Enron Question About the Movie

In: Business and Management

Submitted By tartarughino
Words 643
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1. Explain the concept and rationale behind mark to market accounting and it’s significance to Enron.
When the President of Enron, Kenneth Lay, hires new CEO Jeffrey Skilling, a very energetic and a “dreamer” who joins Enron on the condition that they utilize mark-to-market accounting, allowing the company to book potential profits on certain projects immediately after the deals are signed. To keep its stock price going up par example Enron began a venture that might make $50 million 10 years from now, it could claim the $50 million as current income. However, this projects turn out to be successful. This gives Enron the ability to subjectively give the appearance of being a profitable company even if it isn't.

2. Describe the Enron culture. The culture of Enron was very competitive and all the employees had the same attitude of their bosses. Par example Jeffrey Skilling imposes his idea on Enron by establishing a review committee that grades employees and annually fires the bottom fifteen percent. This creates a highly competitive and brutal working environment.

3. What is Andy Fastow's significance to Enron?
Andy Fastow’s was the Enron’s CFO. He helped the company, hiding the losses with a “Tom Ponzi’s scheme”. One of Enron tactic was to create phony offshore corporate shells and move their losses to those companies, which were off the books. The film shows a schematic diagram tracing the movement of debt to such Enron entities. Two of the companies are named "M. Smart" and "M. Yass."

4. What is Sherron Watkins significance to Enron?
She was the Vice President at Enron. She is considered by many to be the whistleblower that helped to uncover the Enron scandal.
She wrote a concerned internal email message to Enron CEO Kenneth Lay warning him that the in the financial reports didn’t make sense.

5. Why did Wall Street wait until the collapse of…...

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