He Enron Accounting Scandal Essay Example | Topics and Well Written Essays - 1250 words

He Enron account Scandal - Essay ExampleSecond is misrepresenting the earnings make-ups that make the executives enjoy investments as they continued to report fraudulent earnings to investors which still attracted former(a)s due to the apparent financial gains that were being reported. Third is that the top caller executives were involved in embezzlement as they kept on pocketing investment funds from the unsuspecting investors that lead to the bankruptcy of the guild. Fourth is the companys idea of mark to market accounting introduced by skilling that made it the number 1 company to use such as complex method to account for its arrests. (Petrick & Scherer, 2004) This meant income could be put down even without receiving the money and this increased financial earnings. This was fraudulent especially after the Blockbuster video contract that resulted in losses that were treated as profits by the company. Fifth action was poor financial auditing through the use of reckless stan dards that did not identify mistakes in reporting leading to the collapse of the company (Thomas, 2002). Risk management measures to avert the events Initially with the appointment of Skilling to the financial department, the CEO let him implement advanced risk control system at Enron. Embracing this new idea as a intact without first having to test it was a bad thing for the company (Culp, 2002). As much as ideas were initiated to becoming screening was made as members of the risk assessment group colluded with the management to approve deals. Therefore the first thing to do would entertain been to establish a f justiceless risk assessment group that was soluble to the board to avoid the events that led to the companys collapse (Healy & Palepu, 2003). Secondly the companys problems seemed to have emerged from the carefree attitude that was the norm for the management. They turned a blind eye to a lot of malpractices that were misadventure in the company making its situation wo rse. The company should have enforced a hands on management style instead of the hands off style that let the company run the likes of a runaway train. Together with this the company should have enforced corporate governance ethics in order to eliminate such malpractices or reduce risks of them happening (Culp, 2002). The company should have also rigid down the ground rules especially for the fiance department when it comes to reporting of the companys earnings and other financial results. A simple accounting method should have been used and one that could be intimately understood by shareholders and the board of directors so that people are not deceived into believing they have revenues which they do not actually have (Rosen, 2004). Ethical considerations of the laws applicable to the case The laws that applicable to this case specifically tang at the issue of fraud and national misinformation. All financial information concerning the operations of any public owned company or a ny other company for that matter should be disclosed at the end of a particular period of time following the laid down rules and regulations of financial reporting. The law requires that company be responsible in their conduct and relationship with various stakeholders so that each of the company enjoys the outcomes that are got from operating the business. The laws also require that the management acts in