The worst accounting scandals in the United States: crimes committed by Enron and Waste Management Essay

Were All Executive Held Accountable

Two of the 10 worst accounting scandals in the United States included Enron and Waste Management. Both of these companies engaged in falsifying and misrepresenting financial statement (The 10 Worst). However, Waste Management committed these crimes from 1992  1997. Enron engaged in their crimes from 1999-2001. All of Enrons executives and Waste Managements executives, who were aware of misrepresented documents, were all held accountable for their involvement in falsifying reports.

How Was Enron Formed and How Was It Destroyed?

Enron was formed back in 1985 when they merged with Houston Natural Gas and Omaha  Based InterNorth (News, CBC, 2006). Kenneth Lay was the former CEO of HNG and later become the post chairman the following year. Enron began to expand their horizons by moving into new fields such as broadband services and Enron Online. In early 2000 the company had made annual revenue of $100 billion (News, CBC, 2006). As well as their stock prices rose to $90. Kenneth Lay stepped down as CEO and employed Jeffrey Skillings as the CEO in early 2001. However, only six months later Jeffrey Skilling resigned and the next quarter the company reported a loss of $618 million dollars. Andrew Fastow was the CFO for Enron and predicated in falsifying reports as well as hiding where all the Enron debts were located (News, CBC, 2006).

In my opinion all three of these men should be held fully accountable. Lay, Skilling, and Fastow should have known what they were doing was wrong and still continued to lie to possible investors and their existing investors. Fastow took a plea bargain and served 10 years in jail (Trial). However, Skilling and Lay said they were not guilty and went to trial. Skillings was sentenced to 24 years in prison but his sentence was reduced in 2013 to just spend 14 years in prison. Lay never served any time in prison due to the fact he had a heart attack before sentencing (Trial).

How Was Waste Management Formed and How Was It Destroyed?

Waste Management was formed in 1968 by Dean L. Buntrock. Before the scandal started, in 1992, the company was involved in waste collection, recycling, resource recovery, and disposal service. This company employed Arthur Anderson as their outside accountants. The 10K filed in March of 1997 showed that the company had revenue of $9.19 billion, net of $192 million, assets of $18.4 billion, and the stock price was $136 per share. This is when some questions started to be asked. On the report that came out in 1996 about the 1995 financial fiscal year the net was only $39 million. That is a $153 million difference. Apparently a new policy was put into effect when depreciating assets. This new policy said that it there was no salvage value on vehicles or equipment. Salvage value is the estimated resale value of an asset at the end of its useful life. The salvage value is a part of figuring depreciation