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Did Enron fail because of illegal activities, falsified accounting, governance failure, or something else?
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Report of Investigation
Special Investigative Committee of the Board of Directors of Enron Corporation
February 1, 2002
The tragic consequences of the related-party transactions and accounting errors were the result of failures at many levels and by many people: a flawed idea, self-enrichment by employees, inadequately-designed controls, poor implementation, inattentive oversight, simple (and not-so-simple) accounting mistakes, and overreaching in a culture that appears to have encouraged pushing the limits. Our review indicates that many of these consequences could and should have been avoided.
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Debt Markets
Ratings agencies and other analysts review the ability of the firm to service debt
(internal)
Board of Directors
Chairman of the Board and members are accountable for the organization
Regulators
SEC, the NYSE, or other regulatory bodies by country
Management
Chief Executive Officer (CEO) and his team run the company
Auditors
External opinion as to the fairness of presentation and conformity to stds of financial statements Entities whose services are purchased by the corporation
Legal Counsel
Provides legal opinions and recommendations on legality of corporate activities
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Operating CF - Investing CF
The difference between operating cash flow and investing cash flow is a basic measure of the added Financing the firm needs from year to year assuming on changes in cash balances.
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