After 89 years of doing business, Big Five firm Arthur Andersen LLP has informed the Securities and Exchange Commission (SEC) that it will cease practicing before the Commission by August 31, 2002. Andersen was found guilty of the federal crime of obstruction of justice in the U.S. District Court in Houston on Saturday, June 15. An SEC rule prevents any firm convicted of a felony from signing off on financial statements of companies that are registered with the SEC.
The SEC has agreed to allow Andersen to continue to make required filings on behalf of its clients until August 31 in order to assure a smooth transition as those clients move to other accounting firms.
It is expected that state accountancy boards across the country will soon begin rescinding Andersen's license to practice in their states.
The remaining Big Four accounting firms had made contingency plans in case the Andersen jury returned a guilty verdict, including planning for the potential mass increase of Andersen partners and personnel in the job market. Andersen has already had discussions with its rival firms and has begun making arrangements to begin the transition of clients.