Enron accounting scandal Essay Example | Topics and Well Written Essays - 1250 words

Enron accounting scandal - Essay Example It made revolutionary changes in the trading markets of energy which has opened the door for new power traders and suppliers. It also tailored a nationwide energy-trading network by engaging in electricity and natural gas contracts that reflects the cost of delivery to a specific destination. By year 1999, the company adapted an internet-based system as Enron Online was launched. In 2001, it reported its executed trades on-line averaging to $2.5 billion a day. Having posted a 57 per cent increase in sales between 1996 and 2000, the company was considered as one of the most successful companies in the world. It controlled, 25 per cent of the â€Å"over the counter† energy-trading market or the trades conducted party-to-party and not over an exchange like the New York Mercantile Exchange. In addition, in the last week of 2000, its shares hit a 52-week high of $84.87 per share (www.mbaknol.com, 2011). No doubt that among the major player that had a major impact in the gigantic co llapse that turned out to be Enron is the accounting firm that handled its auditing. This is Arthur Andersen which garnered ire and revulsion following the events of the scandal. There was the unending debacle over the alleged shredding of important documents moments before they were subjected to an investigation. This was to cover-up the paper trail on the corruption that went on within the company. In 2002, the Houston Court found the company guilty of obstructing justice that led to the lost of over $60 billion by investors. The jury found it guilty on account of an alteration of a company memorandum that was connected with the revelation of the income of Enron. The judgment emphasized the need of accounting firms to monitor corporations and not just to stick with balancing accounts (Thomas, 2002). Though the entire firm had been indicted and found guilty, the most prominent figure that contributed to the catastrophe is their Chicago lawyer Nancy Temple who ordered David Duncan t o erase her name from a memo when they already knew the Securities and Exchange Commission was after them. The subject of the memo was on a $1 billion loss of Enron that Temple disagrees with. The whole debacle has placed the entire firm into jeopardy as they lost one-third of their 2,300 clients whereas only 5,000 out of a former 26,000 of their United States employees opted to remain with the company. The editor of Bowman’s Accounting Report has been quoted describing â€Å"Arthur Andersen is dead. Once the indictment was handed down, clients started jumping faster than they did off the Titanic† (Thomas, 2002). All these turn of events had led to the realization that there has been transcendence among accounting firms to be more cautious and transparent of their dealings with client companies. This judgment over Arthur Andersen only leads as basis to the public conclusion that there was something awfully wrong with the way Enron conducted its business. The non-disclo sure of facts that the company is in ruins which led investors to believe they are putting their money on a viable company when in fact they are not. This case served only as fuel to the public clamor to delve into the culpability of Enron executives and to hold them liable and to make them responsible to the aftermath of the company’s mess. There have been a number of opinions that pertain to the whole situation, some even uncalled for and downright degrading such as the reference to Andersen employees as Androids (Thomas, 2002). T