What role did Arthur Andersen play at Enron?

Arthur Andersen played a central role in the Enron scandal by failing to maintain professional integrity, ultimately leading to the firm's collapse. As Enron’s auditor, Andersen prioritized lucrative consulting fees over its duty to provide accurate, independent financial oversight.1

The firm’s involvement included several ethical and professional failures:

• Conflict of Interest: Andersen’s Houston office billed Enron $1 million per week for combined auditing and consulting services. This financial dependence incentivized auditors to ignore or approve aggressive and fraudulent accounting practices.1
• Lack of Independence: The lead auditor, David Duncan, maintained close ties with Enron’s chief accounting officer and allowed Enron employees to intimidate Andersen staff into supporting questionable financial decisions.1
• Obstruction of Justice: As regulatory scrutiny intensified, Andersen engaged in a massive effort to destroy audit-related documents. Following an internal directive to comply with document retention policies, staff shredded an unprecedented volume of material and deleted electronic files to hinder the Securities and Exchange Commission investigation.1

While the United States Supreme Court later overturned Andersen's 2002 obstruction of justice conviction due to faulty jury instructions, the firm had already lost its license to practice public accounting and effectively ceased to exist.1