Arthur Andersen’s Fall
Arthur Andersen –
Arthur Andersen was one of the Big Five accounting firms along with PWC, EY, KPMG and Deloitte providing auditing and consulting to corporations.
It was founded on 1st December, 1913 by a Norwegian Arthur Andersen and Clarence DeLany as Andersen DeLany & Co. The firm changed name to Arthur Andersen & Co. in 1918.
Arthur Andersen always maintained high standards and ethics in the accounting industry, especially till the death of Mr.Andersen. In 1914, Mr.Andersen told a client that there is not enough money in the city of Chicago to make him manipulate accounts.
Andersen helped automate the bookkeeping. One of Andersen’s engineer named Joseph Glickauf developed a device that helped companies automate their bookkeeping. Andersen earned huge sums of money selling this technology.
Post 1970, the major accounting firms including Arthur Andersen earned an increasing part of their revenue through consulting services. As a result, the consulting arm of Arthur Andersen witnessed huge increase in its revenue while audit arm could not match consulting arm’s growth. This caused dissent among the consulting partner’s as they believed that they were not getting fair share of firm’s revenue.
In 1989, Andersen Consulting and Arthur Andersen became separate units of Andersen Worldwide Société Coopérative (AWSC). Arthur Andersen used its audit practice to generate more consulting business.
But despite the division, the two units kept resenting each