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    Joshua Paro-An
    The main problem of Enron was accounting fraud through manipulating its market-to-market accounting method to log estimated profits as actual ones. This allowed Enron to hide losses. The Enron scandal could have been avoided with strong enforcement of ethics from top management down. However, individuals in positions of responsibility and charity can still engage in corporate corruption, and banks may remain ignorant of a client's poor financial health for years if the client manipulates documents and the bank lacks financial expertise.

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    The main problem of Enron was accounting fraud through manipulating its market-to-market accounting method to log estimated profits as actual ones. This allowed Enron to hide losses. The Enron scandal could have been avoided with strong enforcement of ethics from top management down. However, individuals in positions of responsibility and charity can still engage in corporate corruption, and banks may remain ignorant of a client's poor financial health for years if the client manipulates documents and the bank lacks financial expertise.

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    The main problem of Enron was accounting fraud through manipulating its market-to-market accounting method to log estimated profits as actual ones. This allowed Enron to hide losses. The Enron scandal could have been avoided with strong enforcement of ethics from top management down. However, individuals in positions of responsibility and charity can still engage in corporate corruption, and banks may remain ignorant of a client's poor financial health for years if the client manipulates documents and the bank lacks financial expertise.

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    165 views1 page

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    Joshua Paro-An
    The main problem of Enron was accounting fraud through manipulating its market-to-market accounting method to log estimated profits as actual ones. This allowed Enron to hide losses. The Enron scandal could have been avoided with strong enforcement of ethics from top management down. However, individuals in positions of responsibility and charity can still engage in corporate corruption, and banks may remain ignorant of a client's poor financial health for years if the client manipulates documents and the bank lacks financial expertise.

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    QUESTIONS:

    1. What is the main problem of Enron?


    Enron's main problem was the accounting method, Market to Market (MTM), which measures
    the fair value of accounts that can change over time, such as assets and liabilities. The
    accounting method is a legitimate practice. However, it is susceptible to manipulation. Because
    of this, Enron's downfall started as they started logging estimated profits as actual ones.

    2. What are the ethical issues of the Enron Scandal?


    3. How did Enron hide their losses?

    4. How can the Enron scandal be avoided?


    The Enron scandal could have been avoided if the organization had strong enforcement of
    ethical discipline starting with the top management. The downfall started with the top
    management when they disregarded honesty and engaged in fraudulent and corrupt practices.
    An organization needs ethical values and alignment to be followed with no exceptions.

    1. Can a person like who was a well-known patron of arts, sports, church and various charities,
    conscious of business ethics and social responsibility, indulge in such law act of corporate
    corruption?

    An individual who is like a well-known patron of arts, sports, church and various charities,
    conscious of business ethics and social responsibility are not exempted from indulging in
    corporate corruption. If an individual does indulge in

    2. What can be the possible role of Bank of America and other banks involved is selling and
    promoting the Company’s Bond issue, when the Company’s financial were so pathetic for the
    last 7-8 years. Further, how were the letter heads of Bank of America used by the finance
    Manages of Parmalat in creating the fiasco?

    The possible role of Bank of America is to make sure that the


    3. Has the fraud taken place in Parmalat due to insufficient internal checks and balances?

    Yes, Parmalat's governance mechanisms, were significantly undermined by the CEO and his
    management's lack of accountability and poorly developed or implemented governance
    procedures.
    4. Is it possible for the bankers of the Company to remain ignorant about the financial health of
    its client for about a decade?

    Yes, the bankers of the Company can remain ignorant about the financial health of its client for
    about a decade for the reason that the Company's lack of financial expertise and understanding
    results in unwise financial decisions and investment errors, which may have unfavorable
    economic effects which are not the bankers' fault. Also, the company executives invented
    contracts that were shown to the banks where they are not knowledgeable that it was
    manipulated and that the financial health of the Company is having problems.

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