Enron and Arthur Anderson

The Enron and Arthur Anderson case that led to the collapse of Enron company was the biggest corporate bankruptcy in U.S. history. This collapse is one of many that was caused by altered financial statements that later became known to the public and the stocks crashed. Before this all became known to the public, Enron appeared to be doing fenomenal. Their annual revenues in the 1990's were at around 10 billion dollars, and in the year 2000 were at 101 billion dollars. The financial statement fraud began when the company used accounting techniques such as unconsolidated partnerships and “special purpose entities” to prevent certain accounts to show up on the reports. In August of 2001, this fraud began to get noticed by the public. The CEO Jeffrey Skilling resigned for reasons unknown and the company reported its first quarterly loss in 4 years. As more fraud became known, the company did worse and eventually it was downgraded to below investment-grade status. People stopped investing and Enron had to file for bankruptcy. Billions were lost in the stock market and many questions were raised about accounting laws and regulations that may need be changed or instilled into the law.

Sources: http://fpc.state.gov/documents/organization/9267.pdf
http://articles.castelarhost.com/enron_questionable_accounting_leads_to_collapse.htm