Topics: Auditing, Audit, Enron Pages: 4 (1485 words) Published: May 10, 2015
Enron was believed to be the company to take over the world in the 1990’s. The company was growing at exponential rates that were unheard of at the time. It was ranked among the 7 top corporations in the world peaking at a net worth of $70 billion. The company’s overwhelming wealth and success gave birth to some overconfident and ultimately greedy people within the company. In the end, Enron fell due to falsification of financial records, reporting profits well in excess of the actual. “On Dec. 2, 2001, Enron declared bankruptcy. Thousands of people were thrown out of work, and thousands of investors -- including most of the company's employees -- lost billions of dollars as Enron's shares shrank to penny-stock levels (http://www.npr.org/news/specials/enron/).” Enron is considered to be the largest corporate fallout in US history. The overconfidence of executive leaders, falsification and manipulation of financial statements, and Andersen’s hidings of the true audit findings, eventually led to the demise of this innovative corporation. Questions

1. The Enron debacle created what one public official reported was a “crisis of confidence” on the part of the public in the accounting profession. List the parties who you believe are the most responsible for that crisis. Briefly justify each of your choices. Executive management of Enron- When misstatements and irregularities emerged and were made clear to the public, the executives of Enron lost the confidence of the stakeholders in the company. Lay, Skilling were all under extreme scrutiny for the recent happenings within the corporation. Internal audit committee of Enron- Not only was the management of Enron under investigation, but the internal auditors of the company were being inspected as well. As internal auditors, they were responsible for controlling and analyzing the financial situations of the corporation. The simple fact that the Enron scandal happened proves that the internal auditors were not...
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