Demise of the Andersen Firm, Changes Among the Big 4 and National firms

Arthur Andersen was initially recognized as the Big 5 accounting companies major players. However, it is currently known just as an insignificant LLP. The company at one moment employed 28,000 individuals in the United States and about 85,000 individuals across the world.  During this time, the company managed $9.3 billion as revenue. However, the company lost its reputation, glory, intelligent workers and customers after engaging in unethical deals with Enron, a client the company had served for 16 years. Andersen offered Enron with internal and external auditing, together with consulting services since 1986 (Edelman & Nicholson, n.d.). Enron was involved in huge debts and considered partnering with another company to solve the problem. The company employed some business deals which according to Andersen analysis were very risky. However, the procedures of audit did not show the risk consideration. Actions of Enron were disputed and generated million in fee. The blame was extended to its audit company. Therefore Andersen was demised where by in 2002 it had to surrender the company public practice license because of the association it had with Enron. The company was sued with criminal charges of justice obstruction a case the won after an appeal. However, despite of this outcome the company had already suffered from the bad reputation by losing customers, skilled workers and thus, it lost it position among the big five. This incident attracted a number of changes in other big four auditing companies. The audit company became more disciplined and ethical while conducting their duties to avoid making similar mistake like that made by Andersen (Solomon, 2007).

Demise of the Andersen Company reduced the most famous accounting firms to four. They include KPMG, Pricewarehouse Coopers, Ernst & Young, and Deloitte & Touche. The four companies have employed more measures to eliminate decisions or act that would make their operations questionable. These companies have tried to embrace transparency to ensure that justice is served and that there is no any company under their watch that is involved in dubious financial operations. The companies also pay attention to rules and regulations provided by the national and world accounting bodies. This ensures standardization of their operations and ensuring that all their performances are as per expectations. This also provides clear manner in which companies financial performance can easily be analyzed by people of different categories that include shareholders, renders, banks, suppliers, government and investors. Therefore, the firms have taken an initiative of employing the international and national accounting standards, rules and regulation of each country they operate in. Among the employed standards include Statements on Auditing Standards (SAS), Generally Accepted Auditing Standards (GAAS), and Generally Accepted Accounting Principles (GAAP) among other professional ethical standards (Solomon, 2007). Good operation policies and ethics have been embraced in the market with intention of drawing more customers and winning their confidence in the long run. After the Andersen incident, it was clear to the companies that the competition is on and that they can easily lose all they have worked for due to a single mistake. In this regard, each company has developed workers code of conduct that guides on how their workers operate and the fines involved for going against their behavior guide. This is meant to protect the companies from being ruined by an act of one or two customers. Therefore, it can be concluded that the demise of the Andersen Company brought great level of reforms in the big five and all other national accounting companies in the United States (Buckstein, n.d.).

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