Good-Bye Andersen: Venerable Giant Will Audit No More
"As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of, its firm permits in all states where it was licensed to practice public accountancy with state regulators," said the former Big Five accounting firm in a statement on Saturday.
Life as Arthur Andersen accountants knew it began unraveling last January when the firm admitted that members of the firm shredded thousands of documents relating to the infamous Enron audit. While contending that the document destruction was all done according to company policy, evidence presented in later court proceedings indicated that the destruction was done after knowledge had been received of a Securities and Exchange Commission investigation.
In June, the firm was found guilty of obstruction of justice, a verdict that essentially sealed the fate of the doomed accounting firm. Although the firm has announced plans to appeal the guilty verdict, the ultimate outcome will not affect Andersen's audit practice.
The U.S. practice, which once boasted nearly 28,000 employees, has been pared down to fewer than 3,000 employees, most of whom are providing services in the areas of negotiating with landlords to end lease agreements, working with auditors from new firms to oversee the transition of audit workpapers, and providing training services at the Andersen training center. Also left behind are a crew of lawyers who will continue to field the numerous lawsuits pending from shareholders and creditors of former clients and retired partners hoping to save a portion of their pension funds.
Throughout this year all of the U.S. firm's publicly held audit clients have sought accounting services elsewhere. Andersen offices across the country have closed, with clients and personnel merging with rival firms. Worldwide, the story is similar. Andersen firms throughout the world have announced mergers with or sales to rival firms.