Yes and no..

IWETHEY v. 0.3.0 | TODO

1,095 registered users | 0 active users | 0 LpH | Statistics
Login | Create New User

Welcome to IWETHEY!

Post #43,680

by Simon_Jester

6/27/02 4:18:29 PM

Yes and no..

Remember, though...that while crooked as hell...what Enron was doing was perfectly acceptable under the law (for the most part). What you would have to prosecute on would be the "reasonable assumption of risk" language that surrounds the reporting of investment income.

Yes and no. The selling of resources to other pseudo-companies appears to be fairly legal, however the transfer of debt to other companies (that were basically extensions of Enron itself) and then not reporting same said debt (of held companies) seemed to questionable to a number of accountants/legal experts, iirc.

Post #43,681

Picture of bepatient

6/27/02 4:29:25 PM

The issue..

[link|http://www.brook.edu/comm/policybriefs/pb97.htm|url]

The immediate accounting problem exposed by Enron's failure was the weak consolidation rule prescribed for highly leveraged "special purpose entities" (SPEs), or partnerships that were formed to carry out various projects whose assets and liabilities were not shown in Enron's balance sheet. Enron failed in part because of losses arising out of the many SPEs that it had created.

The rule for some time has been that sponsors of an SPE need not consolidate it so long as outside investors contribute a majority of its capital and that investment constitutes at least 3 percent of the SPE's assets. Leaving aside the fact that Enron appears to have misled its auditor, Andersen, about the amount of outside investments in SPEs (thus wrongfully avoiding consolidation), it is now clear that the 3 percent test was much too weak. FASB has since rightly raised the threshold to 10 percent.

Guess you're right in that there was a little bit of both going on.

Still...there should be a full disclosure requirement, regardless of investement. The companies liability needs to be recognized and reported.

You were born...and so you're free...so Happy Birthday! _{Laurie Anderson}

[link|mailto:bepatient@aol.com|BePatient]

Democrats to make corporate greed a campaign issue - (marlowe) - (16) - June 26, 2002, 01:36:31 PM EDT

ROFLMAO - (bepatient) - (10) - June 26, 2002, 02:04:40 PM EDT

ROFLMAO, part II - (bbronson) - June 26, 2002, 04:04:50 PM EDT

I won't hold my breath (while you catch yours) - (jb4) - (8) - June 26, 2002, 08:25:45 PM EDT

Don't confuse separate issues. - (bepatient) - (7) - June 26, 2002, 10:38:06 PM EDT

Come on BP... - (Simon_Jester) - (5) - June 27, 2002, 02:17:49 AM EDT

Yep. - (bepatient) - (4) - June 27, 2002, 07:19:00 AM EDT

Um...you do realize... - (Simon_Jester) - (3) - June 27, 2002, 01:38:03 PM EDT

Yep again. - (bepatient) - (2) - June 27, 2002, 02:33:19 PM EDT

Yes and no.. - (Simon_Jester) - (1) - June 27, 2002, 04:18:29 PM EDT

The issue.. - (bepatient) - June 27, 2002, 04:29:25 PM EDT

You also need [oil] an indictment - (jb4) - June 27, 2002, 09:20:52 AM EDT

While possible, I think it is unlikely. - (Brandioch) - June 26, 2002, 03:58:52 PM EDT

Uh yeah? - (orion) - June 27, 2002, 12:54:51 AM EDT

Too tame: make the issue Lying. That will guarantee - - (Ashton) - June 28, 2002, 09:19:34 PM EDT

'Bout time somebody did. -NT - (Silverlock) - June 28, 2002, 11:35:57 PM EDT

Har - (wharris2) - July 2, 2002, 02:03:21 PM EDT

The Idler of Champions.
37 ms