At the Setting of the Sun

  • BOOK REVIEW – Final Accounting: Ambition, Greed and the Fall of Arthur Andersen
  • Barbara Ley Toffler, Jennifer Ringold, 254 pages, Broadway Books, 2003, ISBN 0767914546

Arthur Andersen surrendered its CPA licence (which is the license that allows US audit companies it to perform audits of publicly traded companies) in August of 2002, effectively shutting the company down.  After being convicted of obstruction of an SEC investigation (related to Enron and Andersen’s shredding of documents), the once largest audit company in the world was out of business.

Final Accounting outlines how this happened, and places the blame squarely on the culture of a company used to being at the top of its profession, and on the leaders that failed to act on what they knew: the company was headed off the rails.

Toffler and Ringold reveal the making of an “Android” (the term for employees trained the “Andersen way”), the company’s money making strategy called “billing your brains out” and the divisive nature of the incentive plans within the company that pitted partner against partner, employee against employee.

The book chronicles the changes that took the company away from its winning mantra “Think Straight, Talk Straight”, and how those changes put the focus on pleasing the client at all costs.

Even at the very end, when there was little hope to save the firm, Toffler writes how the culture of denial, arrogance and pride caused the leadership at Arthur Andersen to fail to acknowledge that change was needed.

Toffler writes with inside knowledge: she was, ironically, the Partner in charge of Ethics and Responsible Business Practices at Arthur Andersen during the company’s crisis, and in a perfect place to document the fall of the once-great firm.

Companies like Enron, WorldCom and others that Andersen audited failed because of fraud at the highest levels within that company—fraud that Andersen knew about and yet failed to act, or worse, failed to notice.

The read is interesting and fast paced, and captures well the sadness and bitterness over individual failures as well as the failure of this once proud company. Well worth the time!

Subsequent to the release of this book

Interestingly enough, in 2005 the judgement against Andersen was overturned by the US Supreme Court in a unanimous decision. The company was essentially cleared on the basis that the instructions given to the original jury were so broad that the outcome would have been a guilty verdict no matter what the evidence.

Andersen maybe innocent of the charges, but guilty of astoundingly bad judgement. Not surprisingly, the company has not returned to business on a viable scale.

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