Question

The paper must be written in current APA format. All sources must be of a scholarly nature; at least 5 references if possible.

The paper must have 3 Level 1 headings that correspond to the following case points:

1) How did the corporate culture of Enron contribute to its bankruptcy?

2) In what ways did Enron's bankers, auditors, and attorneys contribute to Enron's demise?

3) What role did the company's Chief Financial Officer play in creating the problems that led to Enron's financial problems?

Answer 1

How did the corporate culture of Enron contribute to its bankruptcy?

If we look at the corporate culture of Enron it can be seen as arrogant and aggressive. The company provides good rewards t those employees who were able to fulfill their goals and if any employee is not able to accomplish the given target, he or she is laid off. The high risks transactions were preferred by the top management as they think that no risk no gain and this philosophy was also adopted by the manpower of the company. As there was a lot of pressure on the employees to earn greater profit and have better performance, this resulted in the use of unethical practices by the employees so that they can maintain their job and improving their profit range by providing the false transactions There was not much regard for the shareholders of the company. The majority of the decision was taken in the boardroom and it was focused on turning the profit into the pockets of the management.

Did Enron's bankers, auditors, and attorney's contribute to Enron's demise? Is so, how?

There was a major role played in the collapse of Enron by the bankers, attorneys, and auditors of the company. Most of the banks helped the company to represent the transactions incorrectly in order to show the better results to the investors. Three British bankers were charged to help the company for the wire-fraud. These bankers used the $7.3 million of funds as a secret investment that was mainly of the employees of the company. This scandal was also supported by many attorneys. No question was raised by them and they approved all of these transactions as valid. They also supported the structure of special objective partnerships in such a manner that it looked like a genuine one. In the absence of the opinion of these attorneys, it would have not been possible for the company to realize all these transactions. At that time the auditor of the company was Arthur Andersen and he had the accountability of maintaining the accuracy of the different financial statements of the company along with the internal bookkeeping. Most of the investors thought that the information provided in the books of the company are true which was not correct

What role did the company's chief financial officer play in creating the problems that led to Enron's financial problems?

At that time the job of CFO of the company was held by Andrew Fastow and he came into the limelight at that time. He was charged for 98 cases in order to falsify the company profits. He was charged with the money laundering fraud, conspiracy and hindering the justice. A lot of efforts were made by the federal officials to recover the money and they were able to seize a sum of $37 million. He was the mastermind behind the partnership that helped the company to conceal a sum of $1 billion debt that became the prime reason for the bankruptcy of the company