Defunct. November 2. Headquarters. 14. Smith Street. Houston, Texas, United States. Key people. Kenneth Lay, Founder, Chairman and CEOJeffrey Skilling, former President, and COOAndrew Fastow, former CFORebecca Mark Jusbasche, former Vice Chairman, Chairman and CEO of Enron International. Stephen F. Cooper, Interim CEO and CRODivisions. Enron Energy Services. Websiteenron. com. The Enron scandal, publicized in October 2. Triple Column Cash Book Pdf' title='Triple Column Cash Book Pdf' />Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largestaudit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit failure. Enron was formed in 1. Kenneth Lay after merging Houston Natural Gas and Inter. North. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that by the use of accounting loopholes, special purpose entities, and poor financial reporting were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives not only misled Enrons board of directors and audit committee on high risk accounting practices, but also pressured Arthur Andersen to ignore the issues. Enron shareholders filed a 4. US9. 0. 7. 5 per share in mid 2. November 2. 00. 1. The U. S. Securities and Exchange Commission SEC began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a very low price. The deal failed, and on December 2, 2. Enron filed for bankruptcy under Chapter 1. United States Bankruptcy Code. Enrons 6. 3. 4 billion in assets made it the largest corporate bankruptcy in U. S. history until World. Coms bankruptcy the next year. Many executives at Enron were indicted for a variety of charges and some were later sentenced to prison. Enrons auditor, Arthur Andersen, was found guilty in a United States District Court of illegally destroying documents relevant to the SEC investigation which voided its license to audit public companies, effectively closing the business. By the time the ruling was overturned at the U. S. Supreme Court, the company had lost the majority of its customers and had ceased operating. Enron employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the accuracy of financial reporting for public companies. One piece of legislation, the Sarbanes Oxley Act, increased penalties for destroying, altering, or fabricating records in federal investigations or for attempting to defraud shareholders. The act also increased the accountability of auditing firms to remain unbiased and independent of their clients. Rise of Enronedit. Kenneth Lay in a July 2. In 1. 98. 5, Kenneth Lay merged the natural gas pipeline companies of Houston Natural Gas and Inter. North to form Enron. In the early 1. United States Congress approved legislation deregulating the sale of natural gas. The resulting markets made it possible for traders such as Enron to sell energy at higher prices, thereby significantly increasing its revenue. After producers and local governments decried the resultant price volatility and asked for increased regulation, strong lobbying on the part of Enron and others prevented such regulation. As Enron became the largest seller of natural gas in North America by 1. Startups news from the, including the latest news, articles, quotes, blog posts, photos, video and more. The November 1. 99. Enron. Online trading website allowed the company to better manage its contracts trading business. In an attempt to achieve further growth, Enron pursued a diversification strategy. The company owned and operated a variety of assets including gas pipelines, electricity plants, pulp and paper plants, water plants, and broadband services across the globe. The corporation also gained additional revenue by trading contracts for the same array of products and services with which it was involved. This included setting up power generation plants in developing countries and emerging markets including The Philippines Subic Bay, Indonesia and India Dabhol. Triple Column Cash Book Pdf' title='Triple Column Cash Book Pdf' />Enrons stock increased from the start of the 1. Standard Poor 5. However, the stock increased by 5. By December 3. 1, 2. Enrons stock was priced at 8. In addition, Enron was rated the most innovative large company in America in Fortunes Most Admired Companies survey. Causes of downfalleditEnrons complex financial statements were confusing to shareholders and analysts. Triple Column Cash Book Pdf' title='Triple Column Cash Book Pdf' />In addition, its complex business model and unethical practices required that the company use accounting limitations to misrepresent earnings and modify the balance sheet to indicate favorable performance. The combination of these issues later resulted in the bankruptcy of the company, and the majority of them were perpetuated by the indirect knowledge or direct actions of Kenneth Lay, Jeffrey Skilling, Andrew Fastow, and other executives such as Rebecca Mark. Lay served as the chairman of the company in its last few years, and approved of the actions of Skilling and Fastow although he did not always inquire about the details. Skilling constantly focused on meeting Wall Street expectations, advocated the use of mark to market accounting accounting based on market value, which was then inflated and pressured Enron executives to find new ways to hide its debt. Font Proxima Nova Regular. Fastow and other executives created off balance sheet vehicles, complex financing structures, and deals so bewildering that few people could understand them. Revenue recognitioneditEnron and other energy suppliers earned profits by providing services such as wholesale trading and risk management in addition to building and maintaining electric power plants, natural gas pipelines, storage, and processing facilities. When accepting the risk of buying and selling products, merchants are allowed to report the selling price as revenues and the products costs as cost of goods sold. In contrast, an agent provides a service to the customer, but does not take the same risks as merchants for buying and selling. Service providers, when classified as agents, are able to report trading and brokerage fees as revenue, although not for the full value of the transaction. Although trading companies such as Goldman Sachs and Merrill Lynch used the conventional agent model for reporting revenue where only the trading or brokerage fee would be reported as revenue, Enron instead selected to report the entire value of each of its trades as revenue. This merchant model was considered much more aggressive in the accounting interpretation than the agent model. Enrons method of reporting inflated trading revenue was later adopted by other companies in the energy trading industry in an attempt to stay competitive with the companys large increase in revenue. Other energy companies such as Duke Energy, Reliant Energy, and Dynegy joined Enron in the wealthiest 5. Fortune 5. 00 mainly due to their adoption of the same trading revenue accounting as Enron. Between 1. 99. 6 and 2. Enrons revenues increased by more than 7. This extensive expansion of 6. Latest Articles by Martin Tillier. Martin Tillers new mustread column on the markets Enlightening. Entertaining. Every day. Only at NASDAQ. com. Study online flashcards and notes for the Legal Environment of Business. In this book. STUDY TOOLS that help you make the grade 21. Discovery. The Enron scandal, publicized in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the. Jayati Ghosh. So its official cash use is back in almost full force in the Indian economy. Cash withdrawals from ATM machines a reasonable if incomplete proxy. Doom 64 Mac more. Sports journalists and bloggers covering NFL, MLB, NBA, NHL, MMA, college football and basketball, NASCAR, fantasy sports and more. News, photos, mock drafts, game. Every bad tweet lives a life. They begin as every tweet begins in idiocy and shame, but also with hope. 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