Case Analysis Conclusion In the early twenty-first century, new laws and regulations enacted to protect investors from fraud had a great impact on prosecuting fraud and encouraging companies to act to...

Introduction
Enron and Sarbanes-Oxley Act 2002 are related in some ways because the act was passed after the fall of Enron when the United States realised that a new act is needed to protect the investors and the companies from going bankrupt, this was also done so that the companies cannot undertake fraudulent activities for their benefits because when the companies undertake such activity the loss is of the economy, government, employees, and the investors who trusted the company and invested in the firm.
The act was one standout one which was also witnessed during the 2008 financial crisis when the frauds related to auditing and cooking of books were not taken place, also the number of accounting frauds that the country saw also reduced.
Enron
The organization is ‘Enron’, the largest energy trading company before it went bankrupt. The company was founded in the year 1985 after a merger between two gas companies, soon the company saw itself rise and enter the Fortune 500 companies, and the revenue of the company kept growing along with the profits (Healy 2003)
There were a host of activities which the organization performed that were both illegal and unethical, starting from the ‘cooking’ (faking) of the company’s financial statements, this was done to show more profits than what the company earned in the previous year or previous quarter.
The unethical activities by the company started in the year 1991, after the appointment of a new executive officer (Finance), who was the head looking after all the accounting and finance-related activities to make sure that the company showered a picture that the company is profitable across, and the profits have been increasing each quarter. For this the company used techniques such as ‘fraudulent accounting practices’ which is unethical, this was used to inflate the company’s revenues and hide debts.
For hiding debts, the company created SPE (Special Purpose Entities) which were like subsidiaries to the company, and the company used to transfer all the debt that it had in its books to the SPE to show its balance sheet as clean.
The other illegal behaviour that the company demonstrated is bribing the accounting firm to look after the company’s audits and financial statements, this caused the accounting firm to not reveal any wrongdoings in the company’s books.
As a result of all the fraudulent activities, and other illegal activities the company made hundreds and thousands of individuals lose their jobs because of the company getting bankrupt, and the other hundreds and thousands lost out on their life’s savings as they invested in the company thinking that the company is performing very good, and they will get good returns on their investment (Benston and Hartgraves 2002).
The organizational...