Question

What pressures did Enron’s management face in 1999/2000? Sketch their implications for Enron.

Answer 1

Enron Corporation is the American Natural gas and energy company that is based on Texas. Enron is known for one of the biggest audit failures. Enron was incroporated in 1985. Enron was doing well but it had heavy amount of debt, because of debt, it was not getting further funds. Enron CFO and key executives tried to inflate the accounts by falsified accounting entries and inadequate financial reporting and with the help of this malpractice, Key executives hide the billion of debt.

In 2001, this bubble burst and Enron's share collapsed in the market, it came down to $1. Shareholders lost their money and they filed a lawsuit against Enron and Enron got bankrupt.

Pressures that Enron’s management face in 1999/2000- Enron CFO Andrew and other key executives pressurized the management and Audit firm to hide the debt and they pressurized the board of directors to ignore this issue.

Their implications for Enron- After Enron scandal came into picture, many executives were sent to jail and court cancelled the license of Audit firm; Arthur Anderson. Shareholders and employees of Enron lost their money.