Accounting Ethics Breach Research Paper Example | Topics and Well Written Essays - 1000 words

Accounting Ethics Breach - Research Paper Example As the essay declares  the Enron scandal was revealed in October 2001, and it resulted in the bankruptcy of Enron Corporation, an energy company based in Huston, Texas, United States. Enron failure became the largest bankruptcy reorganization in the US history at that time, and it was the biggest audit failure. The merging of Huston Natural Gas and InterNorth led to the formation of Enron in 1985. Several years later the company hired Jeffrey Skilling as the president and COO of Enron, and he created special purpose entities through the use of accounting loopholes to hide huge amount of debts from failed projects. Skilling, with the help of Chief Financial Officer Andrew Fastow and other executives misled the firm’s board of directors and audit committee, and continued to follow high risk accounting practices.  This discussion stresses that the company shareholders filed a $40 billion lawsuit against Enron. Subsequently the US Securities and Exchange Commission (SEC) decla red an investigation. Although Enron’s competitor Dynegy had offered to take over the company at a cheap price, the deal failed. As a result, Enron filed for bankruptcy protection under the Chapter 11 of the United States Bankruptcy Code.  Skilling often verbally attacked individuals who pointed out issues with Enron’s accounting practices. However, those industry analysis reports questioning the high stock prices of Enron made company shareholders doubtful about Enron’s profitability.