Escolar Documentos
Profissional Documentos
Cultura Documentos
Contents
1 Introduction
2 Historical Background
3 Causes of Downfall
5 Conclusion
2 31/3/18
Introduction
Arthur Andersen, one of the “Big Five” global
accounting firms.
It is collapsed in 2002 following a series of accounting
scandals from sunbeam corporation to waste
management to Enron corporation to WorldCom of
which it was the auditor.
In late 2002, Andersen filed for bankruptcy.
3 31/3/18
Timeline of Rise of Arthur Andersen
4 31/3/18
Historical Background
A 28-year-old accounting professor started his own
business in 1913 in Chicago (Andersen, Delany &
Co).
In 1918 DeLany left, and the firm changed its
name to Arthur Andersen & Co.
The company developed a philosophy that focused
on building a solid corporate culture among all
Andersen employees.
Arthur Andersen worked before in Price Waterhouse
with Clarence Delaney.
In the1930s, the federal government adopted new
laws to require public companies to submit their
financial statements to an independent auditor
every year. Firm’s Growth
5 31/3/18
Historical Background
Promotion of “4 cornerstones”:
Good service
Quality audits
Well-managed staff
Profits for the firm.
In 1947 Arthur Andersen died, during that period
his firm almost experienced a closed down.
Leonard Spacek, Andersen’s disciple, convinced
the company's partners to remain together despite
financial uncertainty, and became the managing
partner.
Arthur Andersen Corporation moved to the top of
its profession during Spacek’s term.
6 31/3/18
Company Development
7 31/3/18
Company Development
Andersen
Worldwide
Arthur Andersen
Andersen Consulting
8 31/3/18
Competitors
Accounting Firms
PwC
KPMG
Arthur
Andersen “Big Five”
Ernst &
Young
Deloitte
9 31/3/18
Causes of Downfall of Arthur Andersen
Pressure of Revenue
Cost-Cutting Policies
Poor Audits
Investigations
Obstructions in Investigations
10 31/03/18
Audit and Governance Flaws
Deficient Culture
Conflict of Interests
Lack of Independence
11 31/3/18
AA & AC Separation
13 31/3/18
Enron & AA
14 31/3/18
Enron & AA
15 31/3/18
WorldCom and AA
16 31/3/18
Arthur Andersen Collapse
The federal authorities after the Enron
collapse started the overall investigation of
other AA clients.
As a result, WorldCom, Qwest
Communications, Global Crossing, Merck and
Baptist Foundation of Arizona announced
themselves insolvent.
In the end, Andersen agreed to cease auditing
public corporations by the end of August in
2002, essentially marking the end of the
ninety-year-old accounting institution.
All the international offices of AA were bought
by the “big four”.
17 31/3/18
Arthur Andersen Collapse
18 31/03/18
Conclusion
19 31/3/18
References
http://www.termpaperwarehouse.com/search
_results.php?query=arthur+andersen&action
=search
http://www.consultingmag.com/article/ART646114
http://hbr.org/product/arthur-andersen-c-the-collapse-
of-arthur-andersen/an/KEL560-PDF-ENG
http://www.chicagotribune.com/news/chi-
0209010315sep01,0,538751.story
20 31/3//18
THANK YOU !