The Enron Collapse and ERP System

In enterprise, firms have their wonderful moments. Nonetheless, in addition they have their intervals of failure in administration, spending or in different areas. There are additionally firms whose failures have led to complete enterprise closures. Regardless of how huge or how profitable the corporate is, the potential for collapsing remains to be at hand, like what occurred to Enron. As Enron collapsed, different companies have been vastly affected as properly. To forestall the identical demise of different firms from taking place once more, Enterprise Useful resource Planning (ERP) have to be carried out. Enron was a large firm within the pure fuel pipeline enterprise. It was ranked as essentially the most revolutionary firm in 2000. It was additionally recognized for being the primary on administration expertise and second on worker expertise. In a p of 12 years, from 1989 to 2001, Enron’s market worth has grown from $three billion to $80 billion. With this development and success, nobody has foreseen that Enron would find yourself out of business (Doggett, 2009). As well as, Enron was additionally a big legislation agency, with greater than 400 attorneys within the firm’s common counsel workplace. This huge quantity made Enron the second largest legislation agency in Texas. Later investigations assumed that the principle cause for its giant authorized workers has to do with the numerous offshore partnerships Enron has concerned in, notably with Caribbean nations. The corporate didn't pay federal revenue tax in 4 years, though it was thought-about as a quick rising and most worthwhile firm (Doggett, 2009). Apart from these, throughout these occasions that Enron was not paying their taxes, its 24 high executives and board members have bought $1. 1 billion in inventory. These executives and board members dedicated one other mistake once they saved their staff and retirees from promoting their shares. They switched the corporate’s pension plan administrator earlier than they introduced losses. The main participant which precipitated the chapter of the corporate was its auditor, Arthur Andersen. Andersen was additionally employed in an accounting agency that Enron employed to audit the corporate’s books, as required by the legislation. Speculations arose whether or not Enron carried out accounting practices that have been questionable in misrepresenting the corporate’s true monetary situation. Andersen was tasked to warn the general public about these issues, however he both simply let issues occur (Louis, 2002), couldn't see what was taking place or was merely concerned in a cover-up (Doggett, 2009). The demise of Enron has affected different companies, and they don't wish to have the identical destiny as Enron. Some consultants say that Enterprise Useful resource Planning (ERP) methods can't stop all fraud. Nonetheless, firms with ERP methods can simply adjust to the Sarbanes-Oxley Act, which inspires accountability of the highest administration. ERP methods, having centralized databases, can remedy a number of the issues confronted by the businesses. Since knowledge sharing with accounting doesn't happen in “actual time,” and there may be all the time the necessity to do important analysis to gather knowledge for stories, ERP methods may help firms to keep away from these issues. The ERP methods can be utilized to keep away from errors reminiscent of inconsistency in report conserving and inaccuracy in inventory-costing methods (Antony, n. d. ). Moreover, ERP methods can higher stop company fraud by the next: archiving, person authorizations, tolerance teams and monetary transparency. Archiving is essential for auditors with a view to validate the monetary place of the corporate at any given time. ERP can also be helpful in conserving observe of any adjustments or enter of knowledge. Consumer authorizations assist by ensuring that the workers carry out the transactions that their job requires. Additionally you might be all in favour of HealthSouth Company Scandal essay Authorizations also can stop them from making funds to a nonexistent vendor (Murray State College, n. d. ). A tolerance group is one other approach of stopping staff from exercising management past their authority. The corporate can set limits on the entire doc quantity, fee distinction and reductions (Antony, n. d. ). Most significantly, monetary transparency can also be a basic facet of the system. ERP methods can enable firms “unprecedented ranges of economic transparency” over operations (Hamblen, 2009). References Antony, S. (n. d. ). Ideas in enterprise useful resource planning.Retrieved January 14, 2009, from http://66. 218. 69. 11/search/cache? ei=UTF-Eight&p=ERP+methods+%2Benron+collapse&fr=yfp-t-501&fp_ip=PH&u=campus. murraystate. edu/tutorial/college/solomon. antony/Spring06/CIS545/ch05. ppt&w=erp+methods+system+enron+collapse&d=fg3h7kfiSFqJ&icp=1&. intl=us Doggett, J. N. (2009). The Enron-Andersen debacle. WorldNetDaily. com. Retrieved January 14, 2009, from http://www. worldnetdaily. com/information/article. asp? ARTICLE_ID=26110 Hamblen, M. (2009). CA picks SAP’s apps for world ERP system. ComputerWorld. Retrieved January 15, 2009, from http://www. computerworld. com/printthis/2004/zero,4814,98053,00. html Louis, A. M. (2002, January 19). The Enron Collapse. San Francisco Chronicle on-line. Retrieved January 14, 2009, from http://www. sfgate. com/cgi-bin/article. cgi? file=/chronicle/archive/2002/01/19/BU193561. DTL Murray State College. (n. d). Enron story and ERP implications. Retrieved January 15, 2009, from http://66. 218. 69. 11/search/cache? ei=UTF-Eight&p=ERP+methods+%2Benron+collapse&fr=yfp-t-501&fp_ip=PH&u=campus. murraystate. edu/tutorial/college/solomon. antony/Spring06/CIS545/EnronERP. doc&w=erp+methods+system+enron+collapse&d=JivwnUfiSELR&icp=1&. intl=us
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