The Enron scandal has become the face of financial fraud in the world, surpassing all of history’s accounting fraud cases in terms of corporate malfeasance and auditing failures. Enron’s malice, together with the failure of auditing firm Arthur Andersen, swindled many retail investors of their hard-earned savings. It is important for investors to know how to protect ourselves, especially when our supposed accounts guardians (i.e. auditors) go rogue. In this article, we shall point out some accounting red flags investors should look out for, through some interesting case studies of past stock frauds. 1. HealthSouth HealthSouth was one of the largest healthcare providers in the United States that committed an infamous accounting scandal which was perpetrated from 1996 through 2002. HealthSouth CEO Richard Scrushy instructed the company’s senior officers and accountants to falsely inflate earnings by US$1.4 billion. This was done to meet investor expectations and chalk up ‘buy’ ratings...