Enron Scandal

The bankruptcy of Enron is by far one of the most controversial issue in history. Despite of
Enron having a “good” financial record since its debut in 1985, Enron filed for bankruptcy on
December 2 2001, making people wonder why Kenneth Lay, who was then the founder and
chairman of Enron, on the verge of losing his own company. The answer to this question
surfaced when authorities have found out that the company manipulated its financial records to
make it appear in good condition despite having gone through series of loss over the past few
years. To cover and manipulate its financial record, company executives began to rely on
dubious accounting practices, including a technique known as “mark-to-market accounting”.
Furthermore, the company has also managed to hide its mountains of Debts and toxic assets by
using SPEs or Special Purposes Entities. Thus, the promising financial records that Enron’s
investors had rely on were fake and were merely based on estimates.
Despite of how unethical the company’s tactics are, I am certain that legislators, investors or
anyone involved in the corporate world have learned a lesson from it. A lesson that led them to
innumerable realizations. As a student, I have realized that there should be an amendment to
existing laws, especially those that aim to scrutinize every business transaction. Also, the
government should add an extra layer of scrutiny to its system when granting an approval.
Failure to do so would lead to unexpected happenings. This is true when SEC approved Enron’s
transition to mark-to-market accounting method in 1992.
Thus, the fall of Enron did not only leave a scar in our history but has also taught lessons that
led us to my