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| “That which does not kill me, makes me stronger.” – philosopher Frederich Nietzche |
| | | Arthur Andersen was once the world’s largest and most respected accounting and consulting firm, the first firm people thought of when they heard the words “Big Eight,” “Big Six,” and then “Big Five.” In many ways, Andersen created a community – a professional community that was at one time over 85,000 people strong in 80 countries. |
| | | For nearly 90 years, the firm experienced uninterrupted growth, through times of war and economic depression. It was recognized year after year as one of the best employers for the brightest graduates of the world’s leading universities. Its clients were household names, including leaders in every industry sector and top not-for-profit organizations. |
| | | Employees shared in the success of the firm, receiving shares of the profits whenever it exceeded its targets. Personal achievement was also very well rewarded. |
| | | The dawn of the 21st century brought many changes for Arthur Andersen. The firm had just been recognized, once again, as the top firm in Emerson Research Company’s annual “Big Five U.S. Multinational Companies Client Satisfaction Study.” But in early 2000, consolidation within the industry cast a shadow on the competitive environment. That same year, after a rancorous battle between the accounting and consulting arms of the firm, Andersen Consulting split from the firm, becoming Accenture. The final blow came on June 15, 2002, when Andersen was convicted of obstruction of justice because employees, according to firm policy, had shredded documents related to Enron’s external audit. The conviction left the firm unable to perform audits for publicly traded U.S. companies and effectively ended its business. |
| | | In a time when people’s careers hung in the balance and apprehension was building, the Andersen community, amazingly, grew closer. Partners, employees, alumni, friends, and families - we rallied together. We showed our support and concern. We showed our loyalty and friendship. We showed our belief in the firm that had taught us to “think straight, talk straight.” Still, we understood life would never be the same. |
| | | The firm Arthur Andersen as we knew it is no more; but its spirit has survived – in us, the alumni. Through us, the camaraderie and intellectual stimulation that permeated the firm continues. Through us, the memories of what the firm’s founder stood for live on. Because of our experiences, we are stronger as individuals; we are stronger as a community. Together, we remain committed to helping our fellow alumni achieve their aspirations, regardless of their career directions, by fostering inventiveness, knowledge sharing, and success. |
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| The Andersen Alumni Association (www.Andersenalumni.com) has been established to help Andersen Alumni maintain contact with one another on both a social and professional level.
Founded in 2001 by former Andersen employees who remembered Andersen as a special company with a supportive, challenging culture, one that motivated its bright, energetic people to perform beyond what seemed possible. The founders seek to sustain and value that spirit through their association. Members of the Andersen Alumni network can tap into the common bond of Andersen employment and select from a pool of invaluable knowledge and expertise. |
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| Arthur Andersen was a self-starter even as a child; he had no other choice. Born in 1885, he lost both his parents when he was only 16, so young Arthur entered the workforce. He never looked back. Working his way through night school, Arthur served as a mail boy and eventually assistant to the controller at Fraser & Chalmers Manufacturing Company. Shortly after he earned his diploma, he joined the accounting firm Price Waterhouse as a temporary worker.
Education became his lifelong passion. In 1908, Andersen enrolled in the Northwestern University School of Commerce, where he quickly earned his Bachelor of Business Administration degree. At 23, he became the youngest CPA in Illinois. He began teaching night classes at Northwestern while continuing at Price Waterhouse during the day. Two years later, when he secured a controller position at Milwaukee’s Schlitz Brewing Company, he kept his teaching job, which required a 180-mile commute.
Four years later, he was head of Northwestern University’s accounting department. Even after establishing his accounting firm, he continued teaching at Northwestern, retiring only in 1922 in order to devote himself fully to his growing firm. |
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| In 1913, the establishment of the Federal Reserve System and the federal income tax led to a rise in the public’s demand for accounting services. In a landmark decision, Andersen responded to the marketplace by founding Andersen, Delany & Company with Charles Delany. Basing the firm on “knowledge, information, and education,” Andersen was determined it would not be just another accounting firm. When Delany left a few years later, the firm became Arthur Andersen & Company.
Andersen committed himself and the firm to excellence. He built his “different kind of accounting firm” by hiring different employees. Rather than employ recent graduates from bookkeeping schools, from the beginning Andersen recruited top graduates from colleges and universities. This practice was unusual, because college graduates commanded higher salaries than accounting firms typically paid at the time.
Legend has it that in 1914, the president of a local railroad demanded that Andersen approve an unusual transaction that would have lowered the company's expenses and boosted earnings. Andersen, who at the time was worried about meeting his next payroll, told the president that there was “not enough money in the city of Chicago” to make him do it.
"The thoroughly trained accountant must have a sound understanding of the principles of economics, of finance and of organization," he once said. "It has been the view of accountants up to this time that their responsibility begins and ends with the certification of the balance sheet and statement of earnings. I maintain that the responsibility of the public accountant begins, rather than ends, at this point."
In the days before World War II, Andersen was invited to become the first salaried president of the New York Stock Exchange. He declined, choosing instead to remain at the helm of his firm. |
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| When Arthur Andersen died in 1947, the firm almost closed the books. Leonard Spacek, a disciple of Andersen, persuaded his partners to keep the firm going. At 38, he became Andersen’s successor as national managing partner. During Spacek’s tenure, Andersen expanded internationally, growing from the 20th-largest firm in the world in 1947 to become a leader among the Big Eight. For years, Spacek toured the country, promoting sound accounting principles. His call for such entities as an “Accounting Court” led to the establishment of the national Accounting Principles Board.
During Spacek’s leadership, the firm introduced an entirely new consulting business when it unveiled the Glickiac, a computer named after its inventor, Joseph Glickauf, an engineer. This early technology enabled Andersen clients to automate their bookkeeping. Now, along with auditing its clients’ books, Andersen began installing and maintaining the computers clients used to keep the books.
Following Spacek’s tenure, Duane Kullberg was elected CEO of Andersen in 1980 and was re-elected twice. During his term Andersen was divided into the two distinct business units, Arthur Andersen and Andersen Consulting, the predecessor to Accenture. By 1988, the consulting arm was responsible for over 40 percent of the firm’s business. Spacek retired from Andersen in 1989.
Lawrence Weinbach succeeded Kullberg in 1989. He left in 1997 to take the CEO position at technology giant Unisys. Robert Grafton, an accounting partner, was appointed to take his place.
Joseph Berardino, 52, was in charge when the Justice Department issued a criminal indictment against the firm in 2000. He resigned in March 2002, and was replaced by Aldo Cardoso as chief executive officer of Andersen Worldwide SC. |
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| Fortune magazine consistently recognized Andersen as one of 100 Best Companies to Work for in America, and for over 18 years, the CPA Personnel Report Professor's Poll named it the best prospective employer for accounting students. Andersen was recognized its commitment to its employees, providing flexibility, interesting work, and unmatched learning and growth opportunities.
Much of those growth opportunities took place at the Center for Professional Education in St. Charles, Chicago, where we learned the firm’s motto -- "Think straight, talk straight" -- and Andersen's four cornerstones: - Provide good service to the client
- Produce quality audits
- Manage staff well; and
- Produce profits for the firm.
Now dubbed “The Q Center,” the facility is still owned by the firm and operates as a conference and training facility. |
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| In its legal fight against the unjust criminal prosecution, conviction, and destruction of the company, Andersen appealed to the U.S. Supreme Court in April 2005.
The U.S. Chamber of Commerce and the Washington Legal Foundation (WLF), a national non-profit public interest law and policy center, filed two friend-of-the-court briefs in Arthur Andersen v. United States at the U.S. Supreme Court supporting Arthur Andersen. In addition, WLF participated in a symposium at American University Law School on overcriminalization of corporate conduct and led a discussion of the Arthur Andersen case as a prime example of misguided criminal prosecution.
On June 1, 2005, the U.S. Supreme Court overturned Arthur Andersen’s criminal conviction when it ruled unanimously that the Houston jury that found the firm guilty of obstruction of justice was given overly broad instructions by the federal judge who presided at the trial.
"Indeed, it is striking how little culpability the [judge's] instructions required," Chief Justice William H. Rehnquist wrote in the opinion for the court. "For example, the jury was told that, 'even if [Andersen] honestly and sincerely believed that its conduct was lawful, you may find [it] guilty.' "
Although we see the victory as “too little, too late,” alumni everywhere cheered to hear the news. After a long battle to assert its innocence, for Arthur Andersen, vindication is sweet. |
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| What is it about Arthur Andersen that unifies Andersen alumni today? Is it the pain that we suffered as the firm was brought down at the height of its success? The commitment to excellence we shared in serving our clients? The training experiences we shared in St. Charles? The firm’s bittersweet vindication at last?
More than anything else, we are unified in our contributions to growing one of the greatest firms in America’s history.
Near the end of World War II, Arthur Andersen dispatched several of his trusted partners to Europe and Asia to piece together the war-torn network of firm offices. Andersen wrote, “We must have, as we have never had before, a united family—. . . , and we must be tied together as a continuing organization, making for better service to the outside world.”
We are the “united family” of Arthur Andersen alumni. We “think straight, talk straight,” and we honor the Arthur Andersen legacy. |
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| 1913 Arthur Andersen, a 28-year-old accounting professor, co-founds Andersen, DeLany & Co.
1918 The firm, now called Arthur Andersen & Co., starts a management information consulting practice.
1947 Mr. Andersen dies. Leonard Spacek steps in as managing partner, preventing the firm from dissolving. During Spacek's tenure, Andersen moves to the top of its profession.
1954 Andersen consultants help General Electric automate its payroll using the Glickiac computer (right), the first commercial use of the computer in the U.S.
1959 For the first time, the firm admits partners from outside the U.S.
1970 Harvey E. Kapnick becomes chairman and chief executive of the accounting group from 1970 to 1979.
1979 Andersen becomes the world's largest professional-services firm.
1980 Duane R. Kullberg became Managing Partner-Chief Executive Officer of Andersen Worldwide from 1980 until he retired in 1989.
Andersen was divided into the two business units, Arthur Andersen and Andersen Consulting, the predecessor to Accenture.
1989- Lawrence A. Weinbach became Managing Partner and Chief Executive of Andersen Worldwide.
2000 An arbitrator rules that Andersen Consulting can break free from the firm by paying $1 billion and changing its name.
Andersen trial for obstruction of justice begins.
2002 Andersen is convicted of obstruction of justice and is required to stop auditing public companies.
2005 Andersen appeals to the U.S. Supreme Court to overturn the lower court’s decision. |
| | | Sources: |
| “Arthur Andersen,” Accounting Hall of Fame, Ohio State University Fisher College of Business, qtd in www.andersenalumni.com
“Arthur Andersen: Challenging the Status Quo,” by Mary Virginia Moore and John Crampton, Journal of Business Leadership, v. 11, Fall 2000-2001
“Bittersweet Victory,” by Kate O’Sullivan, CFO.com, July 1, 2005 “Closing the Books on Arthur Andersen,” by Joseph Radigan, CFO.com, August 30, 2002
“Justices Overturn Andersen Conviction,” by Charles Lane, Washington Post, June 1, 2005
“So Who Was Arthur Andersen, Anyway?” by John Goff, CFO.com, August 30, 2002 |
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