The Collapse of Enron

Familiarity between client and auditor must be discouraged; long-standing links with big clients are especially good examples of where the audit may be less questioning. There also should be stronger regulation from the government and more independent review, at the extreme appointment of auditors by the state is a suggestion. The role of audit committees could be increased to help bring in some independence, though this did not work for Anderson as only one of the members spoke out. Most importantly though the industry must accept tougher limits in respect of the non-audit services it provides to its clients. The big firms will still wish to continue to provide the full range of accounting skills including tax advice and due diligence on mergers & acquisitions though it is dangerous to provide both to the same clients.…