September 23, 2020

Arthur Andersen

RIP Bernard Ebbers, Former WorldCom CEO and Convicted Felon

So, ex-WorldCom CEO Bernie Ebbers died on Sunday at age 78. His death wasn’t a complete shock; I saw recently that he was in ill health and was granted an early release from prison after serving 13 years of his 25-year sentence for securities fraud, conspiracy, and filing false reports with regulators. My mom used […]

Arthur Andersen & Co.

Accountants Behaving Badly: Andersen Alum Charged with Fraud, Sentencing Postponed In Nxivm Case, Embezzler Jailed

Plus, a Las Vegas tax preparer pleaded guilty to filing bogus returns, and a New Jersey tax preparer pleaded guilty to tax evasion. Naperville man convicted of theft 25 years ago charged again with swindling woman’s estate [Chicago Tribune] Raymond Parcon, who went to federal prison 25 years ago for embezzling more than $1 million […]

There Was One Wreck Paul Volcker Couldn’t Salvage

The out-pouring of encomia for Paul Volcker, who has died at age 92, would tower over even his own formidable 6 ft. 7 in. (e.g., samples in the Financial Times and the New York Times). His credits over more than 40 years include the taming of the rampant inflation of the 1980s as Federal Reserve chairman and, post the […]

Arthur Andersen & Co.

There’s a Good Reason Why Andersen Global Firms Don’t Do Audit Work, Chairman Says

“[T]he Andersen name may have some negative connotations in audit.” — Mark Vorsatz, Andersen Global chairman and Andersen Tax CEO, who is a former Arthur Andersen partner, on why Andersen Global firms only provide legal and tax services. [Bloomberg Tax]

Arthur Andersen & Co.

This Dusty Stack of Decades-Old Arthur Andersen Materials Can Be All Yours

Thanks to the unruly playground-cum-marketplace that is Craigslist, you now have the opportunity to own a bit of Arthur Andersen history. No, I’m not talking about the cheap swag that the most loyal Andersen alumni whisper empty prayers to on private altars hidden in storage units. I’m talking about the written materials that guided the […]

Arthur Andersen & Co.

The “New” Arthur Andersen Was Just Kidding About Holding a Press Conference to Explain WTF Is Going On

Last week kinda blew by and we sorta forgot that this mysterious new Arthur Andersen was supposed to hold a press conference about…well something. In any case, it never happened and I didn’t even get a press kit I was promised. Accounting Today reports that they didn’t get anything either: The new Arthur Andersen told […]

Arthur-Andersen-name-rights-Tax-Madoff-Yugo

Exposure Drafts: Incredibly, The Entire Paper Shredder Industry Passed on ‘Arthur Andersen’ Name Rights

Exposure Drafts appears every other Wednesday. Send suggestions to editor@goingconcern.com.

Golf and Less Government Busybodying Could Have Saved Andersen, Says Former Andersen Partner

Larry Katzen knows Arthur Andersen, he spent more time working there than I have spent on this mortal Earth. He's written a memoir of his time at Andersen called And You Thought Accountants Were Boring (who said that!?) and tells the Pittsburgh Tribune-Review that the government should have just stayed out of the whole thing: […]

#TBT: George W. Bush Didn’t Want Arthur Andersen Looking For WMDs That Didn’t Exist

So infamous were Andersen’s false audits that President George W. Bush joked about them at the 2002 annual Alfalfa Club dinner in Washington, D.C. The president claimed he had good news and bad news from Saddam Hussein: “The good news is he is willing to let us inspect his biological and chemical warfare installations. The […]

Arthur Andersen Alumni’s Efforts at Social Media Are Making Us Sad

It was recently brought to our attention that Arthur Andersen would have been 100 years old this year. Since 2013 would have been a landmark for the firm, it's understandable that people want to rekindle the past. You know, the GLORY DAYS. It's not difficult to stay in touch with people via LinkedIn or Facebook […]

Let’s Talk About Thrifting For Accounting Swag

Surely I am not the only one who has an extensive collection of Federal Reserve tchotchkes and various items of accounting memorabilia. In fact, I seem to recall the very first post I ever read written by Colin on his now abandoned blog being about accounting tchotchkes and that he has since recycled the topic […]

