Enron Corp. - University of California | Office of The President

ENRON'S FALSE FINANCIAL STATEMENTS
418. In order to overstate Enron's assets, shareholders' equity, revenues, net income and
earnings per share, understate debt, and present materially misleading financial statements during
the Class Period, the defendants caused the Company to violate GAAP and SEC rules, in several
ways, including:
(a) by improperly failing to consolidate entities into Enron's financial statements,
defendants hid hundreds of millions in losses that should have properly reduced Enron's earnings,
and hid hundreds of millions in debt which should have been included on Enron's balance sheets
reported during the Class Period;
(b) by improperly accounting for common stock issued to a related-party entity
which should have been treated as a reduction in shareholders' equity but was accounted for as a note
receivable;
involving Blockbuster;
(c) by improperly accounting for broadband transactions;
(d) by grossly abusing mark-to-market accounting, including for a transaction
(e) by improperly characterizing loans as forward contracts in order to conceal
the true amount of Enron's debt;
(f) by improperly accounting for long-term contracts;
(g) by failing to record required write-downs for impairment in the value of
Enron's investments, Enron's long-term assets, and its broadband and technology investments on a
timely basis;
(h) by not recording an aggregate of $92 million in proposed audit adjustments
from 97 to 00 until the very end of the Class Period;
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