Question

according to the Fraud in nonprofits articles, how was the multi billions dollars Erron fraud exposed?

by the wall street journal or by the external auditors

Answer 1

Enron Corporation was a Multi Billion $ Corporation whose shares were traded close $90 per share.But due to its malpractices Enron was declared bankrupt in the year 2001, one of the largest Company in US.

The main reason was the practices which the top Management should have adopted to safe guard the interest of shareholder and lenders were not as per the Accounting standards laid down by the Regulators.Their aim was to hide the Actual Financial positions of the Company by transferring the huge debts & bad assets to other illegal entities formed specifically for this purpose.This helped the Corporation to hide its losses from the Investors and regulators.

The wrong techniques adopted by the Company was also not reported by its Auditors M/s Arthur Andersen LLP, one of the 5 top Accounting firms in US & worldwide and as an Statutory Auditors failed in its duties & responsibilities having a reputation of high standard. The Audit reports signed by Andersen did not mention anything.By mid of year 2001, the real situation became public as their CEO stepped down, stock price stared crumbling, closing illegal entity to prevent further losses,analyst reduced their ratings and the Company reported quarterly loss which caught the eyes of SEC, the US agency which protects the Investors interest,started the investigation & Arthur Andersen was convicted with criminal charges for concealing the financial documents.The reputation of the Accounting firm was hit globally and brought disgrace to the Accounting & Audit profession.