The Chicago Tribune Gets All Weepy for Arthur Andersen

Last week the Chicago Tribune got all emotional about the ten-year anniversary of Andersen being indicted with an obstruction of justice charge. A charge that, effectively, destroyed the firm. Oddly, the Trib made it sound like the end of Andersen was some sort of professional services employer apocalypse:   The obstruction of justice charges against […]

Question of the Day: Defunct Firm Edition

From one of the best accounting Twitter…accounts you can follow:

Department of Justice Would Treat Goldman Sachs Slightly Better Than Arthur Andersen

That is, the DOJ wouldn’t indict Goldman on criminal charges like they did Andersen. Which, you may recall, didn’t turn out so well for A^2.

DealBook reports the musings of Sanford Bernstein analyst Brad Hintz:

If an alleged violation is identified during a Goldman investigation, we expect a reasoned response from the Justice Department. In a worst case environment, we would expect a “too big to fail” bank such as Goldman to be offered a Deferred Prosecution Agreement, pay a significant fine and submit to a Federal monitor in lieu of a criminal charge. Consequently, we do not believe that Goldman investors face an “Arthur Andersen” risk.

No ‘Arthur Andersen’ Risk to Goldman, Analyst Says [DealBook]

Former Andersen CEO: Greed Brought Down Firm

Retired Andersen CEO and Managing Parter, Duane Kullberg was part of a panel discussion that went on at Carthage College in Kenosha, Wisconsin this week where he was the featured speak on the “The Rise and Fall of Arthur Andersen”.

Mr Kullberg was part of a panel that included our friendJim Peterson of Re:Balance and Bill Goodman, President of Schneck SC, a firm with offices throughout Wisconsin that also discussed the future of the audit profession.


Mr Kullberg served as the Andersen CEO from 1980 to 1989 but “the profit-driven company culture in the 1990s, that valued sales more highly than the ethically rigorous auditing practices that built the accounting firm,” was ultimately brought the firm down.

The greed came from the development of the consulting business that became a signficant part of Andersen’s business during the 1980s:

By the time Kullberg took the reins, Andersen was an international player, increasingly involved in providing consulting services. By 1988, it was the largest consulting firm worldwide, deriving 40 percent of earnings from that side of the business.

That brought growing demand for greater independence and a bigger piece of the money pie from partners on the consulting side, while those on the tax-audit side militated against revising the company’s historic approach to treating all partners as financial equals.

So the seeds for the firm’s demise were planted long ago and it was due, dare we say, partners that were jealous over the booming consulting side of the house. After Kullberg split the consulting from the audit/tax the feuding got bad and lawyers got involved. Then the bright idea of rebirthing the consulting business within the audit/tax firm came about:

Under Kullberg, two operating units were created: Arthur Andersen, the tax-audit/accounting group, and Andersen Consulting, both under Andersen Worldwide, each under its own managing partner.

The equal compensation system also was revised, with funds being set aside to reward individual partners and teams of partners for superior performance.

Fissures widened dramatically in 1997 when Andersen Consulting (now Accenture) won an arbitration against Andersen Worldwide and broke off on its own after the tax-audit group set up its own competing consulting service

“All of a sudden, they went back into the arena of business consulting. It was untenable,” Kullberg said.

The rest of this story is well-known. If not, there’s a play coming out this spring. That should catch you up.

Accounting for greed [Kenosha News]
Carthage welcomes Duane R. Kullberg [Carthage College]

Broadway Production of Enron Has Its CFO

As we anticipate the greatest thing to happen to Broadway since George Bush’s penis, we now know who will play the most important role of the entire production: numbers magician Andy Fastow.

The honor goes to Stephen Kunken, best know for his role as James Reston in Frost/Nixon. He will be alongside Norbert Leo Butz who will be playing Jeff Skilling.

We located the list of the cast for the London production of Enron and there is a role for “Arthur Andersen” and two for “Lehman Brothers” so these key roles still need to be filled.

Back to the future Tony winner; we don’t envy the research that Kunken has ahead of him since we’re assuming that he’ll have to channel the book cooking prowess of AF. Then again, since he’s an actor, he only has to pretend to know what he’s talking about with regard to accounting and financial reporting; there’s accountants out there doing that every day.

Kunken Will Play Enron CFO on Broadway [Playbill]