Enron Corp.

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Joseph Berardino, managing partner and CEO of Arthur Andersen, speaks into a microphone while holding papers during a congressional hearing on the Enron collapse.

Enron Corp.

American corporation

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Joseph Berardino, managing partner and CEO of Arthur Andersen, speaks into a microphone while holding papers during a congressional hearing on the Enron collapse. — Enron scandal Joseph Berardino, then CEO of Arthur Andersen, testifying during a congressional hearing on the Enron scandal, 2002.

The Enron scandal involved the 2001 bankruptcy of the American energy company Enron Corporation. Founded in 1985, Enron initially traded natural gas but expanded into trading various commodities and energy derivatives. The company's rapid growth, fueled by aggressive trading strategies and complex accounting practices like "mark-to-market accounting" and the use of special purpose entities (SPEs), masked significant financial troubles.

When the company's profits began to shrink, executives used these dubious methods to hide losses, creating an illusion of profitability. The scandal led to Enron's collapse, one of the largest bankruptcies in U.S. history, and the dissolution of its auditor, Arthur Andersen LLP. This event prompted significant legislative changes, most notably the Sarbanes-Oxley Act, aimed at improving accounting standards and corporate accountability.12

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Enron scandal
energy, commodities, and services company Enron Corporation in 2001 and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world. The collapse of Enron, which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in…
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energy, commodities, and services company Enron Corporation in 2001 and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world. The collapse of Enron, which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in…
Read More

9 Modern Corporate Criminals
Enron and Arthur Andersen
In December 2001 the American energy, commodities, and services company Enron Corporation, which at one time held more than $60 billion in assets, was forced to declare bankruptcy following the disclosure of years of massive accounting fraud designed to hide its…
Read More
In December 2001 the American energy, commodities, and services company Enron Corporation, which at one time held more than $60 billion in assets, was forced to declare bankruptcy following the disclosure of years of massive accounting fraud designed to hide its…
Read More

Arthur Andersen
The Enron Audit
The combination of more complex financial statements, more aggressive accounting techniques, greater concern for customer satisfaction, greater dependence on consulting fees, and smaller cost-effective sampling techniques created many problems for auditing firms. Arthur Andersen’s Houston office was billing Enron $1 million per week…
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The combination of more complex financial statements, more aggressive accounting techniques, greater concern for customer satisfaction, greater dependence on consulting fees, and smaller cost-effective sampling techniques created many problems for auditing firms. Arthur Andersen’s Houston office was billing Enron $1 million per week…
Read More

Harvey Pitt
…notably that involving energy trader Enron Corp. Prominent leaders on both sides of the political aisle claimed that Pitt had been lax in enforcing SEC rules and questioned whether, as a former securities lawyer who had performed work for virtually all of the country’s major accounting firms, he was too…
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…notably that involving energy trader Enron Corp. Prominent leaders on both sides of the political aisle claimed that Pitt had been lax in enforcing SEC rules and questioned whether, as a former securities lawyer who had performed work for virtually all of the country’s major accounting firms, he was too…
Read More

Sarbanes-Oxley Act of 2002
…accounting scandals, including the infamous Enron scandal, in the early 2000s. The Sarbanes-Oxley (SOX) Act was designed to reduce corporate fraud by strengthening financial auditing and public disclosure requirements for publicly traded companies and increasing penalties for certain white-collar crimes.
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…accounting scandals, including the infamous Enron scandal, in the early 2000s. The Sarbanes-Oxley (SOX) Act was designed to reduce corporate fraud by strengthening financial auditing and public disclosure requirements for publicly traded companies and increasing penalties for certain white-collar crimes.
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white-collar crime
Cost to society
…the guilty plea entered by Enron Corp.’s chief financial officer, Andrew Fastow (2004), on charges of having manipulated off-balance-sheet transactions (in this case, of having concealed the company’s debt obligations by transferring them to offshore partnerships), which led to Enron’s collapse. In an associated case, Enron’s accounting firm, Arthur Andersen…
Read More
…the guilty plea entered by Enron Corp.’s chief financial officer, Andrew Fastow (2004), on charges of having manipulated off-balance-sheet transactions (in this case, of having concealed the company’s debt obligations by transferring them to offshore partnerships), which led to Enron’s collapse. In an associated case, Enron’s accounting firm, Arthur Andersen…
Read More