The Fall of Enron

Paul  Healy; Krishna  Palepu

Case | HBS Case Collection | November 2008 (Revised May 2016)

The Fall of Enron

Abstract

The case traces the rise of Enron, covering the company's business innovations, personnel management, and risk management processes. It then examines the company's dramatic fall including the extension of its trading model into questionable new businesses, the financial reporting problems, and governance breakdowns inside and outside the firm. The case offers students an opportunity to explore why Enron failed and to understand the systemic problems in governance that affected its board of directors, the audit committee, the external auditors, and financial analysts.

Keywords: Risk Management; Governing and Advisory Boards; Management Practices and Processes; Crime and Corruption; Financial Reporting; Corporate Governance;

Language: English

Format: Print

21 pages

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Citation:

Healy, Paul, and Krishna Palepu. "The Fall of Enron." Harvard Business School Case 109-039, November 2008. (Revised May 2016.)

Case | HBS Case Collection | August 2018

Revenue Recognition at HBP

Paul Healy and Anywhere Sikochi

In early 2014, Paul Bills, CFO of Harvard Business Publishing (HBP), sat down with David Wan, the company’s CEO, to discuss budget preparations for the coming year. Bills noted that the performance of Corporate Learning, one of HBP’s three business units, would be affected by a business model change for its largest product that required a change in the timing of revenue recognition. Corporate Learning was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server rather than on its clients’ servers, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12). As Bills and Wan discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.

Keywords: Accrual Accounting; Budgets and Budgeting; Revenue Recognition; Financial Reporting; Publishing Industry; Education Industry; United States;

Citation:

Healy, Paul, and Anywhere Sikochi. "Revenue Recognition at HBP." Harvard Business School Case 119-029, August 2018. View Details

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