Arthur Andersen was once one of the world’s most respected professional services firms, renowned for its rigorous approach to auditing and ethics. Founded in Chicago in 1913, the firm grew into one of the “Big Five” accounting firms, advising many of the largest corporations in the UK, the USA and beyond. Its reputation was built on independence and technical excellence, making its eventual collapse all the more striking.
The firm’s downfall is inseparable from the Enron scandal of the early 2000s. Arthur Andersen served as Enron’s auditor and was accused of failing to challenge the company’s aggressive accounting practices. When Enron collapsed in 2001, investigators discovered that Andersen staff had destroyed documents related to the audit, raising serious concerns about obstruction of justice.
In 2002, Arthur Andersen was convicted in the United States for obstruction, a verdict that effectively ended the firm’s ability to audit public companies. Although the conviction was overturned by the US Supreme Court in 2005, the damage was already done. Clients had fled, partners had left, and the firm’s global network rapidly disintegrated.
The fall of Arthur Andersen had lasting consequences for the accounting profession on both sides of the Atlantic. It led to tighter regulation, most notably the Sarbanes–Oxley Act in the USA, and a renewed emphasis on auditor independence and corporate governance. The case remains a powerful warning of how ethical failures can destroy even the most established institutions.
