forensic
How Enron Do Fraud
Ken Lay (Founder and CEO), Jeffrey Skilling (CEO) and Andy Fastow (CFO) found that Enron wasn't making money so what they did is implemented along with the approval of Arthur Andersen the "future value accounting." This type of accounting was to predict the future profit that Enron was going to make and list it as part of there future profit to the shareholders.
“Outside companies”
This creative accounting lead to Fastow to create "outside companies" that were directly involved with Enron to hide the losses the companies made. These companies were named after Star Wars characters. Enron has a lot of special purpose entities to hiding its financing debts and reveal only ‘bright side’ of performance that misleading investors. Firstly, its debts and the losses were not reported in its financial statements because much of its profits and revenue were deals with special purpose entities. Hence, it caused balance sheet understated liabilities and overstated its equity& earnings. Example is White- winged Dove that bought assets from Enron but transfer of assets is not true and should have been treated as loan due to financing from this special entity. It reflect by behavior of Andrew Fastow CFO of Enron, he creates a network of shell companies designed solely to do business with Enron for dual purposes of sending Enron money and hiding its increasing debts. He has a vested stake in these ventures and using them to defraud Enron millions of dollars. Fastow also using Wall Street Investment banks who’s invested its entities and conduct business deals with him. It is a manipulation by top executives toward financial performance data.
Mark to market accounting & Stock market analysts been misleading and confuse
Enron seeks to beguile stock market analysts by push up stock prices and then cash in their multi- million dollar options in a process called ‘pump and dump’. Besides, it portrays itself through public- relation campaign that it is a
Ken Lay (Founder and CEO), Jeffrey Skilling (CEO) and Andy Fastow (CFO) found that Enron wasn't making money so what they did is implemented along with the approval of Arthur Andersen the "future value accounting." This type of accounting was to predict the future profit that Enron was going to make and list it as part of there future profit to the shareholders.
“Outside companies”
This creative accounting lead to Fastow to create "outside companies" that were directly involved with Enron to hide the losses the companies made. These companies were named after Star Wars characters. Enron has a lot of special purpose entities to hiding its financing debts and reveal only ‘bright side’ of performance that misleading investors. Firstly, its debts and the losses were not reported in its financial statements because much of its profits and revenue were deals with special purpose entities. Hence, it caused balance sheet understated liabilities and overstated its equity& earnings. Example is White- winged Dove that bought assets from Enron but transfer of assets is not true and should have been treated as loan due to financing from this special entity. It reflect by behavior of Andrew Fastow CFO of Enron, he creates a network of shell companies designed solely to do business with Enron for dual purposes of sending Enron money and hiding its increasing debts. He has a vested stake in these ventures and using them to defraud Enron millions of dollars. Fastow also using Wall Street Investment banks who’s invested its entities and conduct business deals with him. It is a manipulation by top executives toward financial performance data.
Mark to market accounting & Stock market analysts been misleading and confuse
Enron seeks to beguile stock market analysts by push up stock prices and then cash in their multi- million dollar options in a process called ‘pump and dump’. Besides, it portrays itself through public- relation campaign that it is a