Relationship Between Enron And Arthur Andersen

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Up until a number of years ago, Arthur Andersen was considered as one of the then Big 5 auditing companies around the world. The company knew its beginning in 1913 through Arthur E. Andersen who formed a partnership with Clarence M. Delaney in order to set up Andersen, Delaney & Co. Unfortunately, however, the partners split 5 years later and the company’s name became exclusively Arthur Andersen. Mr. Andersen died in 1947; however, his successor Leonard Spacek led the company to successful periods making it more global. In fact, the first international office was opened in the 1950s with revenues of around $8 million and within a period of 20 years, revenues exploded up to around $130 million, with more than 1,000 partners at the firm. (Edelman & Nicholson, 2008) Successively, the consulting division of the firm split up from Arthur Andersen and as a result, the management of Arthur Andersen decided to focus more on audit services, becoming one of the big 5 audit firms around the globe. At this stage, the company reached its peak with 28,000 people employed in the US and more than 85,000 people employed worldwide, with revenues soaring up to around $9.3 billion. It was during this time, in 1986, that the company engaged Enron as one of its clients providing both internal and external auditing services, in addition to consulting services. Few would have guessed that the 16-year relationship between Enron and Arthur Andersen would have lead to the failure of both companies,

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