Premium
Financial Statement Transparency and Auditor Responsibility: Enron and Andersen
Author(s) -
Sridharan Uma V.,
Caines W. Royce,
McMillan Jeffrey,
Summers Suzanne
Publication year - 2002
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2002.tb00018.x
Subject(s) - accounting , audit , business , transparency (behavior) , auditor independence , context (archaeology) , financial statement , joint audit , political science , law , internal audit , paleontology , biology
On December 2, 2001, Enron, once a global energy‐trading giant, filed for protection under Chapter 11 bankruptcy proceedings. In the weeks preceding the filing, numerous reports of accounting irregularities and the perception of a notorious lack of transparency in the company's financial statements raised questions about the responsibility and role played by Enron's auditor Arthur Andersen. On January 10, 2002 Andersen disclosed that employees at its Houston office had shredded thousands of documents and deleted several emails relating to the Enron audit. On March 14, the Justice Department indicted Andersen on charges of obstruction of justice relating to its inquiry into Enron's accounting. On June 15, 2002, a jury in a Texas court convicted Andersen of these charges. In the context of the Enron‐Andersen case, this paper investigates and discusses the importance of financial transparency, auditor independence and auditor responsibility for the health of global financial markets and the world economy.