The bankruptcy of Enron not only significantly impact the employment and pension of workers, but also the relevant major financial institutions, including investment Banks, commercial Banks, pension funds and mutual funds.
On Feb. 14th, 2002, the international accounting standards foundation chairman and former Federal Reserve chairman Paul pointed out that the obvious problems in accounting and auditing profession has formed a kind of crisis after a long-term period of existence. A typical case of this crisis would be Enron. Causation of the anxiety would be the overstatement of income, suspicion of forecast earning, and unclaimed money in the business account, which are usually the result of audit failure of company. Accounting audit profession crisis is not only the failure of a company or problems appeared in the audit. From the point of view of the on-looking, it is luckily that the international accounting standards foundation chairman personally saves the fate of Arthur Andersen accounting firm (Healy & Krishna, 2003). After that, according to the related media reports, American Arthur Andersen accounting firm claim to compensate Christian protestant Baptist Arizona foundation 217 million dollars for the audit responsibility loss, simultaneously prepare 800 million us dollars in order to strive for reach external audit responsibility mediation agreement of Enron event. Afterwards, American Arthur Andersen Company interrupted the external audit employment relationship.
On January 29th, 2002, President Bush, in the annual state of the union, alluded to that the Enron scandal and bankruptcy accounting events have directly affected some economic management major problems, including accounting standard problem. American companies have to be responsible for employees and shareholders while adhere to the highest level code of conduct through the more strict accounting standards and more strong information disclosure regulation (Bodurtha, 2003)....
References: Healy, P. M.; Krishna G. P. (2003). "The Fall of Enron" (PDF). Journal of Economic
Gerth, J.; Richard, A. Oppel, J. (2001). "Regulators struggle with a marketplace created by Enron". The New York Times.
Bodurtha, J. (2003). "Unfair Values"–Enron 's Shell Game. Washington, D.C.: McDonough School of Business. p. 2.
Please join StudyMode to read the full document