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Enron case study
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  M.J. Dell’AeraAuditingEnron case study H.W.2/22/17 1.   What led to the eventual collapse o Enron under !ay and #illing$ Answer: %ro& the readings and personal research ' ound &ultiple reasons as to (hat led to the Enron’s collapse under !ay and #illing. )he cul&inationo Enron’s top leadership ailure* Enron’s corporate culture that encouraged unethical +ehavior and the collusion o the invest&ent +an#ing co&&unity.  )he ,rst reason and &ost i&pactul reason as to (hat led to the eventual collapse i&portant (as the raudulent top leadership. 'n the Enron case* there (ere &ultiple top leadership ailure* sho(n +y -enneth !ay and Jeery s#illing t(o top level Enron E0’s and Andre( %asto( a top %0 at Enron. Ater Enron declared +an#ruptcy all three o these individuals and &any other &id to top level (or#ers not &entioned in the article (ere involved in the Enron %raud and (ere charge (ith several cri&inal acts li#e &oney laundering* insider trading and %raud. Due to the higher levels o raud recognied in Enron &any other (or#ers and partners ollo(ed i&pacting their corporate culture negatively. 2. Ho( did the top leadership at Enron under&ine the oundational values o the Enron Code of Ethics $ Answer: everal top leadership that under&ine the oundational values o Enron’s ode o Ethics (ere Andre( %asto(* Je #illing* and -enneth !ay. All three allo(ed or their o(n actions and state&ent to no co&ply at all (ith theoundational values o Enron’s corporate culture. %ro& their actions* it evidentthey had no respect or Enron’s ode o ethics. Enron’s pledge to +e superior and proessional (as destroyed +y the a+use o top level eecutive. Due to their position the higher eecutive used their eecutive po(er to a+use Enron’s valuation and return syste& or their personal gain and invest&ent. 3y changing ,nancials state&ent at such a high4level Enron eecutive could coo# the +oo#s and encouraged people to invest &ore in the contract value an ea&ple o raud* and pro&ote the use illegal activities that are against the legal rules o 5AA6. 3oth the peror&ance appraisal syste& and the co&pensation syste& (ere &ade +y Enron’s top eecutives.. 'n retrospect8 given -enneth !ay’s and Je #illing’s operating +elies and the Enron Code of Ethics * (hat epectations regarding ethical decision and actions should Enron’s e&ployees reasona+ly have had$ Answer:  )he e&ployees (ere una(are o the raud and corruption ta#ing place +y -enneth !ay* Je #illing* and Andre( %asto(. 0ne signi,cant high level e&ployee herron Wat#ins (as one o the only e&ployees to +eco&e so&e(hat a(are o the real direction that Enron (as heading opposed to &ost other e&ployees (ho +elieved that Enron (as doing (ell due to high level raud. During this ti&e* Wat#ins acted according to the Enron’s ode o Ethics and &ore accurately +usiness ethics during this ti&e. Wat#ins displayed this +y sending an anony&ous note +ased on Accounting candal she had ound to -enneth !ay &ultiple ti&e. )his proves that the e&ployees  (ere co&pletely una(are o the raud o certain individuals even (hen they (or#ed at high levels. 9ntil they (ere indicted and she testi,ed on resulting in her co&panies de&ise.As a regular e&ployee o Enron prior to the Enron 3an#ruptcy. ' (ould si&ilar to the (ay &ost o Enron did* +eloved that Enron is ollo(ing its ode o Ethics at all levels and ' (as part o a good co&pany. Many reasons or this (ould +e (as Enron’s constant (inning o ortune :;;* e&ployees also +elieved Arthur Anderson Audit ca&e ro& a relia+le auditing,r& and since they ound no raud or pro+le&s in Enron* and ,nally the lac# o E pro+le& (ith the co&pany they (or#ed or. )he e&ployees (ould only<uestion Enron i they ound so&ething that they did not epect.=.Ho( did Enron’s corporate culture pro&ote unethical decisions and actions$ Answer: orporate culture didn’t do &uch to i&prove the standards o values and respect their actual Enron ode o ethics. )hese values (ere destroyed &ainly +ecause o Enron’s E&ployees peror&ance appraisals* the co&pensation progra& and the co&pany’s re<uire&ent or decentraliation o the +usiness unit to +e separate ro& others. Enron’s decentraliation* along (ith their poor operational and ,nancial controls as (ell as co&pany’s la(yers* chair&en and accountants li&ited involve&ent in the co&panies* contri+uted to Enron’s corporate culture that allo(ed or the raudulent decisions and actions. )he peror&ance evaluation process that &any po(erul e&ployees used to &anipulate e&ployee’s youth and &ove up the&selves. Enron’s co&pensation resulted in a gain or Enron’s eecutives rather than their shareholder (hich should +e the &ain goal o orporateculture. 0verall the structure o Enron’s corporate culture led to unethical and raudulent decisions.:. How did the investment banking community contribute to the ethical collapse of Enron?Answer:
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