EnronPs 'risky behavior' was the 3growing arrogance of executives who became confident that no-one was watching and understanding what they were doing' Traders were the most aggressive employees in Enron. Louis Borget, a trader of Enron stole $3 million from the company and nothing was done about it.
EnronPs 'risky behavior' was the 3growing arrogance of executives who became confident that no-one was watching and understanding what they were doing' Traders were the most aggressive employees in Enron. Louis Borget, a trader of Enron stole $3 million from the company and nothing was done about it.
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EnronPs 'risky behavior' was the 3growing arrogance of executives who became confident that no-one was watching and understanding what they were doing' Traders were the most aggressive employees in Enron. Louis Borget, a trader of Enron stole $3 million from the company and nothing was done about it.
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Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
Presented by: Gopal Krishan | i Manipulation of financial
numbers Also called:
i Within the scope of law and 3reative or accounting standards i Against the spirit Innovative Accounting i Not providing true and fair value of the company Earnings Management or i Generally done to inflate the profits Aggressive i Hidden in the notes to Accounting accounts i IS NOT ILLEGAL!!! Fav i £evenue recognition a i Off-balance sheet financing Even if current i Impairment of assets year profits are i Deferred revenue expenditure presented as high, i Inappropriate accruals and the next year estimation of liabilities would have to i Amortization absorb the deferred expenses and hence there will be a dip. ¦aj i Enron
aal i Tyco International It encourages the i Adelphia attitude for i Peregrine Systems committing more i World3om serious i Satyam misrepresentations. i Obsessed with increasing the stock values which Primary cause of Enron¶s ³risky could not be achieved behavior´ was the without financial practices ³growing arrogance of executives who i Organization culture became confident that no-one was i 3orruption looking over their shoulders, watching i 3overing up previous frauds and understanding i Accounting methods what they were doing.´ Traders were the most aggressive employees in Enron. [
i Louis Borget, a trader of aal Enron stole $3 million from the company and nothing was done to him i Louis Borget and N. Mastroeni Diverted $142 million to offshore accounts i Jeff Skilling¶s Mark to market accounting ¦a ¦a a a
i Arthur Anderson sanctioned Mark to market
this accounting accounting allowed Enron to book i They were receiving $1 potential future profits million every week for on the very day the signing the financial deal was signed. No statements matter how much cash was actually flown in the company, to the outside world the profits could be anything company wanted. Ô a i People were paid a large a part through stocks They started i Stock prices were rising but coming up with business was loosing money these fancy i Started the broadband business and made deals derivatives of with the block busters. buying and Booked $50 million for a selling risk deal that didn¶t make a positions. penny. i Weather trading
i Structured finance by Andy F a Fastow Fastow created i His job was to keep stock hundreds of "special- prices up though company purpose entities" designed to transfer was in $30 billion debt Enron's debt to an i The boards signed deals outside company and with Fastow¶s LJM get it off the books-- without giving up control of the assets that stood behind the debt. i Fastow used Enron¶s £a la stock as collateral X individual bankers invested in LJM. i Banks predicted to Some banks even purchase Enron¶s assets invested an amount of when the assets were 25 million each 1. JP Morgan actually engaged in 2. 3redit Suisse loans 3. Meryl Lynch 4. 3itibank i LJM was sold to Meryl 5. Deutsche bank Lynch bankers i Profits were result of deals
with the special purpose entities i Jeff Skilling stepped down as 3EO i Enron stock began to fall ë i The method most commonly used was to hold the open books past the end of the accounting period to accumulate more sales, this meant that companies were holding the open books until they reached their target sales, which they might have promised to shareholders. i £ecording revenue when services are still due and shipping merchandise to private warehouses for storage before the sale is final, and counting the shipments as sales, were two other types of cut-off fraud. i Modern accounting rules £a i Independent auditors The scandal i Securities and financial market regulation was rooted in i The prohibitions against recent changes insider trading in US legal, financial and accounting professions. i Amendments £ i New acts M Sarbanes-Oxley act in US M 3orporate Law Economic £eform Program Act 2004 in Australia i Principal Vs. £ules based standards wuestions?
Foundational Theories and Techniques for Risk Management, A Guide for Professional Risk Managers in Financial Services - Part II - Financial Instruments