Abstract
This case is to the highest degree the comp some(prenominal) Enron which grew to become the one-seventh largest company in the United States. There were many problems in the Enron case. First, when the gas bank was created, they should buzz off thought twice about this since many of the natural gas producers need cash which Enron did non have. This would lead to problems for Enron. Second, Enron created SPEs which ca apply more problems because they were providing currency and keeping the money off the books so that investors could not see what was actually deprivation on. These SPEs only complicated issues for Enron and its investors.
The internal controls that were ignored when LJM1 was created were one, LJMs books were kept separate from Enrons. Arthur Andersen should not have allowed LJMs financial statements to go unconsolidated. Two, any SPE that was created must have a certain dowery of equity owned by outside investors. The LJM1 failed to do that. Three, Enron allowed Fastow to dumbfound on the Board of Directors of LJM1, which was a violation of their Code of Conduct. Four, Fastow used Enron stock as its capital to sell the Rhythms stock. This is a catch violation as it created a scenario where Enron was basically insuring itself, and therefore, without insurance.
Enrons harsh act reexamination could have significantly aided their company, because the performance review was so strict that if someone was not performing in a given period of time, they would indicate a despicable rating to that employee and fire them. This caused employees to be at the top if they evaluate to remain an employee. Strict guidelines could have ensured that Enron employees followed all government guidelines and any Code of Ethics that Enron had in place.
I believe that the belie of financial statements occurs so frequently because it is easy to do. Companies find slipway around inputting the correct financial information. Auditors and other governmental agencies have so...If you want to get a full essay, order it on our website: Orderessay
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