Discussion: Regulators Crack Down

Regulators Crackdown Discussion
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Regulators Crackdown Discussion
Many accounting scandals occurred in the decade before the financial crisis that started in 2007 until 2009. Enron scandal was among the biggest and contributed to significant changes in the accounting standards. The energy company was highly profitable during Jeffrey Skilling’s tenure. However, things began changing when Lay Kenneth took over the chief executive officer’s (CEO) position on 14th August 2001. In November 2001, Enron admitted that it inflated its assets and income levels by about $586 million. The company filed for bankruptcy on December 2, 2001, and its stock prices that were once selling at $90.56 fell to $0.26 per share (Nigam, 2022).
Enron scandal involved the company’s financial department that cooked the accounting books and its auditor, Arthur Andersen. The firm’s unethical practice involved the creation of a special economic vehicle that concealed massive debts from its stakeholders, such as investors and creditors. Based on the Securities and Exchange Commission (SEC), Enron broke several laws by hiding crucial financial information from its stakeholders. The biggest malpractice was manipulating the books of accounts to avoid losing investors'...