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ieve organizational control? Should the reason be the big bonuses after those annual reports showed skyrocket profits? This sure seems like a more than enough reason.

(Chwastiak and Young, 2003) point out that accounting representation (through annual reports) are almost like single minded in their pursuit to show those profits in their statements and choose to hide the negative impact of their activities on our habitat. By manipulating their representation, accountants and financial officers within an organization, will inevitably control the organization and what is portrait to the outside world regarding the organization in question. Furthermore, accounting representation may be partial deliberately in order to achieve organizational control.

A very good example of a partial accounting representation is the case of ENRON Corporation.

Enron was founded by Kenneth Lay (who was also Enron’s Chairman and CEO) in 1985. Enron was an energy company based in Houston, Texas. Enron’s president, CEO and COO was Jeffrey Skilling. Enron’s CFO (chief financial officer) was Andrew Fastow. (BBC News, 2002)

Both Skilling and Fastow were very smart guys and were able to develop a staff of executives that were able to hide millions in debt from failed deals and projects, through the use of accounting loopholes. They were so good that even auditors were fooled with persuasive and apparently authentic financial statements. Arthur Andersen which at the time was one of the five largest audit and accountancy partnerships in the world, were deceived by Enron’s sparkling profits shown on their financial statements, and were not able to spot their fraudulent activities. Enron was not only one of the biggest bankruptancy in America, but undoubtedly the biggest audit failure. (Fezler, 2002)

For several years Enron’s board of directors and audit committee were misleaded by Enron’s financial officers and accountants. Most certainly the high profits shown in their statements resulted in high bonuses for all the members involved in the misrepresentation of the organization in question. (BBC News, 2002)

Both Skilling and Fastow knew exactly what to do in order to hide their unsuccessful managerial skills. Their financial statements were not clear and did not include details of their activities with shareholders and analysts. They implemented a complex business model (market-to-market) which stretched the limits of accounting. This enabled them to manage company earnings and modify the balance sheet to show a positive depiction of their performance. (Fezler, 2002)

These activities resulted in over inflated revenues, and at the same time gave the impression of high innovation, high growth and a remarking performance within their field, giving them an astonishing 65% expansion per year, when a 2-3% growth per year within the energy industry is considered as respectable. Between 1996 and 2000 Enron’s revenue rose from $13.3 billion to $100.8 billion, a 750% increase. Truly impressive; Almost, too good to be true. (Fezler, 2002)

Enron’s scandal is a real example of how accounting representation is partial in order to achieve organizational control. Both Skilling and Fastow had control over Enron, because they had本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。