Enron

Zhenyan Liu MGMT 301

Enron - Northern Natural Gas Company, which was formed in 1931 in Omaha, Nebraska. In 1985, it bought the smaller Houston Natural Gas and changed its name to Enron in the process. Enron was originally involved in transmitting and distributing electricity and gas throughout the United States and developing, building, and operating power plants, pipelines, and it also deals with rule of law and other infrastructure worldwide. Enron owned a large network of natural gas pipelines which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas Transmission, Transwestern Pipeline Company and a partnership in Northern Border Pipeline from Canada. These were the cash cows that made all of the other ENRON companies, ventures and investments possible. They were the only part of ENRON that made significant profits. Ken Lay was an American businessman, one of America's highest-paid CEOs. Lay was the CEO and chairman of Enron from 1986 until his resignation on January 23, 2002, except for a few months in 2001 when he was chairman and Jeffrey Skilling was CEO. He is in the widelyreported corruption scandal that led to the downfall of Enron Corporation. Lay dumped large amounts of his Enron stock in September and October of 2001 as its price fell, while encouraging employees to buy more stock, telling them the company would rebound. Lay liquidated more than $300 million in Enron stock from 1989 to 2001, mostly in stock options. While vacationing in Colorado on July 5, 2006, Kenneth Lay died Jeffrey Skilling As a consultant for McKinsey & Company, Skilling worked with Enron in 1987, helping the company create a forward market in natural gas. and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. The group was called Enron Finance, and Skilling quickly began implementing his vision of Enron as more of an investment back than an energy company. Initially, he took Enron on a mission of growth. The strategy was simple: to take the money that was outside the building and moves it inside the building. He rises to Enron CEO at age forty-eight. He was convicted in 2006 of multiple federal felony charges relating to Enron's financial collapse, and is currently serving a 24-year, 4-month prison sentence at the Federal Correctional Institution, Waseca in Waseca, Minnesota. Andrew Stuart Fastow was hired by Jeffrey Skilling in 1990 at Enron Finance Corp. He was named CFO at Enron in 1998. He was one of the key figures behind the complex web of offbalance-sheet special purpose entities used to conceal their massive losses. In 2001, U.S. Securities and Exchange Commission opened an investigation into his conduct. He is currently serving a 6 year prison sentence for charges related to this conduct.

Enron Company bankruptcy made people, who consider audit as a career, analyze the independence of Auditing. The concept of independence of auditing has been clearly developed. This concept linked to accounting service, has been broadened as a result of the demands made by clients and accounting industry professionals. The requirement of management consultation can have a conflict of interest in professional auditing. Therefore in order to develop a healthy accounting service, a harmony must be achieved between both.