1. Introduction
The Enron collapse, occurred in October 2001, consequently caused the bankruptcy of the whole Enron Corporation, the world’s leading energy, commodities and services company, as well as the dissolution of Arthur Andersen, which was one of the top five largest audit and accountancy firms in the world. Noteworthy it was not only the largest bankruptcy proceeding in American history at that time, but also the most serious audit failure, so that one says, “Enron is fraud and fraud is Enron”. The rise of Enron was almost as fast as its failure. Actually, it was an unbelievable failure of a company with 20,000 employees and operations in 40 countries as well as with claimed revenues of nearly 111 billion USD in 2000. And still this failure taught a good lesson both to the companies conducting doubtful accounting practices and activities and government, so that the latter took various steps to improve regulatory environment and prevent fraudulent practices. This case study is aimed to provide a comprehensive case analysis including case background’s description and discussion of problems and key issues raised in the case, and to develop alternative solutions to the respective problems and generate proper management recommendations.
Keywords: Enron case, Enron Corporation, accounting fraud, fraudulent pratcticies, management control model, CEO, derivatives, futures, governance system, audit, commodity products.
2. Case Background
