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Accounting
Accounting is a very important part of the business world today. It helps protect, defend,
and keep businesses running. Accounting regulates businesses and makes sure everything
balances out, so that things are not unfair. The role of accounting in a business is to control
activities and expenditures, improvement of operational plans, accountability, reporting on
project outcomes, and the writing of bids for new funds. There are many jobs that the
accounting system accomplishes. Accounting has to do with the profitability of a business.
It relays vital operating information to managers who need to analyze the information and
make important decisions. Accountants are the middle men between workers and
managers. They analyze the profitability and all of the transactions. They make reports on
them. They give these to the managers. The managers make decisions based on the
information presented to them. Accounting can also help protect the public. When
businesses cheat, accountants are suppose to pick this up. There are two basic types of
accounting: financial accounting and managerial accounting. Accounting could have
provided much help in cases where businesses become corrupt. One example of this is the
Enron scandal. Accounting plays a major role in every business, as evidence by the impact
it had on a major multi-million corporation like Enron. Accounting plays a major role in
every business.
The Enron Corporation pulled a huge scam that will go down in history. Many people were
affected in this scam. Accountants at the time made a huge mistake, which caused many
people lots of money. Enron declared bankrupt in November 2004. They forced the stock
to plummet, making many people lose money. Not surprisingly, public confidence in the
integrity of the financial reporting process and auditors took a big hit (Walker). Many of
the public stopped trusting the worthy accounting profession after they took such a big hit.
The big mistake is blamed on the auditors. They basically misread the fake information
given to them and they mad the company seem more profitable than it really was.
Although most auditors did not participate in such schemes, all too often the result was
audited financial statements that inappropriately accelerated revenues, deferred expenses,
artificially smoothed earnings and boosted earnings per share (Walker). The accountants
did not participate in the scam. They were mislead and did not catch the trap. The Enron
scam is very complicated to breakdown, but has a quite simple concept. The way that they
