Customer Reviews

Inside Arthur Andersen: Shifting Values, Unexpected Consequences

5 star:		(4)
4 star:		(3)
3 star:		(1)
2 star:		(1)
1 star:		(4)

 

 

I was very disappointed with this book. I had thought we would get some insight into the failure and reasons for the failure of Andersen. This would have included why was David Duncan left in charge of the Enron audit after the restatement occurred, how could the shredding incident have occurred [did not Andersen know how to address potential litigation], where was the head of Andersen's risk practice, what did the practice do, how was the Houston office run if in fact Andersen's offices had considerable latitude to run engagements. None of this was covered.

What we get is chapter upon chapter of history with references to the Chicago Tribune, the Wall Street Journal and the First 60 Years of Arthur Andersen. Oh yeah, we also get comments from some manager in Asia about how he was surprised about the downfall of his firm.

No interviews with key members of the Enron engagement team or the Houston office. No insight on why the firm failed. The book tries to lead us to think that the creation of Andersen Consulting [Accenture] led to the firm's demise. Hardly, did not the other Big 5 all have consulting practices, and none of these firms has failed. What made Andersen different then the other Big 5? David Duncan did not bring in Enron as a client. Who did? Who were the members of the engagement team? How did Duncan, a relatively junior partner, get to be the lead partner on the engagement? Who was really running the show? [The book makes it sound like Duncan reported to a practice director, which was hardly the case. In fact, this practice director was not even part of the Houston office.]

Still considerable room for someone to step in and do some investigative journalism, and some real work to find out what caused the demise of Andersen stemming from the Houston Enron incident.

The majority of this book was a mere recast of the history of Andersen and a chronology of events. Comments by a few Andersen folks, most of whom go unnamed. Was keeping up with Accenture [Andersen Consulting] really the cause? AC was gone 3 years earlier. All the Big 5 had consulting practices -- why is Andersen the one that is gone? Footnote after footnote of references to the Wall Street Journal, the Chicago Tribune and Andersen's History Book.

As a past partner in the Houston office of Andersen [not involved in Enron], I can say that the book clearly misses the mark. To really know what was happening one should explore the culture of the Andersen Houston office, the key players and those who have not been highlighted in the press, the review process, the reason that management did not step in when there was an obvious problem [Enron restatement]. How could the shredding occur? Why did Andersen send down some flunky attorney to Houston[who was only with the firm 2 years and was not even a partner], rather then send the partner in charge of legal. Where were the procedures to replace/remove a partner on an engagement when litigation was threatened? How could Dave Duncun be left in control? Isn't there a conflict here when Dave continues to run the engagement when litigation is threatened [and possibly against him and criminally in this instance] and he remains in charge? Where was the head of risk, and what was he doing? Was Dave Duncan really in charge of the audit, or was that just what the assignments showed? How did Dave Duncan, only a partner for about 5 years, get in charge of the Enron audit? Certainly he did not sell the work.

There is so much missing, and the conclusions are, for the most part, unsupportable leaps.

I read this for a writing project and found it one of the best accounts available of what happened to make this company collapse the way it did. While there is occasionally a sense of victimization running through it - the authors all worked for AA or were affiliated with it - it does not stop them from hard-hitting analysis of how a company declined from iconic status as a standard-setter to one that was, well, slowly corrupted and traducing its values (like, the authors contend, all the other big accounting firms).

What this book adds is an analysis of how AA's governance evolved, from a tightly controlled firm with a charismatic leader to a global, highly decentralised one that was impossible to govern. This was a slow, evolutionary development with consequences that no one could have foreseen. Slowly, values eroded, a culture came undone, and the result was, in many cases, a naked scramble for money. In essence, accounting became a doorway to far more lucrative consulting arrangements, and so AA began increasingly to cooperate with those it was supposed to audit as a public service and with independence and integrity (as it clearly did in the past when the firm stood for something).

Where this book is weaker is on the wider context of the economy, which the reader will have to seek elsewhere. Moreover, while the SEC scrutiny - and the indictment that killed the company - may have been unfair, there were so many scandals developing that at least one firm was slated to take a fall. It was AA, as it turned out, somewhat a scapegoat in which many many good people got hurt, but still, in retrospect, it looks very very bad. I cannot feel outrage at its demise, though I do feel sympathy.

Recommended for specialists. This ain't pleasure reading, but the story is one that needs to be told as an ethics case study.

I was with Andersen for 8 years up until the fall of the firm. This is the first book I have read about the firm the takes a methodical look at what exactly happened at one of the most prestigous firms in the world. If you are interested in Andersen's rise to power and some insight as to what it was like inside during the fall, then its a must read.

I had to read this book for school, and as one may figure before reading an accounting book, I was planning on it being a little boring. Contrarily, this book was very good. It was written by four ex-employees of Enron and Arthur Anderson, so it is very credible.

The book progressed very smoothly, and it made me very knowledgeable on what so many of us have heard, but so few really know about.

I never thought about the thousands of people all over the world who conscientiously practised their profession but were brought down by a series of scandals by people they never knew working in offices they never dealt with. This book is the fall of Arthur Andersen from their point of view. It details the history of Arthur Andersen from its founding until the end and tries to makes sense of what happened. They do a powerful job, making the reader sensitve to the size and corporate culture of Andersen and explaining how changes in the company to accomodate the changing demand for audit services opened the door to this kind of thing to happen. If you couple reading this book with books about Enron itself, you will definitely be feeling that only the people in Anderson involved in the scandal should have been brought down. That being said, they do leave in the "smoking guns" - the former scandals that had caused the SEC to say basically, "One more time and your dead" to Andersen. Enron was the one more time. Still, this book made me think that there might have been a better way of handling it.

The Good: It provides a decent overview of the history of Arthur Andersen leading to the Enron debacle, and a good historical perspective of events leading to the downfall of AA. Also reaches some interesting conclusions at the end.

The Bad: Like another reviewer said, there's no in-depth "inside" look at what was going on in the Houston office, or really any explanation for the Waste Management, Sunbeam or WorldCom restatements beyond what's presented in the overview. It's not so much "Inside Arthur Andersen" as it is "The Rise and Fall of Arthur Andersen".

The Ugly: It's really far too short, and too heavily reliant on newspaper and internal AA documentation. I found a lot of things informative and enlightening about the book--but I admit I knew almost nothing about what happened before I read this book. It's a great starting point, and it raises many more questions and paths of inquiry than it does answer or solve anything.

I think it's a pity how one of the world's most esteemed brands was wrecked by greedy, unscrupulous people and uncaring managers who checked their values at the door (if they ever had them to check). I was actually looking forward to reading the inside story. But this book reads like a patchwork quilt of news articles and interviews that are in the public domain. If you've kept up with the business press you'll likely find little that is new. The publisher should have asked for more rather than rush this out to capitalize on the corporate scandals.

The aim of this book seems to be to offer an account of how Arthur Andersen's culture of consulting developed over the decades, to tell it like it is, rather than a tell-all. When the time came this crucial shift away from audit, mirrored in the other major financial firms, led to Andersen receiving one hundred percent of the blame for the $62 billion losses record in the Enron debacle. The authors make a cogent case for considering the warning that deflecting this blame onto Andersen paves the way for future financial misfortune. It also encourages professional readers and investors to think carefully about the future of audit and the financial sector. This book steers clear of being a prurient tell-all, and avoids the whining tone of its competitors, with the added bonus of having the solid, referenced data and coherent argument it takes to make determined Andersen-haters a little more cautious about laying all the blame at their now-closed door.

This book fails to live up to its promise - there is a good deal of repetition throughout the book both in terms of assertions and content.