The Arthur Andersen And Enron Debacle

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Andersen LLP is self governed and maintains its' owns capital structure and leadership. The firm has been in operation since 1913 and its' headquarters is in Chicago, Illinois. (Clarifying the Structures) The company also maintains offices in fifty cities around the country including Seattle, Miami, and Los Angeles. For the fiscal year ending August 2001 Andersen Worldwide1 made over 9 billion dollars in revenues. (Andersen Revenues by Geographic Area)

The primary functions of the firm are auditing and consulting. The firm also performs several other services including assurance and business advisory, tax and business advisory, transaction advisory and global corporate finance services. Auditors at Andersen are Certified Public Accountants with advanced degrees and many are viewed as experts in their field. An auditor's duty is to ensure that the accounting practices of a firm are legitimate and that the financial information that is provided to the public is accurate and ...

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was monumental it effected millions of shareholders, employees and countless others who had retirement savings invested in Enron. When it collapsed its shareholders lost 60 billion dollars. (Enron: virtual company, virtual profits)

In the mid 90's Enron began to struggle to maintain acceptable credit ratings. In an effort to satisfy Moody's and Standard & Poor's credit rating agencies, Enron had to ensure that the firms' leverage ratios were within an acceptable range. Fastow, who was at the time Enron's CFO, lobbied the ratings agencies to raise Enron's credit rating, but was unsuccessful. This led the company to pursue other methods of lowering the debt ratio. According to the ...

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