ENRON CORPORATION

Benedictus Jason Reinhart (1801379312), Dede Mayangsari (1801439910), Diva Nabila

Arumsari (1801383814), Khairunnisa Tri Utaminingsih (1801385145),
Steven Fernandes Pratama - 1801380466
LA 16

FOUNDER

Kenneth Lay
(1942 2006)
CEO and
chairman of
Enron
Corporation
Lay found guilty
at 2006 on six
count

Jeffrey Keith
Skilling
Former CEO of
the Enron
Corporation
In 2006, he was
convicted guilty
relating to
Enrons financial

HISTORY

Enron Corporation is energy company

based in Houston, Texas, USA. Basicly,
Enron Corporation formed at 1932 in
Omaha, Nebraska.

Enron is incorporation between InterNorth and Houston Natural

Gas that merged on 1985 by Kenneth Lay

1997
Enron bought Portland
General Electric Corp
that cost 2 Billion Dollar

Late 1997, management turned

Enron become Enron Capital and
Trade Resources that become the
biggest company that trade natural
gas and electricity

Enron has wide business coverage, including

electricity, natural gas, pulp, paper, and
communication

Enron made Enron Online on October 1999. That market

energy product through website EOL made $335 Billion on
2000. Enron declared big plan to build high speed broadband

2 December 2001, Enron declared

BANKRUPT

Timeline of
Enron
Corporatio
n

SC
AN
DAL

Enron declared its liquidity in the end of

2001 where as when the beginning of
2001 before the bankruptcy of Enron but
still reported a profit of US $ 100 billion in
early 2001

Relation with IT Governance

Enron has violated few principle of IT Governance, such as:

Enron
manipulate
their
financial statement, so their
investor dont know how big
is Enrons debt

Enron does not guarantee the protection of

shareholders and they just continue to attach great
importance to its own advantage. And they also destroy
the important document when they cant hide their debt

2 December 2001
Enron enroll the bankruptcy of the corporation
to adjudication. And then discovered that
Enron did not issued about $1 Billion debt.
Enron and Andersen public accounting firm
accused for commiting a crime by destroying
document that related with investigation of
Enron bankruptcy

16 October 2001
Enron issued Statement of Financial
Position for the third quarterly. Net profit
of enron increased 100 million
compared to previous period. Enron did
not mention about accounting cost that
charged about $1 Billion and mention
that Enron only have $644 million debt

June 2002
Andersen public accounting
firm dismissed as Enrons
auditor

14 March 2002
Andersen public accounting firm
convicted fault because of
obstructed the process of justice
by destroying the document that
have been explored.

AUDIT
PROBLEMS
- Public accountant whose name was Arthur Andersen has manipulated the
financial statement
- He has destroyed all documents that related with the enron case in order to
hide the evidences

LESSON
LEARNED
This scandal demonstrates the need for significant reforms in accounting and
corporate governance in the United States, as well as for a close look at the
ethical quality of the culture of business generally and of business corporations
in the United States.
Have to be responsible with all things, never destroy the documents even if its
wrong

PROPOSED
SOLUTION
Have to search a better standard such as accounting standard, auditing standard,
that lead to Sarbanes Oxley Act 2002. Sarbanes Oxley is United States federal
law that set new or expanded requirements for all U.S. public company boards,
management and public accounting firms. There are also a number of provisions
of the Act that also apply to privately held companies, for example the willful
destruction of evidence to impede a Federal investigation.

CONCLUSION
In this case, the auditor of Enron has violated the ethics code
professional responsibility. Because the auditor manipulated the financial
statements to show that the company had a good performance but
actually not.
Auditor of Enron also violated code ethics as an independent auditor
because they destroyed the document

THANK YOU