Enron The United States Bankruptcy Code - 1857 Words

In 2001 Enron was famous throughout the business world and was known as an technology powerhouse, and a corporation with absolutely no fear. The unpredicted fall of Enron in 2001 shattered the lives of their employees and the people who believed that their greatness was genuine. It is said the fall of Enron was followed by some revelations on how they may have manipulated their way to the top. Enron was at one time America s seventh largest corporation. Enron fooled the world by portraying to be a steady company with good revenue but at the end we all seen that was not the case. Surprisingly large parts of Enron profit were made of paper. This was made possible due to traders and executives who were corrupt. Having deep debt and hiding†¦show more content†¦This made the company attractive for top graduates out of the best universities across America, which gave the company more competence and a big urge to strive forward. Enron employees were partly paid in stocks so increasing the stock price became a main interest. In 1990, a man named Jeffery Skilling joined Enron Corporation and in 1997, he was appointed as the company s Chief Executive Officer. Mr. Skilling demanded to change Enron s accounting system from a straight forward kind of accounting were Enron had listed actual revenue and costs of supplying and selling gas to the mark-to-market accounting system. These estimations were based on the future net value of the cash flow; costs related to the contract were often hard to figure out. This means that the estimated incomes from projects were included in all of Enron s accounting even though the money was not received and if there were any it would show up in future periods. Investors were given misleading information because of the deviation in the estimations. Enron was the first non-financial company to use the mark-to-market method. The U.S. Securities and Exchange Commission gave Enron their approval to use the method on January 30, 1992. Enron s purposed the entities were going to be used to dodge the traditional accounting conventions but also so they could hide debts. The entities made it possible for Enron to mislead, hide its