ENRON'S CASE STUDY.docx - ENRON’S CASE STUDY Prepared by No Name Matric Number 1 Nur Farah Wahidah Binti Nordin 2017649466 2 Nur Nadhirah Binti Abd


This preview shows page 1 - 4 out of 6 pages.

ENRON’S CASE STUDY Prepared by: No Name Matric Number 1 Nur Farah Wahidah Binti Nordin 2017649466 2 Nur Nadhirah Binti Abd Karim 2017649422 3 Nurfatin Najwa Binti Esa 2017668394 4 Nurul Sahira Binti Roslan 2017668388 5 Siti Norhani Azwani Binti Mashudi 2017649446 6 Wan Nur Nadiah Hawa Binti Wan Ahmad 2017668382 Programme: BACHELOR OF ACCOUNTANCY(HONS.) AC220 Prepared for: MADAM YUSARINA BINTI MAT ISA Date of submission: 11 th JUNE 2019
Image of page 1
Image of page 2
QUESTION 1 The Enron debacle created a “crisis of confidence” on the part of the public in the accounting profession. List three (3) parties who you believe are the most responsible for the fall of Enron. ANSWER 1.Executives of Enron Kenneth Lay as Enron’s chairman, Jeffery Skilling as CEO and Andrew Fastow as Enron’s CFO were all responsible for the crisis. The executives of Enron are the mastermind for the big earning and pushed up the stock prices for their own benefit. When misstatement and irregularities appear and were made clear to the public, the executives of Enron lost the confident of the state holders in the company and the crisis of confident spread. 2.Arthur Andersen Andersen’s job was to check that the company’s accounts were a fair reflection of what was really going on. As such, Andersen should have been the first line defence in the case of any fraud or deception. However, the auditing firm did not present itself with the professionalism and responsibilities that the audit firm should. When the firm noticed that the amount recorded on Enron financial statement was misstated, it was ignored in order to continue receiving the huge amount of fees and payment from the corporation. In doing so, the confidence that the public had in the company was diminished. 3.Securities and Exchange Commission (SEC) The government agency who allowed Enron to use Mark-to-Market accounting practise. This kind of creative accounting practise allow the Enron CEO to perform his PONZI scheme “legally” and led to the sudden collapse of Enron. A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 6 pages?

  • Spring '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors