The more that is learnt about the collapse of Enron, the wider the ramifications appear. The Enron debacle has highlighted fundamental systemic and regulatory weaknesses.

In the corporate world, a new scandal seems to surface, often with the same ingredientscorporate greed, gullible accounts, high-powered connections, and ruined investors. The latest such collapse is particularly a thought-provoking one. When the seventh-largest American corporation crashes and burns, the wreckage is diverse. Enron's debacle has shaken up the accounting and auditing profession, particularly Andersen, the auditor to the bankrupt Enron. The Securities and Exchange Commission (SEC) subpoenaed Andersen. Andersen is in deep waters for overstating Enron's earnings and for failing to scrutinize the company's off-the-books partnerships, which showed the company to be much more in debt than was stated on its balance sheets. In fact, this is not new for Andersen; its other accounting debacles include Sunbeam Corp. and Waste Management Inc. Concerns have been uttered for years about possible conflicts of interest arising from accounting firms performing consulting services for the companies they audit. Auditing firms are accused of using their auditing practice as a means of opening the door at a time to sell profitable consulting practices. Critics argue that this leads them to go easy on the companies they work for and to turn a blind eye to problems. Whatever the case, the auditing firms will have to burn the midnight oil to regain public confidence.

The Houston-based energy giant, Enron, founded by Kenneth Lay has transformed itself from an obscure
gas-pipeline company into the world's largest energy-trading firm both off- and online, in just over 15 years. Enron accounted for around 25 percent of energy trade in both United States and European markets. Encouraged by deregulation, the company turned to electricity to supplement its natural-gas business. Enron has won a string of awards, including Fortune's `America's most innovative company' for an unprecedented six years between 1996 and 2001 and also the Financial Times's `Energy Company of the year'. Enron's prominence came not only from the key role it played in world energy markets but also because under President George Bush, the US administration looked to its chairman Kenneth Lay for advice on energy. In August 2001, Fortune tipped the firm as one of the 10 growth stocks to last the decade. Enron pioneered the world's largest online commodity trading site. Enron was one of the most admired US companies; it recruits 250 newly graduated MBAs from the country's top business schools every year.

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