Enron Movie Review Essay examples
School of Business Administration
The Smartest Guys in the Room
Tutor: Ms S. Bewry
Student: Rajik Brown
1. To identify least five (5) control issues in the movie using the C.R.I.M.E. abbreviation from the Committee of Sponsoring Organisation of the Treadway Commission (COSO) framework was used.
C- Control Activities are procedures and policies that aid management and employees in carrying directives and provide the presence of strong internal controls. ENRON possessed poor controls. * All transactions of a firm must be properly authorised meaning they must exist or occur e.g. * There must be accurate and complete accounting …show more content…
E- Control Environment also referred to as ‘tone at the top’ influences the control consciousness of its people through factors such as integrity, ethical values, management philosophy etc. Unethical and fraudulent practices occurred at the highest form of management (Ken Lay and Skilling) and those practices impacted the actions of the rest of the employees e.g. the Traders stole money from persons who had to pay increased utility bills due to intentional and planned powercuts. 2. How did Enron engage in fraudulent financial in reporting? Give at least three examples of Enron’s creative accounting policies.
Firstly, ENRON established off shore businesses, industries and accounts to aid in hiding the company’s losses and boost it’s profitability by making money. These offshore entities e.g. Lebanon, with Mr M. Yass helped to portray that ENRON was making billions when in fact losses were made. This illusion of profit increased the stock price thus allowing more and more investors to purchase stock.
Secondly, management created a mark to market accounting strategy where management entered into