Everyone knows at least a little about the Enron story and destruction in the lives of employees. It is a story that in any discussion on ethical accounting processes and their response to accounting standards and ethics are ignored for personal greed.
Enron began in 1985, the sale of natural gas to gas companies and businesses. 1996 energy markets was modified so that the price of energy, it can now be decided by competition between energy companies instead of established Government regulations. With this change started Enron function more like a broker than a traditional energy suppliers, trade in energy agreement instead of buying and selling natural gas. Rapid growth of Enron, created excitement among investors and drove the share price. For example, Enron grew, it expanded to other sectors, such as online services, and its financial contracts were more complicated.
To continue to grow at this rate started Enron borrow money to invest in new projects. Because this debt as their performance looks less impressive do would, however, began to Enron partnership that makes it possible to keep the guilt of her books. A partnership created by Enron, Chewco investments (named after the character Star Wars Chewbacca) permissible Enron to keep 600 million dollars in loans of books that it showed the Government and the people who own Enron stock. This debt was not in Enron's reports show com, Enron seems much more successful than it actually was. In December 2000, Enron that has claimed her profits tripled in two years.
In August 2001 lead Enron vice chairman Sherron Watkins an anonymous letter to CEO Kenneth Lay, Enron, with a description of the accounting methods they felt Enron to "implode in a wave of accounting scandals". In August sent CEO Kenneth Lay email to his employees that he expected Enron stock prices also go up. In the meantime, he sold his own stock of Enron.
22 October announced the Securities and Exchange Commission (SEC) to Enron var. 8 November said Enron has overstated the profits made over the last four years of 586 million dollars and more than 6 billion dollars in interest-bearing claims on next year.
With these messages took a Dive Enron's share price. This decrease is due to certain agreements with investors that are necessary for Enron to pay their money back immediately. When Enron not with money to repay its creditors would come, explained the chapter 11 bankruptcy.
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