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Enron Case: Accounting Controversies - Essay Example
They say that accounting is the language of business. A German investor would be ably informed of how the United States company Kentucky Fried Chicken or any other enterprise has performed in terms of generating profits…
Accounting is governed by United States generally accepted accounting principles. The External auditor issues an opening as the fairness of the financial statements. The following paragraphs explain that some persons preparing the accounting statements do not follow the U.S. GAAP. The Enron and Arthur Andersen hit the headlines for their accounting controversy. The external auditors were declared not guilty of audit fraud in the Enron Case. Also, the Enron external auditor, Arthur Andersen, was convicted in June 2002 by the federal jury in Houston, Texas. In addition, the users of the financial statements need unbiased or fairly presented financial statements. Further, the suppliers need the financial statements to determine if the company will not file for bankruptcy. Furthermore, Enron violated generally accepted accounting principles. Finally, Generally accepted accounting principles are the foundations of the income statement, balance sheet and statement of cash flows.