Enron Assignment

Background:

Enron Corporation was an American energy, commodities and services company based in Houston, Texas. It was the 7th largest corporation in the U.S. Founded by Kenneth Lay, its board consisted of Chairman and CEO Jeffrey Skilling, former President, and COO Andrew Fastow, former CFO Rebecca Mark-Jusbasche, former Vice Chairman, Chairman and CEO of Enron International and Stephen F. Cooper, Interim CEO and CRO. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world's major electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion during 2000.

Enron’s ethics code was based on respect, integrity, communication, and excellence. These values were described as follows:

• Respect: We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.

• Integrity: We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.

• Communication: We have an obligation to communicate. Here we take the time to talk with one another and to listen. We believe that information is meant to move and that information moves people.

• Excellence: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.

The success of Enron was determined by the adoption of the fair value method and soon after the accounting scandals which followed were also the result of the manipulation of the fair value system. Enron made great use of the fair value system to practice financial reporting. It seems that the CEO of Enron made extensive use the external auditors to produce the financial reports of Enron....