Enron And The Enron Scandal

2247 Words Dec 8th, 2014 9 Pages
In every single accounting or ethics class, the “Enron Scandal” as a lot might say is brought up to teach all the students a lesson about ethics and how regulations in the accounting world were enacted. The “Enron Scandal” dealt with two parties, first Enron itself, and then their auditors Arthur Andersen. Enron used to be one of the most innovative companies in the world, and Arthur Andersen was the biggest professional services company in the world, so when they both fell after the so called “scandal” it completely changed the world of Accounting. The road to multi-million dollar companies failing is a big one so how exactly did it happen. It all had to do with the way Enron and Arthur Andersen were run and changed which ended up in the demise of both companies.
The Enron Corporation started in 1985 when Houston Natural Gas merged with InterNorth, a Nebraska based Company. Enron was known as the ‘Americas Most Innovative company’ for 6 consecutive years.”(Folger). The reason Enron was so innovative is because it completely changed the way the energy industry was run. Kenneth Lay, Enron’s CEO hired consultant Jeffrey Skilling to completely change the business strategy that the company was run on. They started taking advantage of the fact that energy industry because deregulated and “created a ‘gas bank’ in which Enron would buy gas from a network of suppliers and sell it to a network of consumers, contractually guaranteeing both the supply and the price, charging fees for…

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