Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing auditing, tax, and consulting services for large corporations. In 2002 the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the U.S. pending the result of prosecution by the Department of Justice over the firm's handling of the auditing of Enron, the energy corporation, resulting in the loss of 85,000 jobs. A limited liability partnership (LLP) has elements of partnerships and corporations. ... Nickname: Motto: Urbs in Horto (Latin: City in a Garden), I Will Location in the Chicago metro area and Illinois Coordinates: , Country State Counties Cook, DuPage Settled 1770s Incorporated March 4, 1837 Government  - Mayor Richard M. Daley (D) Area  - City 234. ... Official language(s) English[1] Capital Springfield Largest city Chicago Largest metro area Chicago Metropolitan Area Area  Ranked 25th  - Total 57,918 sq mi (140,998 km²)  - Width 210 miles (340 km)  - Length 390 miles (629 km)  - % water 4. ... It has been suggested that Accounting scholarship be merged into this article or section. ... Professional Services are infrequent, technical, or unique functions performed by independent contractors or consultant whose occupation is the rendering of such services. ... “Taxes” redirects here. ... For other uses, see Consultant (disambiguation). ... Professional Services are infrequent, technical, or unique functions performed by independent contractors or consultant whose occupation is the rendering of such services. ... For the tax agency in Ireland of the same name, see Revenue Commissioners. ... The United States dollar is the official currency of the United States. ... This article is about work. ... A website (alternatively, Web site or web site) is a collection of Web pages, images, videos or other digital assets that is hosted on one or several Web server(s), usually accessible via the Internet, cell phone or a LAN. A Web page is a document, typically written in HTML... The Supreme Court Building, Washington, D.C. The Supreme Court Building, Washington, D.C., (large image) The Supreme Court of the United States, located in Washington, D.C., is the highest court (see supreme court) in the United States; that is, it has ultimate judicial authority within the United States... Court membership Case opinions Laws applied 18 U.S.C. § 1512(b)(2)(A) and (B) (2000 version which has since been modified by Congress) Arthur Andersen LLP v. ... Nickname: Motto: Urbs in Horto (Latin: City in a Garden), I Will Location in the Chicago metro area and Illinois Coordinates: , Country State Counties Cook, DuPage Settled 1770s Incorporated March 4, 1837 Government  - Mayor Richard M. Daley (D) Area  - City 234. ... The Big 4, sometimes written as the Big Four, is a group of international accountancy and professional services firms that handles the vast majority of audits for publicly traded companies as well as many private companies. ... A former PwC office building (Southwark Towers) in London, England. ... Deloitte & Touche (also referred to as Deloitte Touche Tohmatsu, and branded as Deloitte. ... Ernst & Young is one of the largest professional services firms in the world, and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte) and KPMG. Ernst & Young is a global organization consisting of many member firms. ... KPMG is one of the largest professional services firms in the world. ... Basic definition Audit is the examination of records and reports of a company, in order to check that what is provided is relevant and accurate. ... “Taxes” redirects here. ... For other uses, see Consultant (disambiguation). ... For other uses, see Corporation (disambiguation). ... Certified Accountant redirects here. ... For other uses of terms redirecting here, see US (disambiguation), USA (disambiguation), and United States (disambiguation) Motto In God We Trust(since 1956) (From Many, One; Latin, traditional) Anthem The Star-Spangled Banner Capital Washington, D.C. Largest city New York City National language English (de facto)1 Demonym American... The Robert F. Kennedy Department of Justice Building in Washington, D.C. “Justice Department” redirects here. ... For other uses, see Audit (disambiguation). ... Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. ...

One of the few revenue-generating assets that the Andersen firm still has is The Q Center, a conference and training facility outside of Chicago.

History

Founding

Arthur Andersen (1885-1947) - In 1913, Arthur Andersen and Clarence Delaney, both from Price Waterhouse, bought out The Audit Company of Illinois to form Andersen, Delaney & Co which became Arthur Andersen & Co. in 1918. Andersen Consulting split from the parent in 1989 to become the largest consulting firm in the world, and it was renamed Accenture on 01 Jan 2001.

