StudentShare solutions
Triangle menu

Sarbanes-Oxley and Enron - Research Paper Example

Extract of sample
Sarbanes-Oxley and Enron

The accounting profession is self-regulated and its practitioners are supposed to follow the generally accepted accounting principles (GAAP). The GAAP framework was created in 1973 by the Financial Accounting Standard Board (FASB). In order for accounting to function properly the practice requires compliance of high ethical standards. Back at the beginning of the 21st century there was an avalanche of accounting scandals with the most notorious one being the Enron case. At the time investor confidence went down a lot as the credibility of the accounting profession came into question. In order to raise investor confidence the Securities and Exchange Commission (SEC) in alliance with the US congress passed a law called the Sarbanes-Oxley Act of 2002. The purpose of this paper is to describe the Enron case and to provide a detail analysis of the different aspects included in the Sarbanes and Oxley Act of 2002. The Enron Corporation is one of the worst cases of corporate corruption America has ever seen. The situation was very odd due to the fact that Enron Corporation was regarded as one of most respected companies in the energy industry in the late 1990’s and at the beginning of the 21st century. ...
e its collapse the firm was the 7th largest company in the United States with over 21,000 employees on payroll including an international operation that spread across 40 countries (Bbc). On December 2, 2001 Enron Corporation file for bankruptcy which at the time was the biggest bankruptcy in the United States history. The demise of Enron occurred due to a lack of corporate ethics. The unethical behavior started at the executive management level and spread throughout the organization like a virus. An example of how unethical the employees had become is the actions of the energy traders. The traders would intentionally shutdown power grids leaving entire towns without energy with the sole purpose of driving the price of energy up once the energy was turned back on. A lack of ethics and corruption was more evident at the executive management corporate level. The managers of the company were cooking up the accounting numbers of the firm. The corrupt managers colluded with its auditor, Author Anderson, so that they would look the other way and not revealed the fact the accounting numbers did not add up. A technique the firm used to hide losses and its debt was designing a complex web of partnership which used off-balance sheet accounting to alter reality. The firm completely mismanaged the pension fund of the employees. Instead of saving the pension money and using a sound diversification strategy the managers decided to use the pension fund to finance the firm’s illicit activities. The fund was depleted and invested solely in Enron common stocks. The managers of Enron prior to the full scandal being revealed decided to sell all their shares of Enron stocks at full market value; a few months later the Enron stocks became junk penny stocks. Insider trading is an illicit ...Show more

Summary

Abstract The business world is heavily dependent on trusting the accounting information provided by public companies. Stakeholder groups such as lenders, investors, suppliers, and employees make decisions concerning public companies based on the assumption that their financial statements are extremely accurate and precise…
Author : mtoy
Sarbanes-Oxley and Enron essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Sarbanes-Oxley and Enron"
with a personal 20% discount.
Grab the best paper

Related Essays

Sarbanes Oxley Act and Independence Responsibility View
Every company whether public or private runs on the funds provided by their stakeholders. Therefore they are not only responsible but also accountable for their stakeholders’ interest.
13 pages (3250 words) Research Paper
Making Sure Enron Does Not Happen Again: The Sarbanes-Oxley Act of 2002
It was brought down by accounting and auditing errors and internal discrepancies that had, in fact, been going on for some time. In the weeks that followed, it became clear to the public that the devastating trail of mismanagement of funds and deniability by the top leaders of the corporation would haunt Enron forever and make it a sterling example of what not to do in the accounting and finance sector.
14 pages (3500 words) Research Paper
Sarbanes-Oxley Research
It was enacted on 29 July 2002, and also referred to as ‘Public Company Accounting Reform and Investor Protection Act’ and ‘Corporate and Auditing Accountability and Responsibility Act’. It is named after its patrons in the Senate and Congress respectively, Paul Sarbanes and Michael G.
3 pages (750 words) Research Paper
Sarbanes Oxley legislation
Due to this, the congress in the country enforced the Sarbanes-Oxley legislation of 2002. The legislation is very vital in the US corporate world. The law was passed to make the public trust and have confidence in the financial status of companies. The legislation is only applicable to the public held companies.
3 pages (750 words) Research Paper
Sarbanes Oxley Act
In the US Senate, the Sarbanes Oxley Act is commonly referred to as the Public Company Accounting Reform and Investor Protection Act (Shakespeare 333). In the House, the act is commonly referred to as the Corporate and Auditing Accounting and Responsibility Act.
3 pages (750 words) Research Paper
The Cost of Complying with Sarbanes-Oxley Act Section 404
(Coffee, 2006). However, cost of compliance is said to be relatively high and acts as an additional financial burden to public companies in USA.
6 pages (1500 words) Research Paper
The Impact of the Sarbanes-Oxley Act on Auditing
That is, the auditors are required to determine the extent that a corporation’s financial accounting procedures accurately and efficiently reflect the
3 pages (750 words) Research Paper
Sarbanes-Oxley Act of 2002
Furthermore, rather than merely denoting the changes that it taken place, the analysis will also be contingent upon providing something of a value judgment with regards to whether or not this author
5 pages (1250 words) Research Paper
Sarbanes-Oxley Act
Furthermore, rather than merely denoting the changes that it taken place, the analysis will also be contingent upon providing something of a value judgment with regards to whether or not this author
5 pages (1250 words) Research Paper
Sarbanes-Oxley Act of 2002
Some of these regulatory requirements such as state filing and fair lending laws are some of the commonly known compliance requirements that majority of businesses can relate with, having been in operation for
4 pages (1000 words) Research Paper
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation