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Chapter 5. What it Meant to “Do the Righ... > The Key Role of the Accountants

The Key Role of the Accountants

Enron's accountants could have put a stop to the machinations promoted by Wall Street by refusing to let Enron record them in its financial statements in ways that essentially concealed them and their consequences from investors. But its accountants instead accepted the entities, and the financial statements that made use of them, as consistent with generally accepted accounting principles. The auditors also accepted other financial devices which inflated sales figures and understated expenses, thereby increasing reported profits. It seems that Enron was even allowed by its auditors to borrow money and report the money as operating cash flow.[23]

Why did they do it? Perhaps because Enron was a major customer of the accounting firm Arthur Andersen for consulting services as well. Such services tend to be far more lucrative to the accounting firms than are their auditing services.


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