Accounting Controversies Essay Example | Topics and Well Written Essays - 1250 words

Accounting Controversies - Essay Example Deception was the name of the game for Enron. They concealed their controversial and suspicious dealings and transaction with their growing debt so that they appear debt-free and admirable to stockholders and the public. At last, every lie and cover up was made known to many when the company suddenly and unexpectedly filed for Chapter 11 Bankruptcy. That was their last resort. Not even company partnerships and affiliations could save the money and the glory of Enron. When the news of bankruptcy of Enron was revealed, the reasons behind Enron’s downfall remained unclear and uncertain. There were mixed reactions among businessmen, politicians, stockholders and others. Most of them were enraged while some felt concerned. There were those who were not surprise that the discrepancies with the financial statements could actually happen. It was as if it was the common habit among those who wish to decrease their debt. Questions such as the reason behind the downfall as well as the possible ways and means for preventing bankruptcy rose among the interested public. What hindered the company or the government from foreseeing the end of Enron? Was there money laundering or fraud behind the scandal? If there was, has the laws implemented by the government sufficient to verify the financial records of Enron? To shed light on the Enron controversy, a whistleblower, Sherron Watkins, decided to confess all the financial secrets of the company. The government took its role by initiating an investigation powered up by some of the congressional committees. Aside from Watkins, other key players admitted their involvement and decided to testify while some still pleads not guilty. The involvement of an accounting firm as reputable as Arthur Andersen with the controversy, heightened the interest of the public as well as legislators, economists and politicians. The firm also experienced a great loss even though the verdict has not yet been announced. Their clients retracted their loyalty and shifted to other competitive firms. Some employees resigned and sought other jobs from other companies. The accounting firm did a great job on the falsification and manipulation of Enron's financial statements that the discrepancies remained unnoticed to the public and to the government. The implications of the scandal in the political arena was expected since it had close ties with the White House due to the fact that the once prestigious company spent millions of dollars to support Bush's presidential campaign last 2002 elections. Aside from that, Enron's chief executive had personal and friendly relationships with Bush. The latter distanced from Kenneth Lay to prevent any public misconceptions. The investigations of the scandal also revealed that the company requested the presence of two US cabinet members preceding their file for bankruptcy. Even the current vice-president Dick Cheney did not escape the political associations between the government and Enron. The vice resident had several meetings with the executives of the company in lieu of their energy administration plans. The economic implications of the Enron case included the accounting industry's review of their financial policies with the fear of having the same fate as Enron. Other companies who also used the same aggressive accounting methods as Enron have been affected. They steered away from the limelight and have seemed to have lay-low for the meantime while the issues are still steaming. Enron was not the only one negatively affected by the scandal for the same fate went to Arthur Andersen. He was found guilty of destruction of financial records which