The firm of Arthur Andersen was founded in 1913 by Arthur Andersen and Clarence DeLany as Andersen, DeLany & Co ^[1]. The firm changed its name to Arthur Andersen & Co. in 1918. Arthur Andersen's first client was the Joseph Schlitz Brewing Company, a beer maker in Milwaukee. Image File history File links No higher resolution available. ... Image File history File links No higher resolution available. ... ... Accenture (NYSE: ACN) is a global management consulting, technology services and outsourcing company. ... Management consulting (sometimes also called strategy consulting) refers to both the practice of helping companies to improve performance through analysis of existing business problems and development of future plans, as well as to the firms that specialize in this sort of consulting. ... Accenture (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services and outsourcing company. ... A Schlitz advertisement from 1953 The Joseph Schlitz Brewing Company was an American brewery based in Milwaukee, Wisconsin. ... For other uses, see Beer (disambiguation). ... This article is about Milwaukee in Wisconsin. ...

The son of a Norwegian immigrant, Andersen was left on his own at the age of 16 after the death of his parents. He worked during the day as a mailboy and attended school at night. Eventually he was hired as the assistant to the controller of Allis-Chalmers in Chicago where he became intrigued with the work of independent public accountants. He received a degree as a certified public accountant at the University of Illinois in 1908; at age 23 he was the youngest CPA in Illinois. In 1917, after attending courses at night while working full time, he graduated from the Kellogg School at Northwestern University with a bachelor's degree in business. Immigration is the act of moving to or settling in another country or region, temporarily or permanently. ... A controller is a person or device that exercises or attempts to exercise control or influence. ... Certified Accountant redirects here. ... A Corner of Main Quad The University of Illinois at Urbana-Champaign (UIUC, U of I, or simply Illinois), is the oldest, largest, and most prestigious campus in the University of Illinois system. ... The Kellogg School of Management at Northwestern University, officially named the , is also known as The Kellogg School or simply Kellogg. ... Northwestern University (NU) is a selective private, nonsectarian, coeducational research university with campuses located in Evanston, Illinois and downtown Chicago, Illinois. ...

He worked for an accounting firm in Chicago and as a controller for the Schlitz Brewing Co. in Milwaukee. In 1913 at the age of 28, he entered into business for himself under the firm name of Arthur Andersen & Co. In 1915, due to his many contacts there, the Milwaukee office was opened as the firm's second office. From 1912-22, he was a professor of accounting at Northwestern University where he was the first to design courses that forced accounting students to deal with practical operating problems of business organizations. A controller is a person or device that exercises or attempts to exercise control or influence. ... Schlitz is an American beer, often considered the archetype of working-class beers brewed in Milwaukee, Wisconsin. ... Northwestern University (NU) is a selective private, nonsectarian, coeducational research university with campuses located in Evanston, Illinois and downtown Chicago, Illinois. ...

Andersen had an unwavering faith in education as the basis upon which the new profession of accounting should be developed. He created the profession's first centralized training program and believed in training during normal working hours. He was generous in his commitment to aiding educational, civic and charitable organizations. In 1927, he was elected to the Board of Trustees of Northwestern University and served as its president from 1930 to 1932. He was also chairman of the board of certified public accountant examiners of Illinois. It has been suggested that Accounting scholarship be merged into this article or section. ...

Reputation

Andersen, who headed the firm until his death in 1947, was a zealous supporter of high standards in the accounting industry. A stickler for honesty, he argued that accountants' responsibility was to investors, not their clients. During the early years, it is reputed that Andersen was approached by an executive from a local rail utility to sign off on accounts containing flawed accounting, or else face the loss of a major client. Andersen refused in no uncertain terms, replying that he would not sign the accounts "for all the money in America." Leonard Spacek, who succeeded Andersen at the founder's death, continued this emphasis on honesty. For many years, Andersen's motto was "Think straight, talk straight." It has been suggested that Accounting scholarship be merged into this article or section. ...

Andersen also led the way in a number of areas of accounting standards. Being among the first to identify a possible sub-prime bust, Andersen dissociated itself from a number of clients in the 1970s. Later, with the emergence of stock options as a form of compensation (which became particularly prevalent in the late-1990s), Andersen was the first of the major accountancy firms to propose to the FASB that stock options should be expensed, thus impacting on net profit just as cash compensation would. A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). ... The Financial Accounting Standards Board is a major organization to develop Generally Accepted Accounting Principles in the United States (US GAAP) along with SEC, AICPA, and GASB. It was created in 1973 and replaced its predecessor, the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute...

By the 1980s, standards throughout the industry fell as accountancy firms struggled to balance their commitment to audit independence against the desire to grow their burgeoning consultancy practices. Having established a reputation for IT consultancy in the 1980s, Andersen was no exception. The firm rapidly expanded its consultancy practice to the point where the bulk of its revenues were derived from such engagements, while audit partners were continually encouraged to seek out opportunities for consulting fees from existing audit clients. By the late-1990s, Andersen had succeeded in tripling the per-share revenues of its partners.

