The aim of this study is
to describe and analyze the reason of collapse of the biggest energy company, the American company Enron, which
is considered one of the events that has a great effect on the
profession of accounting and auditing. This study focuses in the ethics, which is considered as a preventer
and a conservator of the occurrence of
collapses and financial scandals. The descriptive analysis approach was
adopted, which depended on the inductive methodology by inducting the studies and researches which
aimed to explain and analyze the reasons of the collapse of Enron company and
knowing the lessons learnt from it and the methods to avoid financial scandals like this. We are going to summarize some
lessons that can be learnt to avoid the same fate of Enron and regain
trust of the financial markets as well as both professions of accounting and auditing. This study is divided into an
introduction and four parts and a conclusion. The results find that there are many
reasons of the collapse of Enron company, the
most important is, the administration of the company made inflation of the
profits ostensibly up to billion dollars in the year before the company’s
collapse. Moreover, the internal audit in the company failed in the ethical and financial aspects as a result of continuous deception,
greed, bribery, speculation and fraud.
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