Heugas Alexis
9/3/2013
Cases in financial management

Enron’s Downfall
A strong ethical conduct is a key requirement in all facets of society today. It defines who people are and usually pays off in the long run. It is especially important in a business setting and must be adopted by companies hoping to sustain consistent and continuous growth for an indefinite time period. In this paper I am going to dive into one of the most well-known and infamous examples fraud in the modern era, I will try and unravel the details of who the beneficiaries were, what they had to gain for their actions, the consequences of their actions and what has been done to prevent such an occurrence in the future and how it has revolutionized the financial reporting standards.
There is no greater example of fraud than that of the Enron scenario which occurred in October of 2001. Enron was once one of the energy giants in the world and was deemed ‘too big to fail’. Enron was once very successful and provided thousands of jobs, however, due to a few key executives who driven my their own greed, the company collapsed, causing many people to lose a lot of their money and for many of them their life savings.
There came a point in time when Enron began struggling to generate profit and cash flow from the regular business transactions. The company launched many projects which became write-offs and Enron found themselves a massive debt pit. Due to the greed of a few key executives namely Jeff Skilling, Ken Lay, Andy Fastow and the Public Accounting Firm Arthur Anderson, the company covered up their losses and poor balance sheet position by falsifying the financial statements and declaring nonexistent revenues. They did this to protect their initial reputation personal wealth.
Andy Fastow created a very smart, yet unsustainable plan. He covered up the fact that the Enron was in $30 billion