Predictably, Andersen struggled to balance the need to maintain its faithfulness to accounting standards with its clients' desire to maximise profits, particularly in the era of quarterly earnings reports. Andersen has been alleged to have been involved in the fraudulent accounting and auditing of Sunbeam Products, Waste Management, Inc., Asia Pulp and Paper, and the Baptist Foundation of Arizona, WorldCom, as well as the infamous Enron case, among others. Sunbeam Products is an American company that has produced electric home appliances since 1910. ... Waste Management, Inc. ... The Baptist Foundation of Arizona (BFA) was a Southern Baptist Charity whose fraudulent behavior led to the largest collapse of a religious financial institution in the nations history. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. ...

Andersen Consulting and Accenture

Revenue per year in million US dollars, source : corporate press releases

The consulting wing of the firm became increasingly important during the 1970s and 1980s, growing at a much faster rate than the more established accounting, auditing, and tax practice. This disproportionate growth, and the consulting division partners' belief that they were not garnering their fair share of firm profits, created increasing friction between the two divisions. Image File history File links This is a lossless scalable vector image. ... Image File history File links This is a lossless scalable vector image. ...

In 1989, Arthur Andersen and Andersen Consulting became separate units of Andersen Worldwide. Andersen increased its use of accounting services as a springboard to sign up clients for Andersen Consulting's more lucrative business. Accenture (NYSE: ACN) is a global management consulting, technology services and outsourcing company. ... Andersen Worldwide Société Coopérative (AWSC) was a Swiss-based entity which managed the global offices of accounting firm Arthur Andersen. ...

The two businesses spent most of the 1990s in a bitter dispute. Andersen Consulting saw a huge surge in profits during the decade. However, the consultants continued to resent transfer payments they were required to make to Arthur Andersen. In August 2000 the conclusion of the International Chamber of Commerce granted Andersen Consulting its independence from Arthur Andersen, but awarded the $1.2 billion in past payments (held in escrow pending the ruling) to Arthur Andersen, and declared that Andersen Consulting could no longer use the Andersen name. As a result Andersen Consulting changed its name to Accenture on New Year's Day 2001. Year 2000 (MM) was a leap year starting on Saturday (link will display full 2000 Gregorian calendar). ... The International Chamber of Commerce (ICC) is an international organization that works to promote and support global trade and globalization. ... Accenture (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services and outsourcing company. ... This article is about the date January 1 in the Gregorian calendar. ... Year 2001 (MMI) was a common year starting on Monday (link displays the 2001 Gregorian calendar). ...

Perhaps most telling about who had "won" the decision was that four hours after the arbitrator made his ruling, Arthur Andersen CEO Jim Wadia suddenly resigned. Industry analysts and business school professors alike viewed the event as a complete victory for Andersen Consulting ^[2]. Jim Wadia would provide insight on his resignation years later at a Harvard Business school case activity about the split. It turned out that the Arthur Andersen board passed a resolution saying he had to resign if he didn't get at least an incremental $4 billion (either through negotiation or via the arbitrator decision) for the consulting practice to split off, hence his quick resignation once the decision was announced.^{[citation needed]}

Accounts vary on why the split occurred — executives on both sides of the split cite greed and arrogance on the part of the other side, and executives on the Andersen Consulting side maintained breach of contract when Arthur Andersen created a second consulting group, AABC (Arthur Andersen Business Consulting) which began to compete directly with Andersen Consulting in the marketplace. Many of the AABC firms were bought out by other consulting companies in 2002, most notably, Hitachi Consulting and KPMG Consulting, which later changed its name to BearingPoint. It has been suggested that Hitachi Works be merged into this article or section. ... BearingPoint, Inc. ...

Involvement in accounting scandals

On June 15, 2002, Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron, resulting in the Enron scandal. Nancy Temple (Andersen Legal Dept.) and David Duncan (Lead Partner for the Enron account) were cited as the responsible managers in this scandal as they had given the order to shred relevant documents. Since the U.S. Securities and Exchange Commission does not allow convicted felons to audit public companies, the firm agreed to surrender its licenses and its right to practice before the SEC on August 31, 2002. This effectively ended the company's operations. is the 166th day of the year (167th in leap years) in the Gregorian calendar. ... Also see: 2002 (number). ... Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. ... The Enron scandal was a financial scandal that was revealed in late 2001. ... This article or section does not cite its references or sources. ... David Duncan (born 1960), is the United States governments star witness in the Arthur Andersen trial. ... The U.S. Securities and Exchange Commission, commonly referred to as the SEC, is the United States governing body which has primary responsibility for overseeing the regulation of the securities industry. ... is the 243rd day of the year (244th in leap years) in the Gregorian calendar. ... Also see: 2002 (number). ...

