The Enron company was founded in July 1985 following the merger of the Houston Natural Gas companies of which Kenneth Lay was president and CEO management and InterNorth, creating the largest gas transportation. network in the United States. In principle, this company was dedicated to the administration of gas pipelines, as well as the transportation of electrical energy. The following year, Lay was named director of the new company, which, after only four years, became one of the largest companies in the United States. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayIn 1989, with the arrival of Jeffrey Skilling, the company discovered what accounting engineering was (liabilities become assets, loans considered as income, "make-up" debt, inflated allowances, etc.) With the help of Arthur Andersen, who was at the time one of the five most important auditors in the world, they committed fraud, manipulating the information contained in the reports for great profit, when in fact the debts far exceeded the profits. During 2001, an accounting discrepancy appeared, resulting from poor application of accounting techniques. They were excluded from the consolidated balances of three companies expected to be included, in which they reflected many liabilities that affected Enron's global accounts. After that, Jeffrey Skilling, before the bankruptcy, resigned from his position citing family reasons and sold the shares he held in the company. Subsequently, the company admitted to inflating its profits, which caused its shares to plunge further. In October of the same year, Enron reported losses 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 affair" for destroying documents about losses of more than a billion dollars at the company he was auditing, this occurred in June of the same 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 executive director, were convicted of conspiracy to commit fraud. Lay and Skilling were charged with 6 and 28 counts of conspiracy, fraud and financial schemes to conceal 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 faced a sentence of up to 45 years in prison. On October 23, 2006, Jeffrey Skilling was sentenced to 24 years in prison after being convicted of 19 counts during his tenure in less than a year of his time at the company and resigned just four months before bankruptcy. Keep in mind: This is just a sample.Get a custom paper from our expert writers now.Get a custom essayAfter the Enron fraud case, a law called the “Sarbanes Oxley Act” was developed , which aims to establish more rigid and more effective internal control. measures to prevent listed companies from committing fraud. For accountants and auditors, this law requires them to extend their tests before issuing an opinion corroborating the information presented in the financial statements of companies..