© D.L. Crumbley
Enron’s management figured an ingenious method of overriding the double-entry of accounting. They simply ignored it.
It remains the simplest, most elegant financial fraud. Enron created special-purpose entities (SPEs) and pledged Enron stock – just pieces of paper.
If the SPE was successful, they recognized income.
When the SPE had huge losses they issued more paper. Debts were filed off-balance sheet in the partnerships.
Source: Joe Anastasi, The New Forensics, John Wiley & Sons, 2003, p. 92-93.