Please read the following sections of three Wikipedia postings about the Enron Scandal and the fall of the Big 8 accounting firm Arthur Anderson.

1. https://en.wikipedia.org/wiki/Enron_scandal (read the opening section, along with the two sections on Revenue Recognition and Special Purpose entities under the Causes of Downfall section, and read the Financial Audit section under the Corporate Governance section)

2. https://en.wikipedia.org/wiki/Arthur_Andersen (read the sections on Reputation and Enron Scandal/Demise)

3. https://en.wikipedia.org/wiki/Auditor_independence (read the section on Independence of the External Auditor)

Please answer:

a. What responsibility did the auditors have in their audit of Enron?

b. Who was their responsibility to?

c. Obviously they failed. Based on your review of the published facts, what do you think was the auditors downfall?