The Andersen indictment also put a spotlight on its faulty audits of other companies, most notably Sunbeam and WorldCom. The subsequent bankruptcy of WorldCom, which quickly surpassed Enron as the biggest bankruptcy in history, then led to a domino effect of accounting and other corporate scandals that continues to tarnish American business practices. Sunbeam Products is an American company that has produced electric home appliances since 1910. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration—see text) in the United Kingdom. ...

On May 31, 2005, in the case Arthur Andersen LLP v. United States, the Supreme Court of the United States unanimously reversed Andersen's conviction due to what it saw as serious flaws in the jury instructions.^[3] In the court's view, the instructions allowed the jury to convict Andersen without proving that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents. The opinion, written by Chief Justice William Rehnquist, was also highly skeptical of the government's concept of "corrupt persuasion"--persuading someone to engage in an act with an improper purpose even without knowing an act is unlawful. is the 151st day of the year (152nd in leap years) in the Gregorian calendar. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... Court membership Case opinions Laws applied 18 U.S.C. § 1512(b)(2)(A) and (B) (2000 version which has since been modified by Congress) Arthur Andersen LLP v. ... Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      The Supreme Court of the United States (sometimes colloquially referred to by the... William Hubbs Rehnquist (October 1, 1924 – September 3, 2005) was an American lawyer, jurist, and a political figure who served as an Associate Justice on the Supreme Court of the United States and later as the Chief Justice of the United States. ...

Despite this ruling, it is highly unlikely Andersen will ever return as a viable business even on a limited scale. The firm lost nearly all of its clients when it was indicted, and there are over 100 civil suits pending against the firm related to its audits of Enron and other companies. In addition, its reputation was so badly tarnished that no company wanted Andersen's name on an audit. Even before voluntarily surrendering its right to practice before the SEC, it had many of its state licenses revoked. It began winding down its American operations after the indictment, and many of its accountants bolted to other firms. From a high of 28,000 employees in the US and 85,000 worldwide, the firm is now down to around 200 based primarily in Chicago. Most of their attention is on handling the lawsuits and presiding over the orderly dissolution of the company. Arthur Andersen, LLP has not been formally dissolved nor has it declared bankruptcy. Ownership of the partnership has been ceded to four limited liability corporations named Omega Management I through IV.

See also

• Accenture
• Accounting scandals
• Conspiracy of Fools
• Corporate abuse
• List of notable business failures
• Timeline of the Enron scandal
• Arthur Andersen LLP v. United States

Accenture (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services and outsourcing company. ... Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. ... Conspiracy of Fools is a book by Kurt Eichenwald detailing the Enron scandal. ... Corporate abuse refers to incidents that involve unethical behavior on behalf of a corporation; a case of corporate abuse may be a scandal, fraud, or negligence toward the corporations employees and/or the local community. ... The following is a list of notable business failures, known either for marking the end of a well-known brand, for criminal proceedings associated with their demise (often fraud or other corporate crime), or for causing significant financial problems (or suffering from them). ... Timeline of the Enron scandal: // CFO Andrew Fastow begins committing crimes by creating off-book entities for personal enrichment [1] Andrew Fastow creates Chewco in an effort to hide debt and inflate profits but Chewco doesnt meet requirements to keep it off Enrons balance sheet. ... Court membership Case opinions Laws applied 18 U.S.C. § 1512(b)(2)(A) and (B) (2000 version which has since been modified by Congress) Arthur Andersen LLP v. ...

References

1. ^ Arthur Andersen: Challenging the Status Quo; American National Business Hall of Fame
2. ^ Arbitrator's Ruling Goes Against Accounting Arm: Consultants Win Battle Of Andersen; International Herald Tribune
3. ^ Arthur Andersen, LLP v. United States, 544 U.S. 696 (2005)

External links

• Frontline PBS video about Andersen

• U.S. official site
• Indictment of U.S. v. Arthur Andersen, LLP.
• Copy of Andersen attorney Nancy Temple's e-mail
• Supreme Court Overturns Conviction in Arthur Andersen LLP, Petitioner v United States

Articles

• Arthur Andersen and the Baptists (Salon.com)