Professional Documents
Culture Documents
1. Enron was an energy trading and utility company based in Houstan,Texas, that began to
trade extensively in energy derivative market.
2. It was founded by Kenneth Lay, in 1985, as a merger between Lay’s Houston Natural
Gas and Internorth. Both of these companies were relatively small companies that were
in acquisition by Enron.
3. Before its bankruptcy, Enron employed approximately 20,600 staff.
4. It was a major electricity, natural gas, communications and pulp paper company.
5. Enron claimed for its revenue to be more than $101 billion during 2000.
6. Fortune, named Enron “Americas Most Innovative Company”.
PRODUCTS OFFERED
• Enron traded in more than 30 different products, including oil and LNG transportation,
broadband, principal investment, risk management.
• Enron online(a commodity trading platform) traded into petrochemicals, plastics, power,
pulp and power, steel & weather risk management.
• Enron was also an extensive future traders including sugar, coffee, grains etc.
• During its bankruptcy, Enron was divided into 7 distinct business units.
WHAT MADE IT A SCANDAL?
• Sherron Watkins was Vice president of Corporate Development at the Enron corporation. In June
2001, she was given the task of finding some assets to sell off but it was very difficult for her. She
prepared a memo regarding the various problems and placed it onto the box but this memo was not
taken into consideration. On august 22, Watkins handed CEO Lay a seven page letter and told him
that Enron would implode in a wave of accounting scandals.
• In august 2001, Watkins alerted then-Enron CEO Kenneth Lay, of the accounting irregularities in
financial reports. In February 2002, she revealed the various facts regarding Enron partnerships and
finally made a resignation in November.
• However, Watkins has been criticized for not reporting the fraud to government authorities and not
speaking up publicly sooner about her concerns.
MANY OF ENRON’S RECORDED ASSETS AND PROFITS WERE INFLATED OR TOTALLY FRAUDULENT AND NON-EXISTENT. DEBTS AND LOSSES WERE PUT INTO ENTITIES
FORMED OFFSHORE THAT WERE NOT INCLUDED IN THE COMPANY’S FINANCIAL STATEMENTS.
AUDITING AND ACCOUNTING ISSUES