Critical Thinking



Read the following articles or other related articles regarding the Enron case and then answer the questions below:


Fusaro, Peter C. and Ross M. Miller, “What Went Wrong at Enron,” Wiley, 2002; Reinstein, Alan and Thomas Weirich, “Accounting Issues at Enron,” The CPA Journal, December 2002; Eichenwald, K., and Henriques, D.B. “Enron’s Many Strands: The Company Unravels; Enron Buffed Image to a Shine Even as It Rotted From Within.” New York Times, February 10, 2002.

Short Answer Questions

1. What was Enron’s first successful market?

2. What created to opportunity for Enron to trade in this market?

3. What was the name of Enron’s Internet trading venture?

4. What was the name of Enron’s fair value accounting model?

5. What related party legal entity did Enron make famous?

6. Who was the famous whistleblower who penned the memo “Has Enron Become a Risky Place to Work?”

Discussion Questions

1. Was Enron an accounting fraud or a business failure concealed by fraud?

2. Enron extensively used fair value accounting. What prevents companies from abusing fair value accounting the way that Enron did?

3. Did Enron’s auditor fail or was the auditing firm a victim as well?