Warning: Undefined variable $apf_catid in /home/papersun/public_html/wp-content/plugins/add-post-footer/add_post_footer.php on line 312
Explain why Enron collapsed and do you think this collapse was avoidable”
Enron tumbled from the seventh largest US firm and six-time winner of Fortune’s most innovative firm award to b-ankruptcy in less than one year. Yet, management used financial engineering and related-party transactions to disguise Enron’s financial condition for over three years. These transactions, board approved, sanctioned by the external auditor, and partly disclosed in SEC filings, put the firm on an economic precipice of which few were aware.
There are several reasons that lead to collapse of Enron. The main reason is that the company and its operations became increasingly complicated and convoluted so that in the end they became even hard for the management to handle. In addition, the markets that they were operating in especially the derivatives market which lead to enhanced profits also created conditions that lead to their downfall.
With the complicated deals were the different ways that the management was trying to evade taxes and use accounting techniques that were although not illegal but appear to be unethical. The transactions as carried out between the different parts of the company and its affiliates created money that only existed on paper.
Enron’s internal investigation and a US Senate exploratory committee concluded that the Board of Directors failed in its supervision duties. Specially, the board approved the formation of off-balance sheet joint venture run by Enron employees, failed to effectively monitor transactions with these partnerships, and failed to react to warning signs about those transactions, as they became known.
Kindly order custom made Essays, Term Papers, Research Papers, Thesis, Dissertation, Assignment, Book Reports, Reviews, Presentations, Projects, Case Studies, Coursework, Homework, Creative Writing, Critical Thinking, on the essay topic by clicking on the order page.
Secure Order
Academic Assistance
