The Enron Company was founded in July 1985 following the merger of Houston Natural Gas, of which Kenneth Lay was president and CEO, and InterNorth, creating the largest gas transportation network company in the United States. In principle, this company was dedicated to the administration of gas pipelines and electricity transmission. The following year Lay was appointed director of the new company, which after just four years became one of the largest companies in the United States. We say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay In 1989, with the arrival of Jeffrey Skilling, the company discovered what accounting engineering is (liabilities becoming assets, loans calculated as income, "catch-up" debts, inflated benefits, etc.) With l The help of Arthur Andersen, who at the time was one of the five most important auditors in the world, committed the fraud, manipulating information into reports with large profits, when in fact, the debts far exceeded the profits. During 2001, an accounting discrepancy emerged, due to the poor application of accounting techniques. Three companies that should have been included, reflecting many liabilities that affected Enron's global accounts, were excluded from the company's consolidated balance sheets. Subsequently, Jeffrey Skilling, before the bankruptcy, resigned citing family reasons and sold the shares he owned in the company. Later, the company admitted that it had inflated its benefits, which sent its shares plummeting further. In October of the same year, Enron declared a loss of 638 million euros in its results for the third quarter of the year. In January 2002, the investigation into the Arthur Andersen case, the audit of the energy company, began. The jury found Andersen guilty of obstruction of justice in the "Enron case" for destroying documents about losses of more than a billion dollars in the company he controlled, which happened in June of that year. In January 2004, Skilling and Lay were charged with fraud. On May 25, 2006, Kenneth Lay, known as Enron's chairman, and Jeffrey Skilling, its former chief executive, were convicted of conspiracy to commit fraud. Lay and Skilling were charged with 6 and 28 counts of conspiracy, fraud and financial maneuvering to hide losses and exaggerate Enron's profits in order to attract money from investors. On July 5 of the same year, Kenneth Lay, 64, died of a heart attack and risked a sentence of up to 45 years in prison. On October 23, 2006, Jeffrey Skilling was sentenced to a 24-year prison term after being found guilty of 19 charges during his tenure in less than a year at the company and resigning just four months before bankruptcy . Remember: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay After the Enron fraud case, a law called “Sarbanes Oxley Law” was developed, which aims to establish stricter and more efficient internal control measures aimed at preventing publicly traded companies from committing fraud. For accountants and auditors, this law requires them to extend their testing before issuing an opinion that supports the information presented in companies' financial statements.