ABSTRACT
At the turn of the century Enron Inc. was one of the largest and wealthiest corporate enterprises in the US. Arthur Andersen (AA), its public accounting firm, was widely regarded as the premier international accounting firm by virtue of its ethics, the expertise of its staff and the longevity of its associations with the world’s most prestigious clients. It is now clear that for Enron’s senior management cadre, and especially its CEO, its power and wealth were insufficient, resulting in actions being taken that clearly violated the rules and ethics of accounting. The degree to which Enron’s accounting staff were complicit in the episode is unclear but all of the company’s employees experienced an initial loss of employment nevertheless. The fate of AA was just as grim as it collapsed in the aftermath. The extent of its own leadership’s collusion is unknown since it was the misstatement of the value of Enron’s foreign subsidiaries that was the major defalcation. In hindsight, a major issue that should probably have been handled differently was the US government’s rush to justice, arguably precipitated by one employee’s overly quick finger on a shredding machine. Much of what has subsequently been written about Enron suggests that AA could have survived the debacle, since the former Big Eight accountancy firms reduced to the Big Four through consolidations over recent decades is, in retrospect, less than an ideal outcome. It was particularly shortsighted on the part of the US government to accentuate further an already oligarchic situation within a vital industry, especially as virtually all of AA’s staff quickly found new employments with former competitors.
