Before filing for bankruptcy in 2001, Enron Corporation was one of the largest natural gas and electricity companies in the world. In addition to being one of the largest bankruptcies in American history, Enron undoubtedly was the biggest audit failure. It was one of the most famous company in the world, but also one that fell down too fast. In 1985, Enron was created by a merge between Houston Natural Gas and InterNorth by Houston’s Natural Gas’s CEO Kenneth Lay. It was considered one of the world’s leading electricity, natural gas, communications, and pulp and paper companies before becoming bankrupted in 2001. Enron incurred in a massive debt and in order to survive Kenneth Lay hired McKinesy & CO who assigned Jeffrey Skilling whom had a background in banking and asset and liability management. Kenneth was so impressed with Skilling’s genius that he created a new division in 1990 called Enron Finance Corp. and hired Skilling to run it (Thomas, 2002). Jeffrey Skilling enlisted Andrew Fastow who oversaw the building of the company’s vast trading operations, and it’s financing by ever more complicated means. He moved up quickly and found himself as CFO in 1998. Just shortly after six months, Jeffrey Skilling, chief executive unexpectedly resigned for personal reasons leaving Chairman Kenneth Lay to reassume the office. Arthur Andersen was once known as a major player in the accounting profession. Arthur Andersen provided Enron with external and internal auditing, as well as consulting services. May of 2001, Enron’s executive chief strategy officer and vice chairman Clifford Baxter left the company, due to uncontroversial circumstances. It was rumored that Baxter, who later committed suicide, had clashed with Jeff Skilling. Enron had three main business units – Wholesale Services, Energy Services, and Global Services. Their services were offered to thousands of customers around the world. The wholesale service unit was responsible for...
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