Enron's challenges with Financial Reporting Yes, Enron manipulated its earnings to impress the investors. The challenge with Enron's financial reporting mostly involved overstatement of revenues and hiding of liabilities so as to mislead investors on the company's financial conditions. Due to increasing industry competition, Enron diversified its investment in an attempt to maintain its position in the market. This resulted in unexpected huge losses instead of profits. For instance, Enron suffered substantial losses after a wrong decision to invest in fiber optics and broadband market in 1999. However, despite these losses, Enron never declared any information regarding its losses until 2001 (Wang, 2012). During these years, Enron achieved a bottom- line by overstating its revenues and hiding liabilities and losses. In 1998, 1999, and 2000, the company's revenue numbers were $40 billion, $60 billion, and $101 billion respectively. Other than manipulating its financial statements, Enron failed to disclose any risks to investors. Contrarily, the top executives at Enron disclosed a great earnings forecast, encouraging investors to purchase stocks at Enron. The company also suggested that its ovees invest the ron's audit