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Enrons audit firm was one of the 'big five' accounting firms. In 2002 Enron (a leading public-listed entity) filed for bankruptcy and this lead to the demise of its audit firm. Enron had carried out accounting malpractices leading to the firm looking better than it was, and eventually the firm having to declare bankruptcy because instead of being the alleged 'success' that it was, the firm was in fact a failure.

This is a key example of why accounting standards are needed, because without them users of financial statements can be fooled about the state of a business resulting in negative consequences for all involved.

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