Enron scandal summary enron case

accounting scandal

The Enron scandal was an accounting scandal sparked by American energy company Enron Corporation filing for bankruptcy after news of widespread internal fraud became public in October , which led to the dissolution of its accounting firm, Arthur Andersen, previously one of the five largest in the world.

The largest bankruptcy reorganization in U.S. history at that time; Enron was cited as the biggest audit failure.^:&#;61&#;

Enron was formed in by Kenneth Lay after merging Houston Natural Gas and InterNorth.

Several years later, when Jeffrey Skilling was hired, Lay developed a staff of executives that – by the use of accounting loopholes, the misuse of mark-to-market accounting, special purpose entities, and poor financial reporting – were able to hide billions of dollars in debt from failed deals and projects.

Chief Financial Officer Andrew Fastow and other executives misled Enron's board of directors and audit committee on high-risk