CHAPTER 10
Assessment of the Financial Infrastructure
In 2001 we saw the collapse of the Enron Corporation and eventually the conviction of several of its senior managers for accounting fraud. Along with the collapse of Enron, and as a direct result of Enron’s failure, we also saw the collapse of Arthur Andersen, which had been Enron’s external audit firm. Arthur Andersen was one of the “big five” accounting firms, and its reputation was fatally tied to Enron. Arthur Andersen’s defense was that it could work only with the numbers provided to it by Enron, that its reports were based on accepted accounting practices, and therefore, that its work was sound. Unfortunately, during the Enron investigation, Arthur Andersen destroyed documents related ...
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