This paper addresses the Enron financial statement fraud case and specifically with the advantage of hindsight, answers the question: “As a fraud investigator, how would you go about finding the existence of these liabilities and partnerships?” (Albrecht et al., 2012, p. 481) The paper concludes with analysis of the final Enron Annual Report of 2000 highlighting areas in the report most indicative of financial irregularities.
Instinctively, something that causes disproportionate difficulty or advantage relative to others, contributes to a sense of unfairness. A survey exclusively of increased burdens on smaller organizations may reveal such areas for concern.
In the aftermath of the US financial crisis of 2007-2009 an “estimated $8 trillion of wealth in the US stock market was lost on top of the $6 trillion loss in the market value of homes. The total wealth loss of $14 trillion by US households in 2009 was equal to the entire 2008 US GDP” (Liu, 2013, para. 1).
When the banks first revealed that they had taken on at least $2 trillion of toxic assets that were beyond their capacity to withstand financially, the government stepped in.
“The unraveling of the U.S. economy began with the collapse of the subprime market. The subprime lending market provided a relatively new, untapped source of potential profits” (Watkins, 2011, p. 366).
“Although subprime mortgages accounted for less than 20 percent of all mortgages outstanding, just over half of these foreclosure initiations were on subprimes” (Gilbert 2011 p. 88). Naturally a review of the subprime lending meltdown would lead to the source of the risky banking behaviors and the government housing policies that created the loan availability.