Enron - A Lesson in accounting failure

Enron Corporation was an energy, commodities, and services company based in Houston, USA.

At its peak, Enron was one of the largest companies in the United States, employing over 20,000 people and claiming revenues of $111 billion in 2000.

However, it filed for bankruptcy in December 2001 in one of the largest accounting scandals in history.

Enron’s downfall stemmed from the misuse of financial reporting mechanisms, which allowed the company to hide its true financial position.

When the truth about Enron’s accounting practices came to light, its stock price plummeted from $90 per share to less than $1 within months.

The company filed for bankruptcy on December 2, 2001.

In response to the scandal, the U.S. government introduced the Sarbanes-Oxley Act of 2002 (SOX), which established stricter rules for financial reporting, auditing, and corporate governance.