Review of Accounting Ethics

REVIEW OF ACCOUNTING ETHICS

Ruben Garcia

Professor: Dr. Mohammad Rahman

ACC 557 – Financial Accounting

10/18/12

In 1985, after the deregulation of natural gas pipelines, Enron was born from the merger of Houston Natural Gas and InterNorth, a Nebraska pipeline company. In the fusion process Enron incurred in massive debt and, as a result of deregulation, no longer had exclusive rights to its pipelines.

In 1989, Enron began to market natural gas, rapidly becoming the largest distributor of natural gas in the United States and the United Kingdom.

In November 1999, "Enron Online" was launched, a system of global Internet transactions that allowed Enron customers see real time market prices and make transactions online. In two years, the e-commerce platform began to make 6000 daily transactions valued at $2.5 billion.

In just 15 years, Enron grew from a small gas firm in Texas to be the seventh largest company in the United States, with 21,000 employees in over 40 countries, with over $100 trillion of revenue in the fiscal year of 2000. The company diversified and from selling gas and electricity it also offered other services such as wireless Internet. Furthermore, Enron Corporation owned and managed a number of pipelines in Venezuela, Bolivia, Argentina, Brazil and Colombia.

Its complex corporate structure was union of more than 3,000 companies linked through holdings, making it virtually impossible to audit by conventional methods, on the other hand it made it very easy to hide and fake results.

Enron's distinction originated not only for its role in the global energy market but also because the Bush administration consulted his chief executive, Kenneth Lay, as energy consultant, this contributed to have millions of investors throughout the United States; also, most pension funds of employees were invested in company shares.

Enron was the main source of financing for the political career of former President George W. Bush, and Enron’s proposals...