The Death of Arthur Andersen

Arthur Andersen's loss of reputation

Arthur Andersen’s loss of reputation

Arthur Andersen was a facilitator of the fraud that went on at Enron. The auditing/consulting company acted in unethical ways by looking in the best short-term interests of the firm in order to make substantial personal gains. The employees of Arthur Andersen were making too much money off of their Enron accounts, which caused them to not practice good moral judgments. This conflict of interest resulted in the large-scale financial scandal that destroyed Enron, and in essence, destroyed Arthur Andersen as well.

As a result of this scandal, Arthur Andersen voluntarily surrendered its CPA license in 2002. The firms’ reputation and trust were so severely damaged that it lost most of its partners to other auditing firms as its clients also fled to competing firms. Since the financial scandals, Arthur Andersen has been mainly involved in a cleanup effort to resolve the crimes that it had committed in the past by basically just operating to settle remaining litigation against the firm.

In a recent news article about Arthur Andersen, the author Michael Cohn describes the result of a decade-long class-action lawsuit against the firm. WorldCom and Arthur Andersen have just reached a settlement for WorldCom to receive an additional $38 million. This payment will settle and release the contingent payment claim that was  a term of a previous settlement.

Arthur Andersen is nowhere close to the company it once was. The firms’ use of unethical business practices has destroyed its reputation past the point of repair. In essence, the company is now considered obsolete. Far too much taboo and negativity is associated with the once-prestigious name of Arthur Andersen. The immoral practices of the firm over a decade ago were too severe to permit any sort of recovery.

The "death" of Arthur Andersen in 2002

The “death” of Arthur Andersen in 2002

Andersen to Pay Additional $38M for WorldCom Audits


5 thoughts on “The Death of Arthur Andersen

  1. It is interesting to see how a company as huge as Arthur Anderson could not recover from a scandal like this. Do you think this case is a lessen for other companies about the effects of acting in the interest of the short term? Or do you think other companies may continue to make bad decisons in hopes that they will not be caught?

  2. Does it even exist as a firm? Worldcom was hardly a paragon of business ethics. Do they exist as a firm? Or, are these people suing husks of the former entities?

    When you add up the financial losses of investors, the settlements, and the “opportunity cost” of lawyers prosecuting these cases, it underscores even more for me that Enron and Arthur Anderson did not “loose money.” They never really made money (created real value) to begin with.

  3. I was surprised to find that Arthur Anderson is still alive! But barely…after being so involved in the Enron scandal, it seems only fitting that the company struggled from then on. As I’ve said in another post, “Karma’s a B*tch”. I would like to think that this serves as an example of “what not to do” for other companies in the future, but will greed continue to take over some people?

    • The supreme court has overuled the court decision in 2005. I believe this case is a good example of what other courts should not do to avoid decisions taken to please the people and reach consensus while protecting politicians


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