Enron collapse resulted from falling in auditing standards? Why?

Auditing is a way of keeping track of where money is coming from and where it is going. If there are no clear records of where the money is then no one can say how much money there is and therefore how much anything is worth at any given time. If you are investing money in other companies to avoid paying, say, taxes or insurance or pensions then that weakens consumer confidence and shareholder confidence which can cause investors to withdraw money. If the auditing company cannot account for where the money is then you get a lot of problems feeding back into the cycle and it collapses.

Enron was being investigated for financial fraud and other very illegal financial activities and their auditing company, Anderson, actually shredded many important documents and in teh process destroyed a paper trail that could have potentiallysaved the company and prevented the disaster that followed. Essentially there was a conflict of interests between the shareholders, the auditing company and Enron itself.

There are many articles on the collapse of enron which are freely available online, see wikipedia, the Economist, the wall street journal, the financial times, etc just google on of them and add "enron audit failure", for example "the economist enron audit failure".