Enron and Arthur Anderson were both giants in their own industry. Enron, a Texas-based energy trading company, was expanding rapidly in both domestic and global markets. Arthur Anderson, LLC. (Anderson), based in Chicago, was well established as one of the big five accounting firms. But the means by which they achieved this status became questionable and ultimately contributed to their demise. Enron used what are often called “creative” accounting methods, which led to the posting of record earnings. Anderson, who earned large audit and consulting fees from Enron, failed to meet the audit standards required in their work. Investigations and reports have led to finger-pointing and blame-placing, but both companies contributed to one of the most notorious accounting scandals in history. Much speculation remains as to what measures could and should have been taken to protect innocent victims and numerous investors from the enormous losses resulting from this scandal. Accounting Practices at Enron Unethical accounting practices involving Enron date back to 1987. Enron's use of creative accounting involved shifting profits from one period to another to manipulate earnings. Anderson, Enron's auditor, investigated and reported these unusual transactions to Enron's audit committee, but failed to discuss the illegality of the acts (Girioux, 2008). Enron decided that the act was irrelevant and Anderson accepted their decision. At this point, the auditors should have reassessed their risk assessment of Enron's internal controls in light of how the matter was handled and the risks Enron was willing to take The history of unethical accounting practices... half of the paper ... ...6). Enron and Arthur Andersen: The Case of the Crooked E and the Fallen A. Global Perspectives on Accounting Education: Vol. 3: Iss. 1, Article 3. Retrieved from: http://digitalcommons.bryant.edu/gpae/vol3/iss1/3Giroux, G. (Winter 2008). What went wrong? Accounting fraud and lessons from recent scandals. Social Research, 75, 4. p.1205 (34). Retrieved June 16, 2011, from Academic OneFile via Gale: http://find.galegroup.com.proxy.davenport.edu/gtx/start.do?prodId=AONE&userGroupName=lom_davenportcSarbanes-Oxley Act of 2002 (SOX), Pub. L. n. 107-204, 116 Stat. 745 (codified as amended in sparse sections of 15 USC) Thomas, C.W. (April 2002). The rise and fall of Enron. When a company seems too good to be true, it usually is. Journal of Accountancy, retrieved June 15, 2011, from http://www.journalofaccountancy.com/Issues/2002/Apr/TheRiseAndFallOfEnron.htm