Commentary: How Governance Rules Failed at Enron
The audit committee followed all the rules--but it let shareholders down
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By Louis Lavelle
One of the mysteries of Enron Corp.'s (ENE ) fall from grace is how an audit committee chock full of talent could have been blind to the company's financial sleight of hand. So far, speculation has centered around the apparent failure of Enron's auditors, Arthur Andersen LLP, to alert the audit committee to the problem until very late in the game. But the truth is, the audit committee deserves much of the blame for Enron's collapse--and the corporate governance movement deserves much of the blame for the Enron audit committee.