BLUF

The collapse of Enron 20 years ago still raises questions on corporate fraud, especially concerning the independence and ethics of auditors.

Summary

Twenty years ago, Enron was exposed by a whistle-blower for fraud when hiding its losses. The subsequent corporate collapse resulted in the largest bankruptcy in US history at the time. In addition, Enron's auditors, Arthur Andersen, were also eventually bankrupted: See:  Arthur Andersen: The fall of America's oldest accounting behemoth! As a result of Enron's bankruptcy, new regulatory frameworks were introduced to change corporate culture. Lesley Curwen writing for the BBC, explains how one of the critical checks on the way businesses operate is the external audit by accountants. In Enron's case, Arthur Andersen, Enron's auditors, had a conflict of interest; as they also had lucrative, non-audit consulting work from Enron and did not want to lose Enron's business by criticising Enron's behaviour. This article reminds us of the need to ensure that companies and other organisations behave ethically and that truly independent auditors must audit them.

Learn about why it is essential for all businesses to always behave in an ethical manner.

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