Get In Touch

How the Enron scandal led to the fall of Arthur Andersen and the end of the Big 5?

    Share on

In the early 2000s, the world's top accounting firms were known as the "Big 5": Deloitte, PwC, EY, KPMG, and Arthur Andersen. But everything changed after the infamous Enron scandal.

 

Enron, a Texas-based energy company, was once celebrated for innovation in energy trading. However, in 2001, it was revealed that Enron had been hiding billions in debt using complex structures called Special Purpose Entities (SPEs).

 

These accounting tricks made the company appear far more profitable than it actually was.

 

Shockingly, Enron's auditor was Arthur Andersen, which not only missed the fraud but was later caught shredding crucial audit documents during the investigation. This obstruction of justice raised serious ethical concerns.

 

In December 2001, Enron filed for bankruptcy, and by 2002, Arthur Andersen was convicted, and its license to audit public companies was revoked. The fallout was massive - over 85,000 employees were affected, and the Big 5 became the Big 4.

 

Though Andersen's conviction was later overturned, the damage was irreversible. Had the scandal not occurred, Arthur Andersen might still be a dominant force in global accounting today.

Share:

Post a comment

Your email address will not be published. Required fields are marked *

Markets shudder as oil rockets - 1% stock slide sparks fear of Geopolitical fallout!

Markets shudder as oil rockets - 1% stock slide sparks...

Stocks dropped nearly 1% as oil surged amid Israel‑Iran tensions, triggering global equities sell‑off and...
CCPA Cracks Down on 'Dark Patterns': E-Commerce Platforms Ordered to Self-Audit Within 3 Months

CCPA Cracks Down on 'Dark Patterns': E-Commerce Platforms Ordered to...

India's consumer watchdog mandates e-commerce platforms to self-audit and eliminate deceptive 'dark patterns' within three...
Tinder's Giant Pink Truck Lets You Dump Your Ex- LITERALLY!

Tinder's Giant Pink Truck Lets You Dump Your Ex- LITERALLY!

Tinder launched a pink "Emotional Baggage Disposal Unit" truck, letting people dump gifts and memories...
Amazon’s Starlink rival is finally in Orbit!

Amazon’s Starlink rival is finally in Orbit!

Amazon launched its first 27 Kuiper satellites to rival SpaceX’s Starlink, marking the start of...
Bhumika Realty Plans Big with Rs 2000 Crore Goal

Bhumika Realty Plans Big with Rs 2000 Crore Goal

Bhumika Realty targets Rs 2,000 crore revenue in FY25, fueled by key projects in Gurugram...
What is omnichannel marketing?

What is omnichannel marketing?

Omnichannel marketing connects all customer touchpoints- online, in-store, mobile, and more for a seamless, personalized...

Login

Don’t you have an account ?

Register