1. Perform an initial ratio analysis with Enron’s 2000 10-K Report, using the “Irrational Ratios”, the “Key Ratios for Investing” and the “Emerging Ratios”. Irrational Ratios Days Sales in Receivable Index | 1.376 | *This could be a red flag because this comes in closer to the mean manipulators index than the non-manipulators index. | | | | Gross Margin Index | 2.144 | *This is definitely a red flag because it is much higher than the average manipulators index of 1.193. | |
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Sarbanes-Oxley Act of 2002 - SOX The finance industry was not always regulated. Prior to the great stock market crash in October of 1929, there was no regulation. After this crash, Congress held hearings to determine the problems and suggest solutions. This resulted in the Securities Act of 1933. The Security Exchange Commission (SEC) was created as a result of the Securities Act of 1933 and the Securities Exchange Act of 1934. The intent of this Commission was to restore confidence to investors
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Enron: Questionable Accounting Leads to Collapse * Problem Definition * There was a lot of oversight that happened in the company of Enron. The once supergiant energy company suddenly collapsed and it cannot be revived anymore * Performance was highly recognized and failure was gravely penalized. This lead employees to cut corners in order to achieve the desired goal * Delivery of bad news was dismissed and neglected. Only good news were entertained and this lead to employees
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The requirement to provide a DIRRI to stakeholders is not an unreasonable task for practitioners. However, the ongoing implications of the Walton case are likely to include continual heightened supervision by ASIC in regards to appointments where the referrer was involved in pre-appointment transactions requiring investigation and the increased scrutiny of DIRRI’s (even though they were held in the Walton case to be satisfactory). It has been suggested by some that pre-appointment meetings be restricted
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The talk of having a new body that was tasked with the mandate of overseeing public companies accounting and auditing process had been circulating before the enactment of the Sarbanes-Oxley act. As early as 1990s, the then chairman of the Security and Exchange Commission was already lamenting about the erosion of auditor independence. However, accounting scandals that emerged towards the end of 1990s showed the deplorable state of the corporate world that characterized the United States corporate
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Enron, Ethics, and the Law BUS 375 Enron, Ethics, and the Law This paper will explain the history of Enron and were it failed. These failures led to many changes that today’s employees must know about and then be trained to avoid those same mistakes. While this company was based in the United States their failures had a global impact that has caused cultural changes across the world. These changes have caused employee ethics training to be changes across the world. Like everything else in the workplace
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Week 5 Reflection Team A ACC/291 February 29, 2013 Steven Marantz Weekly Reflection We covered very interesting topics in week three and four. The students were asked to discuss topics which they felt comfortable with, the topic they may have struggled with, and how the weekly topics related to the application of their field. The students of team A have some similar pertaining to the weekly reading assignment and some that
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paper examines a business failure that occurred at Enron Corporation, an American energy company based in Houston, Texas. The corporation was formed in 1985 by Kenneth Lay after the merger of Houston and InterNorth natural gas pipeline companies. In the early 1990s when the federal government deregulated energy production, the company was able to thrive due to expanded markets that enabled the corporation to sell energy at high prices. By 1992, Enron had become the largest merchant of natural gas in
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History of Enron Enron is an energy company based in Houston, Texas that deals with the energy trade on an international and domestic basis. It was formed in 1985 when Houston Natural Gas merged with InterNorth. After several years of international and domestic expansion involving complicated deals and contracts, Enron was billions of dollars into debt. All of this debt was concealed from shareholders through partnerships with other companies, fraudulent accounting, and illegal loans. Enron was created
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activities by corporations. The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud. SOX was enacted in response to the accounting scandals in the early 2000s. Scandals such as Enron, Tyco, and WorldCom shook investor confidence in financial statements and required an overhaul of regulatory standards.
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