Sarbanes-oxley Act & Evolution of Concept of Corporate Responsibility - Accounting Assignment Help

Assignment Task

Task

This spring marks the 20th anniversary of the beginning of the dramatic and cataclysmic demise of Enron Corp. A scandal
of exceptional scope and impact, it was (at the time) the largest bankruptcy in American history. The alleged business
practices of its executives led to numerous individual criminal convictions. It was also a principal impetus for the
enactment of the Sarbanes-Oxley Act and the evolution of the concept of corporate responsibility. As such, it is one of the
most consequential corporate governance developments in history.
Yet a new generation of corporate leaders has assumed their positions since then; for others, their recollection of the
colossal scandal may have faded with the years. And a general awareness of corporate responsibility principles is no
substitute for familiarity with the governance failings that reenergized, in a lasting manner, the focus on effective and
responsible governance. A basic appreciation of the Enron debacle and its governance implications is essential to director
engagement.
Enron was formed as a natural gas pipeline company and ultimately transformed itself, through diversification, into a
trading enterprise engaged in various forms of highly complex transactions. Among these were a series of unconventional
and complicated related-party transactions (remember the strangely named Raptor, Jedi and Chewco ventures) in which
members of Enron’s financial leadership held lucrative financial interests. Notably, the management team was
experienced, and both its board and its audit committee were composed of a diverse group of seasoned, skilled, and
prominent individuals.
The company’s rapid financial growth crested in March 2001, with media reports questioning how it could maintain its high
stock value (trading at 55 times its earnings). Famous among these was the Fortune article by Bethany McLean, and its
identification of potential financial reporting problems at Enron. [1] In a dizzying series of events over the next few months,
the company’s stock price collapsed, its CEO resigned, a bailout merger failed, its credit was downgraded, the SEC began
an investigation of its dealings with related parties, and it ultimately declared bankruptcy. Multiple regulatory investigations
followed, several criminal convictions were obtained and Sarbanes-Oxley was ultimately enacted to curb the perceived
abuses arising from Enron and several similar accounting scandals. [2]
There remain multiple important, stand-alone governance lessons from Enron controversy of which all directors would
benefit:
1. The Smartest Guys in the Room. The type of aggressive executive conduct that contributed heavily to the fall of
Enron was not unique to the company, the industry or the times. In the absence of an embedded culture of corporate
ethics and compliance, there is always the potential for some executives to pursue “edge of the envelope” business
practices, especially when those practices produce meaningful near term financial or other operational results. That
attitude, combined with weak board oversight practices, can be a disastrous combination for a company.
Harvard Law School Forum on Corporate
Governance
Twenty Years Later: The Lasting Lessons of Enron
Posted by Michael Peregrine (McDermott Will & Emery LLP) and Charles Elson (University of Delaware), on Monday, April 5, 2021
8/21/2021 Twenty Years Later: The Lasting Lessons of Enron
https://corpgov.law.harvard.edu/2021/04/05/twenty-years-later-the-lasting-lessons-of-enron/ 2/4
Even though commerce has made great progress since then on internal controls, corporate responsibility ultimately
depends upon the integrity of management, and the skill and persistence of board oversight. [3]
2. The Critical Importance of Board Oversight. As the company began to implode, Enron’s board commissioned a
special committee to investigate the implicated transactions, directed by William C. Powers Jr., then dean of the University
of Texas School of Law. The Powers Report, as it came to be known, outlined in staggering detail a litany of board
oversight failures that contributed to the company’s collapse.

This Accounting Assignment has been solved by our Accounting Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
    
Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.