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Case enron EssayEnron faces most of the luck ordinarily faced by any aught company, including price instability and foreign currency risks. Enron operated in many different areas of the world with different restrictive and political risks. Enron faced business risks such as a complex business model, extensive mathematical function of derivatives and special purpose entities, aggressive transaction structuring and accounting, rapid expansion of business through complex and irregular ventures, extensive reliance on credit rating, and limitations in GAAP. The complex nature of the business model of Enron increase the likelihood of material misstatements. It enabled the management to overstate its revenue while not disclosing the actual value of its debt. The risk of fraud by management was high. The transactions involving SPEs essentially involved Enron receiving borrowed funds that were shown as revenue without arrangement liabilities. Also, the amount of misstatements was hug e as Enron had hundreds of such SPEs. Complex financial derivative transactions were used to report enormous amounts of debt. Huge increases in borrowing were made to look like hedges for commodity trades rather than vernal debt financing.The network of SPEs along with complicated speculations and hedges kept an enormous amount of debt off the balance sheet. The accounting standards were pitiful in providing for the proper accounting of these transactions. The loopholes in the standards were used to structure transactions in such a way that hundreds of SPEs were excluded from consolidation. Also, the management took advantage of the complexity of accounting standards to shroud the actual economic substance of the transactions. fit disclosures with regard to related party involvement and securing outside SPE investors against possible losses were not made.