Enron’s Misleading Accounting Information

Enron’s Misleading Accounting Information
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Program Name or Degree Name (e.g., Master of Science in Nursing), Walden University
COURSE XXX: Title of Course
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Month XX, 202X
Enron’s Misleading Accounting Information
Enron Corporation was an American energy, commodities, and services company. In 2001, a controversial accounting fraud was discovered by an external auditor and marked the beginning of the fall of the then fifth most prominent company in the world in terms of revenue. As a result, the company faced accusations of reporting false or misleading accounting information.
According to Litan (2002), the immediate accounting problem at Enron was the weak consolidation rule needed for highly leveraged particular purpose entries (SPEs) formed to perform projects whose liabilities and assets were exempted from the company’s balance sheets. Therefore, the company failed to disclose its proper financial condition to public investors by falsifying its accounts contrary to law requirements. Instead of reporting that the company was making losses, Enron assigned the losses to unconsolidated SPEs, which were o...