The Enron Scandal, Everything in Between and the Result of It All

The Enron Scandal, Everything

In Between and the Result

Of It All

Tasha R. Graham

Elizabeth City State University

Author Note

Tasha R. Graham, Department of Accounting and Business Administration

Correspondence concerning this article should be addressed to Tasha Graham,

Department of Accounting and Business Administration,

1704 Weeksville Rd. Elizabeth City, NC 27909

Contact: TRGRAHAM040@students.ecsu.edu

Abstract

The intent of this paper was to assess the creative accounting and accounting manipulation used at Enron. It assessed the red flags and warnings signs of possible fraud at Enron, as well as, variable interest entities used by Enron. This paper assessed corporate governance and other compromises apparent at Enron such as the conflicts of interest. This paper assessed the earnings management at Enron and the impact on accounting and the auditing function in general. Finally, this paper suggested a best practice framework for corporate governance to avoid such failures in the future.

Enron Debacle: A Real Threat to the

Core of Accounting

I have described in this paper, the creative accounting and accounting manipulation used at Enron. I have described the red flags and warnings signs of possible fraud at Enron, as well as, variable interest entities used by Enron. I have described the corporate governance and other compromises apparent at Enron, such as the conflicts of interest, and earnings management at Enron. In this paper, I have also described, the impact on accounting and the auditing function in general. As a final point, I have suggested a best practice framework for corporate governance to avoid such failures in the future.

Literature Review

In Holts et al.’s (2002) article, Accounting practice in the post Enron era: The implications for financial statements in the property industry, it discusses what happened at Enron. It discussed Enron’s revenue recognition tactics, the special purpose entities that were...