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    Problems in Enron Collapse

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    radhikagupta2912
    The document outlines 4 key problems that contributed to Enron's collapse: 1) Conflicts of interest on the board as some members had private dealings with the company. 2) The board failed in its fiduciary duty by allowing high risk accounting, conflicts of interest in transactions, and lavish compensation. 3) Lack of independence of board members who had financial ties to Enron. 4) A breakdown of ethical procedures as Enron engaged in gift giving that resulted in conflicts of interest and some unethical donations.

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    Problems in Enron Collapse

    Uploaded by

    radhikagupta2912
    96 views5 pages
    The document outlines 4 key problems that contributed to Enron's collapse: 1) Conflicts of interest on the board as some members had private dealings with the company. 2) The board failed in its fiduciary duty by allowing high risk accounting, conflicts of interest in transactions, and lavish compensation. 3) Lack of independence of board members who had financial ties to Enron. 4) A breakdown of ethical procedures as Enron engaged in gift giving that resulted in conflicts of interest and some unethical donations.

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    The document outlines 4 key problems that contributed to Enron's collapse: 1) Conflicts of interest on the board as some members had private dealings with the company. 2) The board failed in its fiduciary duty by allowing high risk accounting, conflicts of interest in transactions, and lavish compensation. 3) Lack of independence of board members who had financial ties to Enron. 4) A breakdown of ethical procedures as Enron engaged in gift giving that resulted in conflicts of interest and some unethical donations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    96 views5 pages

    Problems in Enron Collapse

    Uploaded by

    radhikagupta2912
    The document outlines 4 key problems that contributed to Enron's collapse: 1) Conflicts of interest on the board as some members had private dealings with the company. 2) The board failed in its fiduciary duty by allowing high risk accounting, conflicts of interest in transactions, and lavish compensation. 3) Lack of independence of board members who had financial ties to Enron. 4) A breakdown of ethical procedures as Enron engaged in gift giving that resulted in conflicts of interest and some unethical donations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    of 5

    PROBLEMS IN ENRON COLLAPSE

    1) CONFLICTS OF INTEREST 2) FUDUCIARY FAILURE 3) LACK OF INDEPENDENCE 4) ETHICAL PROCEDURES BREAKDOWN

    CONFLICTS OF INTEREST
    Some board members expressed the doubt about the

    nature of the operation and tried to enquire properly into the CFOs compensation. The board also circumvent the rule preventing the employees from engaging in private deals with the company. In the end the board fails to exercise its proper mandate, despite doubts about transactions and the CFOs compensation.

    FIDUCIARY FAILURE
    Enrons board clearly in its fiduciary duties

    to safeguard the shareholders interest. It allowed Enron to engaged in: 1) High Risk Accounting. 2) Transactions carrying obvious conflicts of interest. 3) Lavish Compensation policies.

    LACK OF INDEPENDENCE
    Financial ties between Board members and

    Enron. They weakened the independence of the board and its ability to challenge management decisions and judgements. Some ties were clearly unethical eg. Private consulting services provided by a board member to management.

    ETHICAL PROCEDURES BREAKDOWN Enron engaged in large scale gift giving that resulted in many potential conflicts of interest. Overall, a misconception of Enrons social responsibility resulted in excessive and sometimes unethical donations.

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