Enron Corporation
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- Date Submitted: 02/27/2011 05:36 AM
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Enron Corporation
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....
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....