... may have met the first criteria because its transactions were apparently recorded in technical compliance with GAAP. But, technical compliance is not sufficient for truthful accounting. Meeting the other two criteria is essential, and here Enron failed. • Economic substance: The financial statements must represent ... effects of the transaction are transparent to the reader of the financial statements. Enron did not meet the third criterion because the notes related to the SPEs in Enron's financial statements were written so obtusely that they were not transparent to the reader. There ...

• Word Count: 1893
• Approx Pages: 8
• Grade Level: Undergraduate