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Enron Corporation Founded By Merger Huston Natural Gas With Internorth

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Enron corporation was founded in 1985 by merging Huston Natural Gas with InterNorth primarily focusing on maximisation of the interstate gas pipeline network in based in Houston, Texas, U.S. (https://www-emeraldinsight-com.ezproxy.uow.edu.au/doi/pdfplus/10.1108/03074350510769839). During the merging process Enron incurred a huge debt and the market was hugely deregulated as a result to survive in the industry it was compulsory to come up with a new business strategy. Therefore, Kenneth Lay founder CEO of Enron hired Jeffrey Skilling who was very talented and had experience in banking and asset management industry to come up with a solution. Later on he came up with his revolutionary idea of creating a gas bank where they would buy and sell gas from a network of suppliers to network of customers which was the solution of their debt and cash (https://www.journalofaccountancy.com/issues/2002/apr/theriseandfallofenron.html). Afterwards the deregulated markets allowed Enron to became one of the leading electricity, natural gas, communications and pulp & paper by placing bets on the future prices. Prior to the scandal Fortune magazine had called Enron as the ‘most innovative company’ for back-to-back six year from the year 1995 to 2000 …show more content…

Additionally, it led to the collapse of Arthur Andersen, one of the largest accountancy and audit firm in the world at that time and the passage of the Sarbanes-Oxely Act of 2002. Furthermore, this essay will illustrate the three key audit issues (i.e auditors independence, due diligence and true & fair view accounting) which raised during the collapse, following by discussing the relevance of the developments following Enron(i.e Sarbanes-Oxely Act) to Australian

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Abstract On July 25, 2002, Congress passed the Sarbanes-Oxley Act of 2002 (SOX) in reaction to a series of financial accounting scandals involving companies like Enron, Tyco and WorldCom. SOX Act is a direct result of the legislature reaction to the above mentioned scandals. This paper presents the objective and main components of the SOX, criticism of SOX. The paper also deals with the economic impact of SOX and whether SOX met its goals.

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