Essay: Reasons of Fraud in Enron Company

Sample Essay

The corporate fraud committed in Enron was not a result of errors in accounting procedures and standards but also because of the corporate culture and organizational structure of the company. Apart from mischievous intentions and actions of the company Chairman, CEO and CFO to distort the financial position of the company, the lack of internal control, loose organizational structure were also the factors which gave rise to wrongdoings in the company.

The fact remains that if the top management and leaders of an organization are involved in unethical and fraudulent activities, employees in lower management are sure to follow and fraudulent activities cannot be controlled. The lack of proper accounting standards and regulations for activities performed by Enron were a major factor of misrepresentation and fraud by the company management as they used the limitation of accounting standards to their maximum use.

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