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    Enron, Ken Lay, Auther Anderson, SPE's

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    Enron's questionable transactions on pp 96-107

    1. Which segment of its operations got Enron into difficulties?

    3. Did Enron's directors understand how profits were being made in this segment? Why or why not?

    5. Ken Lay was the chair of the board and the CEO for much of the time. How did this probably contribute to the lack of proper governance?

    6. What aspects of the Enron governance system failed to work properly, and why?

    9. Identify conflicts of interests in:
    ? SPE activities
    ? Arthur Andersen's activities
    ? Executive activities

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    Solution Preview

    1. The special purpose entities (SPE) involved in water, high speed broadband, and international power transmission got Enron into trouble.

    3. In short, no. An SPE's financial data can be left off a parent company's consolidated financials so long as 3% of the total investment comes from outside sources. The perpetrators of impropriety cooked the books and hid billions worth of Enron's expenses in the SPE's financials. The board would have likely concerned themselves primarily with ...

    Solution Summary

    The solution describes what part of Enron got it into trouble and implications for the board, CEO, and auditor. SPE's are also discussed.