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Enron - accounting practices

Let's hear from you with your thoughts on the Enron Corporation. I'm looking for:

1. Should these "empires" be more closely monitored to prevent such a disaster from happening again?
2. Do you think that there are business out there who "cook the books" or scam to decrease their taxes and/or hide profits and/or inflate their profits for their benefit?

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Please see response attached, which is also presented below.

RESPONSE:

Let's hear from you with your thoughts on the Enron Corporation. I'm looking for:

1. Should these "empires" be more closely monitored to prevent such a disaster from happening again?

Enron Corporation was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed around 21,000 people (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of $111 billion in 2000. An interesting quote from Jeff Skilling:

"All that being said, your honor, I am innocent of these charges. I am innocent of every one of these charges," - Jeff Skilling, former Enron chief executive

However, as was later discovered, many of Enron's recorded assets and profits were inflated, or even wholly fraudulent and nonexistent, by putting debts and losses into entities formed "offshore" that were not consolidated with (included in) the company's financial statements and, in addition, by the use of other sophisticated and arcane financial transactions between Enron and related companies formed to take unprofitable entities off the company's books. http://en.wikipedia.org/wiki/Enron

Enron Corporation was only one of several corporate giants who manipulated the numbers to make it appear that the company was doing better than it actually was, and thus deceived the major shareholders in the company who lost large sums of money as a result (see full facts of the case of Enron's fraud and bankruptcy at ...

Solution Summary

By addressing the questions, this solution addresses the need for more regulation and if other businesses are engaged in similar accounting practices.

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