ANDERSEN, THE COMPANY, FALTERS;

ANDERSEN, THE MAN, DIDN'T

On Aug. 31, 2002, The Associated Press reported:

"After 89 years in business, Arthur Andersen LLP on Saturday ended its role as auditor of public companies.

"The Chicago-based company was convicted in June of obstruction of justice for shredding and doctoring documents related to Enron Corp. Afterward, Andersen told the Securities and Exchange Commission it would cease auditing public companies. It already had given up its license to practice in several states.

" '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,' the company said Saturday in a statement."

The reputation of Arthur Andersen, the company, is irredeemable. The reputation of Arthur Andersen, the man, is untouched.

Andersen was an accountant. He was the accountant, accomplishing what none in his discipline, before or after, has. His was the world's premier accountancy firm, respected beyond all others.

Arthur Andersen, the man, died in 1947. Arthur Andersen, the company, continued. It flourished, it grew, remaining the leading accountancy firm through the decades. But something went wrong. The accountancy principles, the ethical principles, espoused and practiced by Arthur Andersen, the man, were abandoned by the company bearing his name (at the end, bearing only his surname).

We here pay tribute to a man whose endeavors were successful and whose standards were high, and to whom blame cannot be affixed for the folly of his successors a half century after his death.

BIOGRAPHICAL SKETCH

The son of a Norwegian immigrant, Arthur Andersen was left on his own at the age of 16 after the deaths of his parents. He worked during the day as a mailboy and attended school at night.

 Eventually, he was hired as the assistant to the controller of  Allis-Chalmers in Chicago where he became intrigued with the work of independent public accountants. He received a degree as  a certified public accountant at the University of Illinois in 1908; at  age 23 he was the youngest CPA in Illinois. In 1917, after  attending courses at night while working full time, he graduated  from Northwestern University with a bachelor's degree in business.

 He worked for an accounting firm in Chicago and as a controller for the Schlitz Brewing Co. in Milwaukee. In 1913 at the age of 28, he entered into business for himself under the firm name of Arthur Andersen & Co. In 1915, due to his many contacts there, the Milwaukee office was opened as the firm's second office. From 1912-22, he was a professor of accounting at Northwestern University where he was the first to design courses that forced accounting students to deal with practical operating problems of business organizations.

Andersen had an unwavering faith in education as the basis upon which the new profession of accounting should be developed. He created the profession's first centralized training program and believed in training during normal working hours. He was generous in his commitment to aiding educational, civic and charitable organizations. In 1927, he was elected to the Board of Trustees of Northwestern University and served as its president from 1930 to 1932. He was also chairman of the board of certified public accountant examiners of Illinois.

© University of Wisconsin-Milwaukee School of Business Administration; reprinted with permission.

ANDERSEN'S CREDO

The thoroughly trained accountant must have a sound understanding of the principles of economics, of finance and of organization. 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.

 — Arthur Andersen

CHICAGO, March 5, 2001 — Arthur Andersen, the leading global provider of integrated professional services, today announced that it will be known simply as Andersen....

Andersen was founded in 1913 as an accounting and business advisory firm. Today, it offers a broad range of professional services in consulting, assurance, tax, corporate finance and, in certain countries, legal services. Andersen...employs more than 77,000 professionals in 84 nations.... Andersen has enjoyed uninterrupted growth since 1913. Its 2000 revenues totaled $8.4 billion.

 — Andersen press release