Research Paper on:
Overview of Special Purpose Entities

Unformatted Sample Text from the Research Paper:
is, of course, because of the Enron scandal, which utilized an impressive array of such techniques to move debt and losses, off its balance sheet which served to make the  company look better on paper than it actually was (Feldman, 2002). However, accounting experts agree that it was the way that SPEs were used in this case that make this  technique seem shady, not the use of SPEs per se. Nevertheless, other business experts, such as Business Week, look on the utilization of SPEs as mere camouflage for evading consolidating  reporting rules. Off-the-balance financing can be a useful corporate tool when used properly (Bottglieri, 1999). This is how airlines routinely employ complex leasing arrangements that make it possible for  these companies to finance new planes that would otherwise be unaffordable (Feldman, 2002). Nevertheless, SPEs , which are "limited-purpose vehicles into which a business can shuttle assets and liabilities"  remain a particular concern (Feldman, 2002, p. 46). A business can create a SPE with a bare minimum of outside investment, just 3 percent (Feldman, 2002). This translates into a  sponsoring company getting to retain up to 97 percent of the stake, yet still claming that this is not ownership for accounting purposes (Feldman, 2002). Kahn (2002) asserts that  while the media is referring to what Enron officers did as "off-balance-sheet" partnerships -- "those hundreds of Enron entities that were used to hide its debt and book illusory profits"  -- but, on Wall Street, these are known as "special purpose entities" (SPEs) (p. 84). While SPEs are definitely getting a great deal of bad press, Kahn (2002), like Feldman  (2002), insists that it would be difficult to find a Fortune 500 company that does not use at least one. While an SPE is a complex financial instrument, it