Enron Corporation

Enron Corporation

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Enron Corporation
1. Describe how Enron could have been structured differently to avoid such activities.
Public companies are required by law to share transactions with shareholders and the members of the investing public with several documents. Enron did not share facts that were important to understand certain transactions. Enron did not provide complete financial statements or give the CFO??™s actual or expected benefits from the large transactions that were taking place. If the organizational structure had not been changed from the original structure things may have been different. Enron decided to hire people from outside the company and give them power to make big decisions. These big decisions would drastically affect the organization. Top performers were given more opportunity for bonuses and stock options when the reward system in the company changed. The system was controlled by internal authority and the people in control were on the same level so no one questioned what was going on. The average workers did not want to make their superiors angry so they would not report any wrong doing when the dishonest reviews came out. This is what started the fall of Enron. If the people in control had been on different levels and had to answer to someone, then it would have been harder to get away with dishonest reviews. Also if full financial statements had been furnished then transactions could have been questioned right away and people would have been held accountable.
2. Discuss whether Enron??™s officers acted within the scope of their authority.
Enron??™s officers did not act within the scope of their authority. The scope of authority is limited by what is legal. The officers acted dishonestly and unethically to benefit themselves. The shareholders and other public investors were losing money because of the unethical and dishonest things the officers were doing. Anytime there is a law broken, then you are not within your scope of authority.
3. Describe the corporate culture at Enron.
It takes organizational culture and corporate culture working hand in hand to make a corporation work. Corporate culture determines which practices are appropriate and which are not. This develops standards, guidelines, and expectations for individuals within an organization. For years the Enron Corporation was spending big and even when the warnings about the shaky finances began to surface, no one at Enron saw any reason to change. The company had to be better and flashier in everything it did. On Secretaries??™ Day, Enron celebrated with gifts of Waterford Crystal and the company set aside $1.5 million for a Christmas party. The company??™s spending reflected a go-go corporate culture. Former employees said top executives cast traditional business controls out the window. Top officers, who insisted they were unaware of financial details and did not pay attention to conflicts, let executives sit on both sides of multimillion-dollar deals. Corporate culture can not be too loose or too soft to be real and important. The corporate culture at Enron was corrupt and led to the company??™s downfall.
4. Discuss two alleged irregularities in the actions between sellers of securities and Enron.?
One of the irregularities in the actions between sellers of securities and Enron was the financial statements that did not clearly show operations and finances with shareholders and analysts. With it complex business model and unethical practices required the company use accounting limitations to misrepresent earnings and modify the balance sheet to make the company look better. Another irregularity was how Enron executives were pressured to find new ways to hide debt. Jeffrey Skilling and Andrew Fastow , top executives, created off-balance sheet vehicles, complex financing structures, and deals so complex that few people could understand them.
5. Discuss whether or not Enron was liable for the actions of its agents and employees.
A corporation is a legal entity, not an actual being. A corporation can not do anything on their own. Anything a corporation does is through their agents and employees. A corporation can be sued civilly or prosecuted in criminal court for the actions of its agents and employees if those actions constitute a crime. A corporation can not be charge with drunk driving just because he works there but when acting on behalf of the company, fraud can lead to charges for both the employee and the corporation.

References
http://en.wikipedia.org/wiki/Enron_scandal
http://www.chron.com/news/specials/enron/

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