Enron

The film, Enron: The Smartest Guys in the Room shows that there are many factors that played a part in the Enron Scandal. Many people acted out of greed and justified their own unethical actions and the unethical actions of others around them for the sake of large amounts of money. The internal controls that were meant to keep companies from committing such blatant fraud completely defeated or ignored. In addition to that, the company was lead by several very charismatic men whose lies were almost as bad as their brazen attitudes and scorn for ethics.

In the film about the most infamous corporate scandal of the 21st century, it is clear that there were several things that should have kept Enron’s fraudulent activities at bay. These internal controls are vital, as they keep financial reporting honest and accurate. One such control is the division of labor or, in this case, power. First, the accounting firm Arthur Anderson was responsible for auditing Enron. One of their primary functions was to make sure that Enron’s reporting was accurate. Clearly they did not perform their duties. Another internal control that could have prevented the Enron scandal was the other companies and financial institutions that conducted business with Enron. Many of the companies Enron did business with were the fake businesses of Andy Fastow. The other ones like Merrill Lynch just turned a blind eye to obviously suspicious transactions. The regulations placed on energy in the state of California also should have helped to stifle the fraudulent activities of Enron’s executives. This control, in particular, was just steamrolled over when energy was deregulated because of the rolling blackouts and rising energy prices. Ordinarily internal controls like audits and regulations would have stopped a scandal in its tracks but when the people leading a company are all more concerned with money than anything else and extremely charismatic, it take more than a few things to stop them from doing...