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Special-purpose entities were created to mask significant liabilities from Enron's financial statements. These entities made Enron seem more profitable than it was, and created a dangerous spiral in which, each quarter, corporate officers would have to perform more and more financial deception to create the illusion of billions of dollars in ...
The post-Enron rules of the Financial Accounting Standards Board, which require some measure of independence of a special purpose entity from the operating company, and genuine economic substance to the transaction in which the SPE is a party, made it difficult or impossible to structure a synthetic lease SPE, so synthetic leases have ...
An Enron manual of ethics from July 2000, about a year before the company collapsed. Enron's complex financial statements were confusing to shareholders and analysts. [1]: 6 [10] When speculative business ventures proved disastrous, it used unethical practices to use accounting limitations to misrepresent earnings and modify the balance sheet to indicate favorable performance.
Fastow was one of the key figures behind the complex web of off-balance-sheet special purpose entities (limited partnerships which Enron controlled) used to conceal Enron's massive losses in their quarterly balance sheets. By unlawfully maintaining personal stakes in these ostensibly independent ghost-entities, he was able to defraud Enron out ...
LJM, along with Chewco, played a major role in the downfall of Enron (see Timeline of the Enron scandal) and was the primary vehicle by which Fastow and others siphoned off at least $42 million while ruining Enron. [4] Its debt-concealing transactions with Enron effectively pushed liabilities off balance sheets and led to Enron's perceived ...
FIN 46, Consolidation of Variable Interest Entities, was an interpretation of United States Generally Accepted Accounting Principles (U.S. GAAP) published on January 17, 2003 by the U.S. Financial Accounting Standards Board (FASB) [1] that made it more difficult to remove assets and liabilities from a company's balance sheet if the company retained an economic exposure to the assets and ...
Special purpose entities. Add languages. ... Special pages; ... Cite this page; Get shortened URL; Download QR code; Print/export Download as PDF; Printable version;
Enron is considered to be the largest bankruptcy reorganization in U.S. history, as well as the biggest audit failure. [13] Executives at Enron used accounting loopholes, special purpose entities, and misleading financial reporting to hide billions in debt from failed deals and projects.