Tyler LeBlanc Essays (1134 words) - Enron Scandal, Free Essays

Tyler LeBlanc Essays (1134 words) - Enron Scandal, Free Essays Tyler LeBlanc Prof. Sullivan CRJ 362 2/6/2017 Enron's Scandal Dismantle Enron was a Houston based corporation founded in 1985, that reached the peak of the business world in the late nineties to early Two thousands. Enron was known for their business savvy techniques, on the other hand it was notorious for their demise resulting from their audit scandals. The aftermath was imprisonment of large amounts of CEO's, as well as thousands of employees losing their jobs. This all transpired when there was constant change of CEO's and CFO's , and unsystematic plumet of $137 million loss in stock in which attracted the attention of many forcing the justice to investigate. In this paper i will evaluate the facts of this case,and analyze the scandal using the rational choice theory. The rational choice theory ties into the Enron scandal as executives took into account the large benefits prior to participating in this infamous disparagement,as the rational choice theory states that individuals make decisions with the greatest benefit or satisfaction. They took into mind the pros in this situation, and Found loopholes around being caught . These executives thought that there would be no way they would be caught, and even if so they believed they personally would not be held accountable for fraud if in fact they were exposed. Anderson Litter was the Auditing company that was in charge of checking frequently on Enron's books, however the company rarely did so. This factor led Enron accountants to believe that if no one was checking the books that they could purposefully undermine the rules by misfiling, and not reporting Enron's problems. Anderson litter and other auditors had all the reason in the world to keep quiet of the scandal that was taking place bas ed off the fact that they let all Enron's messy business slide under the radar they were now considered accomplices. Enron felt they had more to gain then lose, when analyzing the cost benefits. The benefits would be auditors could live lavishly as there was large amounts of income filling there pockets from the scandal. The cost if they were to come clean they would be tarnishing the corporation's reputation as well as their own. Waste Management's jail free scandal was the staple for Enron's executives when taking in consideration the cost benefits in the corporation's fraud scandals. Waste management was a corporation that bought out hundreds and thousands of garbage companies, increasing their sales and profits year by year. The Company was a skyrocketing business as their company stock profit soared higher than any other big time corporation. The Waste Management business hit the fan when the company could no longer expand as they ran out of garbage companies to buy out. This large problem did not stop waste management as they turned to a counting fix fooling wall street to believe the company was still growing by stretching depreciations. Waste Management changed the life span of their assets such as garbage trucks,landfills, and garbage containers. The typical lifespan of these assets is twelve years, Waste Management changed it to eighteen years saving over one hundred million dollars. This was all possible from the help of Anderson auditing company as they did not report the Waste management financial mistakes. In 1997 Waste Management and Andersen's auditing company was exposed for its $1.7 billion exaggerated stock earning. Both corporations were fined $457 million which is like paying a typical bill for the average person. Anderson Auditors did not stop after their exposure from this big scandal as they came to the table with the same approach with Enron. Enron's executives took in account if they did get caught in there scandal they would only be faced with a minimum fine compared to the billions of dollars they would make from the fraud scandal , they believed they wouldn't receive jail time as well. Anderson Little Firm was the direct Auditing firm in which Enron had ties too. Although the auditors based from Anderson's knew Fastow was embezzling money, they would sign off on tax statements within Enron. The auditing company became one of the same with enron holding the same beliefs and morals in respects to accounting. Anderson became so