Rise & Fall of Arthur Andersen, LLP

1016 Words Jul 4th, 2014 5 Pages
March 4, 2014
Rise & Fall of Arthur Andersen, LLP

Abstract

Enron was a natural gas company that was formed in 1985 by Kenneth Lay. By 1992, Enron was the largest selling company of natural gas in North America. In October 2001 a scandal involving Enron was emerging. This scandal led to the fall of the company. The Enron case and many others cases led to the collapse of other companies that did business with them which included one of the largest accounting firms in Chicago; the accounting firm of Arthur Andersen.
This paper will discuss the rise and fall of one of Chicago’s top accounting firm and how greed and dishonesty can destroy and company and a good reputation.
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Soon after Bernardino’s resignation WorldCom which was a major audit client of the Andersen Accounting firm admitted to cooking its books to the tune of $3.8 billion. This incident along with other Andersen clients began a wide range of investigations to come. (Chicago Tribune, 2002)

Outcome

After years of being developed into a successful accounting business in Chicago, a company that Andersen was involved with had a scandal brewing. This scandal went on to become one of the largest scandals in the business community. It stemmed from a company called Enron which was a natural gas company out of Houston, Texas. In November of 1997,
Enron buys out a partner 's stake in a company called JEDI and sells the stake to a firm it creates, called Chewco, to be run by an Enron officer. Thus begins a complex series of transactions that enable Enron to hide debts. In February 2001 a story breaks calls Enron a "largely impenetrable" company that is piling on debt while keeping Wall Street in the dark. August of the same year the CEO of Enron resigns. October 12 of the same year Arthur Andersen’s legal counsel instructs workers who audit Enron 's books to destroy all but the most basic documents. By the end of the year the Securities Exchange Commission had launched an investigation on Enron and Andersen
Accounting. The United States Justice Department went on to indict Arthur Andersen accounting firm of obstruction

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