Enron

Identify one of the examples of financial reporting misconduct associated with the Enron scandal

In the wake of the stratospheric success and subsequent fall of Enron, many were compelled to ask: how could this be possible, namely how could a firm which seemed so successful on the surface be so corrupt at its core? The answer, although not simple, can be boiled down to this: creative financial accounting. While Enron deployed many techniques to hide its falling profits, one of its most successful was the creation of "special purpose entities [or vehicles] -- subsidiaries that have a single purpose and that did not need to be included in Enron's balance sheet" and "were used to hide risky investment activities and financial losses" (Folger 2011).

It should be noted that not all SPV lack legitimacy, but rather that Enron used them for fraudulent, misleading, and therefore illegal purposes. "A corporation...
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