Andrew Fastow, Robert Jaedicke, and the Anderson auditing firm all contributed to the eventual downfall of Enron Corporation. Andrew Fastow and his subsequent actions were the main reason for the collapse of the energy giant. In order to increase his company standing as well as personal wealth formed shady partnerships to hide company debt and balloon profits. He did this by requesting that the board suspend its corporate ethics code twice to set up these partnerships. This ethics code was formed to ensure that no Enron employee would be involved in outside partnerships or have any conflicts of interest. Mr. Fastow bears the burden of this fiasco by knowingly deceiving the auditors, the board, and investors. His unethical decision to forge these partnerships and bloat profits for personal gain, cost employees their personal retirement, and investors of millions of dollars.
The audit committee chaired by Robert Jaedicke exacerbated to downfall of Enron Corporation by being very easily manipulated and in taking such a passive role in it's auditing procedures. The auditing committee had a very diverse membership and had very weak attendance to most meetings and votes. The members that were local and had better attendance were very cozy with Enron Corp. and had interests and ties that would benefit from Enron having better profits. Robert Jaedicke, a retired accounting professor, held the lead position since he was inducted to the committee in 1985. This could have added to the to the problem as his long tenure may have contributed to the boards approach. Most auditing boards switch heads every three to five years to maintain distance from management. This board also failed be involved with the Anderson auditing firm, which proved to be a huge mistake. Anderson personal, not forced to report to them and be accountable to them, continued to go to management with their reports and concerns.
