| Arthur Andersen | |
|---|---|
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| Type | Limited Liability Partnership |
| Founded | 1913 |
| Headquarters | Chicago, Illinois, USA |
| Industry | Accounting Professional Services Tax Consulting Licenses of Certified Public Accountants surrendered in 2002 |
| Products | Professional Services |
| Revenue | US$9. A limited liability partnership (abbreviated as LLP) has elements of Partnerships and Corporations. Chicago (ʃɪˈkɑːgoʊ is the largest City by population in the state of Illinois and the American Midwest of the United States. The State of Illinois ( roughly ill-i-NOY is a state of the United States of America, the 21st to be admitted to the Union. The United States of America —commonly referred to as the For other uses of this term see Industry (disambiguation An industry (from Latin industrius, "diligent industrious" Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, Professional services are infrequent technical or unique functions performed by independent contractors or consultants whose occupation is the rendering of such services In Marketing, a product is anything that can be offered to a Market that might satisfy a want or need Professional services are infrequent technical or unique functions performed by independent contractors or consultants whose occupation is the rendering of such services In business revenue or revenues is Income that a company receives from its normal business activities usually from the sale of goods and services The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been 3 billion (in 2002) |
| Employees | approx. Employment is a Contract between two parties, one being the employer and the other being the employee. 200 as of 2007 85,000 (in 2002) |
| Website | www.andersen.com |
Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations. A website (alternatively web site or Web site, a back-construction from the Proper noun World Wide Web) is a collection of Web pages Chicago (ʃɪˈkɑːgoʊ is the largest City by population in the state of Illinois and the American Midwest of the United States. The Big 4, sometimes written as the Big Four, are the four largest international Accountancy and Professional services firms which handle the vast majority PricewaterhouseCoopers (or PwC is one of the world's largest Professional services firms Deloitte Touche Tohmatsu (also branded as Deloitte) is one of the largest Professional services firms in the world and one of the Big Four auditors, along Ernst & Young is one of the largest Professional services firms in the world and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC, KPMG is one of the largest Professional services firms in the world The most general definition of an audit is an evaluation of a person organization system process project or product A corporation is a separate legal entity usually used to conduct business In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm's handling of the auditing of Enron, the energy corporation, resulting in the loss of 85,000 jobs. Certified Public Accountant ( CPA) is the Statutory title of qualified Accountants in the United States who have passed the Uniform The United States of America —commonly referred to as the The most general definition of an audit is an evaluation of a person organization system process project or product Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE was an American Energy company based in Although the verdict was subsequently overturned by the Supreme Court of the United States, it has not returned as a viable business. The Supreme Court of the United States is the highest judicial body in the United States and leads the federal judiciary.
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.
Contents |
History
Founding
The firm of Arthur Andersen was founded in 1913 by Arthur Andersen and Clarence DeLany as Andersen, DeLany & Co. Arthur E Andersen (1885-1947 was a founder of the accounting firm Arthur Andersen. [1] The firm changed its name to Arthur Andersen & Co. in 1918. Arthur Andersen's first client was the Joseph Schlitz Brewing Company of Milwaukee.
The son of a Norwegian immigrant, Andersen was left on his own at the age of 16 after the death of his parents. Norwegians See also History of Norway and Demography of Norway. Immigration refers to the movement of people among countries While the movement of people has existed throughout human history at various levels modern immigration implies long-term 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. Certified Public Accountant ( CPA) is the Statutory title of qualified Accountants in the United States who have passed the Uniform This article is about the flagship campus For other uses and locations of University of Illinois, see University of Illinois (disambiguation The University of 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.
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 to 1922, 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.
Andersen had an unwavering faith in education as the basis upon which the new profession of accounting should be developed. Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, 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.
Reputation
Andersen, who headed the firm until his death in 1947, was a zealous supporter of high standards in the accounting industry. Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, 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. "
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, 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. Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures The Financial Accounting Standards Board (FASB is a private Not-for-profit organization whose primary purpose is to develop generally accepted accounting principles
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 maximize 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 brand that has produced electric Home appliances since 1910 Waste Management Inc ( is a Waste management, comprehensive waste and environmental services company in North America. 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 MCI Inc is an American Telecommunications company that is headquartered in Ashburn Virginia. Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE was an American Energy company based in
Andersen Consulting and Accenture
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.
In 1989, Arthur Andersen and Andersen Consulting became separate units of Andersen Worldwide. Accenture () 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 Andersen increased its use of accounting services as a springboard to sign up clients for Andersen Consulting's more lucrative business.
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 US$1. The International Chamber of Commerce is a non-profit private international organization that works to promote and support global trade and Globalization. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been 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. Accenture () is a global Management consulting, Technology services, and Outsourcing company New Year's Day is the first day of the Year. On the modern Gregorian calendar, it is celebrated on January 1, as it was also in ancient Rome (though
Perhaps most telling about who won the decision was that four hours after the arbitrator made his ruling, Arthur Andersen CEO Jim Wadia suddenly resigned. Jamshed "Jim" Wadia was a CEO of Arthur Andersen in August 1997 a post from which he resigned on August 7 2000 due to his inability to favorably steer the then impending 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 US$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.
