Question

What do you think were the underlying causes of the Enron scandal?

Answer 1

Underlying causes of the Enron scandal are provided below:-

1) There was a conflict of interest been played by Arthur Anderson

2) Corporate culture that encouraged greed and fraud. The top executives acted in their own self-interest. There was an environment of increasing arrogance that led them to believe that they would be able to handle greater risk without encountering any danger

3) The management's goal was to maintain the appearance of Enron value rather than showing the real financial position of the company and for that they created numerous subsidiaries

4) For internal auditing too, Enron outsourced external auditors