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Enron's Fraud

In: Business and Management

Submitted By amrhosny
Words 258
Pages 2
Enron was going to become the world’s leading company, but due to a lot of fraud and corruption that was happening inside the company. Fraud at Enron reached a place when they collapse that they couldn’t prevent it anymore even if they want to. They were covering a fraud with another fraud like when Andrew Fastaw who is the CFO of the company introduced a new way of trading concern called a special purpose vehicle or entity, which is Enron can sell an asset to another entity, but the asset will remain at its place, The SPV would pay cash for the asset and Enron can then show the transaction as a sale which would boost its reported profits.
Well, whether Enron could have detected the fraud or not, the fraud could easily be detected by any accountant that was working at Enron, but because fraud was coming and committed from the top level management, management up there was doing fraud and letting or forcing everyone else in the company to believe that this is the best way to manage the company and to create profit. Employees were afraid to talk about what is happening in the company and they were applying something called tone at the top. Also, if the independent members on the audit committee were really independent, this could also help in detecting the fraud.
Fraud could be detected if there is a will to detect it, when employees are not working under pressure and there is a transparency of information inside the company.

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