Question

Please write your opinion in 350 words as to why if Andrew (Andy) Fastow did not violate Generally Accepted Accounting Principles he was sent to jail. Do you think the conviction was fair?

Answer 1

Andrew Faston was the CFO of Enron. He portrayed a completely healthy image of Enron before it collapsed. He devised some of the most clever off balance sheet instruments and special purpose entities to conceal actual financial information from investors and stakeholders.

Later on , after being convicted of fraud, he struck a deal with the authorities and became an informant on colleagues in exchange of a reduced sentence. In his own words, each transaction he undertook at Enron was approved by the accountants, the authorities , attorneys and the auditors. Thus, he followed all the rules, and yet committed fraud.

In this regard, it is important to note that fair accounting practices are not only in appearance but also in fact. Even though there was no clear violation of rules as the concealment was extremely clever, it does not imply that the fraud did not exist. Since fraud did occur, the conviction was fair.