In the last decades creative accounting and corporate governance emerged as common used terms in economical debates. In my assignment I want to point out the meaning and relevance of these concepts as well as to establish a relationship to the Enron case as one of the most prominent corporate collapses in recent years.
Inhaltsverzeichnis (Table of Contents)
- Preface
- Creative Accounting
- The Enron Case
- Corporate Governance post Enron
- Referencing List
- Bibliography
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This assignment aims to explore the concepts of creative accounting and corporate governance, highlighting their relevance and relationship to the Enron case, one of the most prominent corporate collapses in recent years.
- The definition and practices of creative accounting
- The role of institutional factors and flexibility in enabling creative accounting
- The Enron case as an example of fraudulent accounting practices
- The impact of the Enron scandal on corporate governance
- The need for stronger regulations and oversight to prevent similar scandals
Zusammenfassung der Kapitel (Chapter Summaries)
- Preface: This introductory chapter briefly introduces the concepts of creative accounting and corporate governance, setting the stage for the subsequent analysis of the Enron case.
- Creative Accounting: This chapter defines creative accounting and its various interpretations, exploring the factors contributing to its existence, including institutional weaknesses and the demand for consistent growth. It also discusses the techniques used to manipulate financial data, such as the treatment of exceptional and extraordinary items and merger accounting.
- The Enron Case: This chapter provides an overview of the Enron case, highlighting the company's rapid rise and fall, driven by fraudulent management practices and creative accounting techniques. It examines the use of market-to-market accounting, the Rank-or-Yank system, and the role of the auditing company, Arthur Anderson, in the scandal.
Schlüsselwörter (Keywords)
The main keywords and focus topics of this assignment include creative accounting, corporate governance, fraudulent accounting practices, Enron case, market-to-market accounting, Rank-or-Yank system, and corporate scandals.
Frequently Asked Questions
What is "Creative Accounting"?
It refers to accounting practices that follow the letter of the law but deviate from its spirit to present a company's financial health in a more favorable light.
Why did Enron collapse?
Enron collapsed due to massive fraudulent management practices, including the use of special purpose entities to hide debt and inflate profits.
What is "Mark-to-Market" accounting?
It is an accounting method that records the value of an asset based on its current market price, which Enron manipulated to record projected future profits as current income.
How did the Enron case impact Corporate Governance?
The scandal led to much stricter regulations, such as the Sarbanes-Oxley Act, to improve auditing, transparency, and board oversight.
What was Arthur Andersen's role in the scandal?
Arthur Andersen was Enron's auditor; they failed to report the fraudulent practices and were later found guilty of obstructing justice by shredding documents.
- Quote paper
- Matthias Kammerer (Author), 2005, Creative Accounting, the Enron Case and its impact on Corporate Governance, Munich, GRIN Verlag, https://www.grin.com/document/83236
