Enron Corporation

ACCOUNTING FRAUD CAUSED the seventhlargest corporation in United States to fall victim to white-collar crime. Its demise was due to accounting practices in violation of Securities and Exchange Commission (SEC) regulations. It is the classic case of the devil is in the details. From its founding in 1981 until the late 1990s, Enron was a dynamic, expanding energy corporation. The larger it grew, the more it diversified.

The accounting fraud at Enron was complex, but it is why it collapsed. Enron annual reports to shareholders stated very high earnings but kept nearly all its debt off the annual reports by stating in a footnote that a special purpose entity (SPE) covered the debts. The use of special purpose entities is a legitimate practice but there are ...