Enron And Its Effect On Society - 1867 Words

Throughout history and surrounding us everyday we see that money equals power. What we also witness as a society, is that the more wealth acquired the more underlying corruption is involved. While taking Financial Accounting here at Sacred Heart University, I am learning how money that is earned and spent is recorded within a firm. An accountant within a firm has to be very exact with numbers in order to make the correct statements for the company. In reality, if the accounting department fails the entire firm fails. It is easy to see how companies manipulate their numbers in order to increase profit for themselves. Money equals power and the more money coming in, the more power hungry companies tend to get. The same principal happens†¦show more content†¦In the early 1990’s financial analysts studying Enron hypothesized that even though Enron was selling some of its major assets, they would begin to experience a great amount of debt. For example, Enron sold assets to a company called Azurix. Azurix was unable to live up to the standards that would financially benefit Enron and over a short amount of time, led to some major debts for Enron. This was happening with a lot of companies that Enron sold to and partnered up with. Over time, Enron started losing a significant amount of money and had to figure a way to quickly make it back. In 1990, COO Jeffery Skilling made a choice that would haunt him forever. Skilling hired Andrew Fastow to help with Enron’s financial dilemma. Fastow’s plan was for Enron to open up limited liability special purpose entities. This meant that Enron would open up an SPE to hide its debt and ownership so that on paper, Enron wasn’t claiming all of its losses. The true benefit of this was to maintain its stock price and to have the company appear to be growing, while in fact it was hiding from the world that it was collapsing (Seabury, Investopedia). After years of appearing to be growing financially, Enron was on top of the world. By the end of the 1990’s Enron was named Fortune’s, â€Å"100 Best Companies to Work for in America† and â€Å"America’s Most Innovative Company†, six years in a row. Little did the public