Enron Of The Sarbanes Oxley Act Essay - 1358 Words

Enron was a U.S. based energy-trading company. At its height of operation in the early part of 2001, it was booking revenues of about $140 billion (Enron Ethics). At the end of 2001 it declared bankruptcy. The Enron bankruptcy was the largest corporate economic failure at that time, and still remains an example of how corrupt practices magnify in the long run. What led to Enron’s failure was primarily a lack of ethics, and poor accounting practices. This scandal was one of the reasons that new regulations were passed for financial reporting standards, the Sarbanes-Oxley Act was passed in 2002 as a means of stopping such a collapse in the future. According to the movie, Enron: The Smartest Guys in the Room, Kenneth Lay was no stranger to corporate scandal. In 1987 the president of the Valhalla office in New York, Louis Borget, was found out to be making risking trades, destroying trade documents, and keeping two sets of accounting books. He was not fired by Lay after Lay was in formed of the wrongdoing, but later convicted and sent to jail. Jeff Skilling was hired in 1990, and decided to change Enron’s accounting method to mark-to-market accounting. This allowed them to book assets and liabilities at their fair value based on the current market price. This method was approved by the Securities and Exchange Commission and signed off on by Arthur Anderson, Enron’s accounting firm. This practice allowed Enron to report items at whatever they felt fair value was, which was oftenShow MoreRelatedThe Sarbanes Oxley Act And Enron Essay1565 Words   |  7 PagesThe Sarbanes-Oxley Act was signed into law in 2002 and it was ment to ensure that publicly traded companies complied with policies that made their financial records honest and not distorted to make them look better or to make them look worse. This was supposed to cut down on the corporate fraud with accounting. This all started because some companies such as, Enron and WorldCom. Enron was repo rting inaccurate trading revenues by acting as a middle man in partnerships and selling back and forth theseRead MoreAfter Effects of Enron Scandal and Sarbanes-Oxley Act on the American Market784 Words   |  3 Pages2005). This is particularly true when one adds the necessity of ethical responsibility from business professionals. The Enron Scandal, for instance, became a global call for accounting reform and clearly reduced the publics confidence in the corporate environment. Briefly, Texas-based energy company Enron used one of the nations most prestigious accounting firms, Arthur Anderson. Enron employed over twenty-thousand people and had revenues over $100 billion. Forbes magazine called the company one ofRead MoreCorporate Scandals And The Implact Of The Sarbanes Oxley Act1472 Words   |  6 PagesA LOOK AT CORPORATE SCANDALS AND THE IMPLACT OF THE SARBANES-OXLEY ACT OF 2002 I. INTRODUCTION An economic boom filled with fraud, collapsed in the early 2000s with the unravelling of Enron in October 2001 followed by the implosion of WorldCom and many others big corporations. The downfall of these major companies led to a wide spread crisis of confidence in the financial markets. A crisis caused by executive greed was able to be magnified when the gatekeepers, the auditors, lawyers and analystsRead MoreEvents Leading Up to the The Sarbanes-Oxley Act Essay examples1203 Words   |  5 PagesThe Sarbanes-Oxley Act was enacted on July 30, 2002. It was enacted by the 107th United States Congress. It is named after sponsors U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It is also known as the ‘Public Company Accounting Reform and Investor Protection Act’ in the Senate and ‘Corporate and Auditing Accountability and Responsibility Act’ in the House. 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Through defining a code of ethics, organizations can follow, the market becomes fair for investors to have confidence in the integrity of the disclosures and financial reports given to them. The code of ethics includes the promotion of honest and ethical conductRead MoreThe Sarbanes Oxley Act Of 20021614 Words   |  7 PagesThe Sarbanes-Oxley Act of 2002 (SOX) was enacted to bring back public trust in markets. Building trust requires ethics within organizations. Through codes of ethics, organizations are put in line to conduct themselves in a manner that promotes public trust. Through defining a code of ethics, organizations can follow, market become s fair for investors to have confidence in the integrity of the disclosures and financial reports given to them. The code of ethics include â€Å"the promotion of honest andRead MoreThe Sarbanes Oxley Act Of 20021525 Words   |  7 Pagesthe Sarbanes-Oxley Act of 2002 (Cheeseman, 2013). 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Causes for Sarbanes-Oxley Act Sarbanes Oxley Act is US federal law, which is established in order to set out the some standards for accounting firms, public company boards and managementRead MoreAcc403 Assign 1-Sarbanes Oxley1057 Words   |  5 PagesSarbanes-Oxley Act Student Name Professor Name ACC 403 – Auditing 8/19/2012 Sarbanes-Oxley Act The Effectiveness of Regulations. There used to be a time in the United States when there were no regulations in place to protect the public from corporate greed and deceit. Publically traded companies used the auditors they had on retainer to audit their financial statements. There was no reason to believe that such large corporations would allow their share holders to fall. That fairytale