Accounting and the Enron Debacle

Paper Summary:

In this essay, the writer reviews the case of Enron and the financial scandal which rocked the financial management and accounting communities when the company fell. The role that accounting played in the debacle is highlighted and some suggestions for fixing accounting problems are made. Ultimately, in this article it is suggested that an accounting system is only as good as its enforcement.

From the Paper:

"In the wake of the Enron financial scandals in 2001 and 2002, one of the world's largest companies declared bankruptcy due to accounting irregularities and the company's accounting firm, the well-known and respected firm of Arthur Andersen, disintegrated following public debates about accountability and transparency in financial management. Ultimately, accounting practices in the U.S. received a large part of the blame for the problem arising in the first place, even with the public acknowledgement of executive corruption and corporate fraud that drove the Enron collapse. The reverberations were felt throughout the world of financial management and accountancy, as the practice and oversight of accounting became a topic of intense interest in the business community and the policy arenas where business is regulated."

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