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. Hitachi Consulting is an international management and technology consulting firm with headquarters in Dallas, Texas. BearingPoint Inc ( is one of the world’s largest providers of management and technology consulting services to Global 2000 companies and government organizations
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. Events 763 BC - Assyrians record a Solar eclipse that will be used to fix the Chronology of Mesopotamian history See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. The crime of obstruction of justice includes crimes committed by Judges Prosecutors attorneys general, and elected officials in general Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE was an American Energy company based in The Enron scandal was a financial scandal involving Enron Corporation Former ( NYSE ticker symbol ENE and its accounting firm Arthur Andersen Nancy Temple (Andersen Legal Dept. Nancy Anne Temple was an in-house attorney for Arthur Andersen who advised Michael Odom and David B ) 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. David Duncan (born 1960 is the United States government's star Witness in the Arthur Andersen trial. Since the U.S. Securities and Exchange Commission does not allow convicted felons to audit public companies, the firm agreed to surrender its CPA licenses and its right to practice before the SEC on August 31, 2002--effectively putting the firm out of business. The US Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility Events 1056 - Byzantine Empress Theodora becomes ill dying suddenly a few days later without children to succeed the Throne See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar.
The Andersen indictment also put a spotlight on its faulty audits of other companies, most notably Waste Management, Sunbeam and WorldCom. Waste management is the collection Transport, processing, Recycling or disposal of Waste materials Sunbeam Products is an American brand that has produced electric Home appliances since 1910 MCI Inc is an American Telecommunications company that is headquartered in Ashburn Virginia. The subsequent bankruptcy of WorldCom, which quickly surpassed Enron as the biggest bankruptcy in history, led to a domino effect of accounting and like corporate scandals that continue to tarnish American business practices. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their Creditors Creditors may file a bankruptcy petition against This article is about chain reactions. For the political theory, see Domino Theory.
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. Events 1279 BC - Rameses II (The Great (19th dynasty becomes pharaoh of Ancient Egypt. Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. Arthur Andersen LLP v United States, 544 US 696 ( 2005) was a United States Supreme Court case in which the Court unanimously overturned accounting The Supreme Court of the United States is the highest judicial body in the United States and leads the federal judiciary. Jury instructions are the set of legal rules that Jurors should follow when the Jury is deciding a civil or criminal case [3] In the court's view, the instructions were far too vague to allow a jury to find obstruction of justice had really occurred. The court found that the instructions were worded in such a way that Andersen could have been convicted without any proof 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. William Hubbs Rehnquist (October 1 1924 – September 3 2005 was an American lawyer, jurist, and a political figure who served as an Associate Justice
Since the ruling vacated Andersen's felony conviction, it theoretically left Andersen free to resume operations. However, as of 2008 Andersen has not returned as a viable business even on a limited scale. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common 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. The firm sold most of its American operations to KPMG, Deloitte & Touche, Ernst & Young and Grant Thornton LLP. KPMG is one of the largest Professional services firms in the world Deloitte Touche Tohmatsu (also branded as Deloitte) is one of the largest Professional services firms in the world and one of the Big Four auditors, along Ernst & Young is one of the largest Professional services firms in the world and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC, Encompasses the US operations of Grant Thornton International, one of the largest Accounting organizations outside of the Big Four ( Deloitte Touche Tohmatsu
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.
As of 2008, Arthur Andersen LLP has not been formally dissolved nor has it declared bankruptcy. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common 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
- David J. Lesar
References
- ^ Moore, Mary Virginia; Crampton, John (2000). Accenture () 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 Conspiracy of Fools is a book by Kurt Eichenwald detailing the Enron scandal A corporate scandal is a Scandal involving allegations of unethical behavior by people acting within or on behalf of a corporation This is a list of notable Business failures significant for marking the end of a well-known Brand, for criminal proceedings associated with their demise or for their Timeline of the Enron scandal 1985 Kenneth Lay seizes control of Omaha-based Internorth. Arthur Andersen LLP v United States, 544 US 696 ( 2005) was a United States Supreme Court case in which the Court unanimously overturned accounting David J Lesar, is Chairman, President, and Chief Executive Officer of Halliburton Energy Services. "Arthur Andersen: Challenging the Status Quo" (. PDF). The Journal of Business Leadership 11 (3): 71-89. American National Business Hall of Fame.
- ^ Mitchell Martin (8 August 2000). Arbitrator's Ruling Goes Against Accounting Arm: Consultants Win Battle Of Andersen. International Herald Tribune. Retrieved on 2008-05-05. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 553 - The Second Council of Constantinople begins 1215 - Rebel Barons renounce their allegiance to King John
- ^ Arthur Andersen, LLP v. United States, 544 U.S. 696 (2005).
External links
- 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
- Arthur Andersen and the Baptists (Salon. com)
- Frontline PBS video about Andersen
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