Enron collapse A look back Essay

Enron was formed as a leave behind of merging with an new(prenominal) friendship and it became a successful incorporated. The joy of the worry owners is to see how it grows fast and to inveigle to a greater extent investors. There are rules and ordination that g overns the corporate fiscal report that is open for inspection by authorization investors (Folger, 2011). The audit of these financial reports should release the accurate financial state of the partnership and this should be made known to the stakeholders of the confederacy. The stakeholders of a fellowship play an classical intention in progress of the disdain and the personnel casualty concern of the follow (Sterling, 2002). The company of Enron did not manage its debts and therefore looked for means of hiding the loyalty from its stakeholders so as to continue devising profit. The aim of a business is to make profit and be able to relent the debts of the creditors and too attract investors who are interested in the business. Most investor relay on the financial statement to determine whether to invest or not to invest (Folger, 2011). The Enron keep company was a big company that was famous and successful before its fall. The corporate attracted many investors since they financial report showed how the business was growing at extravagantly rate (Bauer, 2009). However the corporate management did not disclose the sure and fair view of the financial reports. The financial report of a company should not mislead the shareholders or its members. Moreover, in the Enron scandal there were nigh cases in which it showed bollocks of its financial reporting since the corporate did not presentation original and fair financial accountings to its stakeholders. The corporate used financial double-dealing and mark- market accounting to hide its actual debts and certain financial mooring (Folger, 2011). These reports made the investor believe that the corporate was fashionin g profit while it was making losses in real sense. It is also a form of artifice to stakeholders since it cannot meet all its debts and in case of winding up bulk of the investors and shareholder would suffer greatly. The Enron scandal was deemed to be great since it had huge debts to confirm and its assets could not settle these debts. Indeed, financial misconduct affects a large host of stakeholder and leaves a great mark that cannot be erased (Sterling, 2002). For example the shareholders of Enron corporate were passing affected and suffered a loss of billions that were not recovered since the corporate went wear and the assets of the business were also false in existence. The investors also suffered greatly from these financial misconduct, they lost their resources. In addition, the employees suffered greatly by losing billions of pension benefits due to the misconduct of financial reports which led to the bankruptcy of the Enron therefore could no longer pay them (Folg er, 2011). The financial statement of a company is very important to the investors, it gives an over view of the stability of the business and its ability to pay debts. The Enron corporate failed to disclose true and fair view financial statements by hiding its real financial reports and the investors were misled and also due to many investments made by the company lead to its bankruptcy (Sterling, 2002). The purpose of accurate financial reports is to help the investors and also the company to know to what extent they should contract or invest in other businesses. It also helps in managing of the companys debt thus making profit but the Enron was only interested in making a lot of profits that led to their down fall. Ethics are rules that govern every business and its members on how to conduct their daily roles in the company (Brady, & Dunn, 1995). In other words, the managers of this corporate owe their loyalty to its stakeholders and their interest ought to be the intere st of the business (Bauer, 2009). In deontology of the Enron corporate, the management had a handicraft and obligations to exhibit the true statement of finance and also to operate the business in the interest of the stakeholders and not their interest. As the leaders they ought to make sure that the going concern of the business is kept and the assets of the company are secured. In addition, the duty of the Enron managers was to disclose the true and fair view of financial reports (Bauer, 2009). On other hand, utilitarian is a form ethic that is used to show the positively charged side of the organization, for example by disclosing the false statement to stakeholders thus glaring them of the real situation (Folger, 2011). The Enron leaders used different methods to conceal the honor about its debts and faked the profits. They made the business look attractive and therefore more investors invested in the business. At the end, the ethics rules were violated and the leaders h ad a role to play .Enron had a role to disclose the truth which could have bring through the company (Bauer, 2009). If at the beginning, the company revealed the truth it would not have finish bankrupt and the employees would have secured their jobs. Finally, the company had a duty to disclose the true financial statements and also save the company from falling and the scandals would have been avoided. The companies should prepare into practice the ethics governing the corporates. Therefore, to prevent any future happenings much(prenominal) as the past frauds in the company, there has been an enhanced regulation as well as oversight in the company (Folger, 2011).ReferencesBauer, A. (2009). The Enron scandal and the Sarbanes-Oxley-Act. Munchen smile Verlag.Brady, F. N., & Dunn, C. P. (1995). Business meta-ethics An analysis of two theories. Business Ethics Quarterly, 385-398.Folger, J. (2011). The Enron collapse A look back. Investopedia, December 1. Retrieved October 25, 2014, a t http//www.investopedia.com/financial-edge/1211/the-enron-collapse-a-look-back.aspxSterling, T. F. (2002). The Enron scandal. New York Nova Science Publishers.Source memorandum