. for the u.s. supreme court case see arthur andersen llp v. united states . this article needs additional citations for verification . please help improve this article by adding citations to reliable sources . unsourced material may be challenged and removed . january 2016 learn how and when to remove this template message arthur andersen type limited liability partnership industry accounting professional services tax consulting licenses of certified public accountants surrendered in 2002 founded 1913 relaunched in 2016 headquarters chicago illinois united states products professional services revenue us 9.3 billion in 2002 number of employees approx . 200 as of 2007 85 000 in 2002 website aa1913.com arthur andersen llp based in chicago is an american holding company and formerly one of the big five accounting firms among pricewaterhousecoopers deloitte touche tohmatsu ernst & young and kpmg providing auditing tax and consulting services to large corporations . in 2002 the firm voluntarily surrendered its licenses to practice as certified public accountants in the united states after being found guilty of criminal charges relating to the firm s handling of the auditing of enron an energy corporation based in texas which had filed for bankruptcy in 2001 . 1 one of the few revenue generating assets that the andersen firm still has is q center a conference and training facility outside of chicago . 2 the former consultancy and outsourcing arm of the firm now known as accenture which had separated from the accountancy side in 1987 and renamed themselves after splitting from andersen worldwide in 2000 continues to operate and has become one of the largest multinational corporations in the world until 2002 . the network has been relaunched from europe in 2016 . contents 1 history 1.1 founding 1.2 reputation 1.3 andersen consulting and accenture 2 enron scandal 3 demise 4 migration of partners and local offices to new firms 5 see also 6 references 7 external links history edit founding edit main article arthur e. andersen arthur andersen 1885 1947 in 1913 arthur andersen and clarence delany both from price waterhouse bought out the audit company of california to form andersen delany & co. which became arthur andersen & co. in 1918 . revenue per year in million u.s. dollars . source corporate press releases born 30 may 1885 in plano illinois and orphaned at the age of 16 andersen began working as a mail boy by day and attended school at night eventually being hired as the assistant to the comptroller of allis chalmers in chicago . in 1908 at age 23 he became the youngest cpa in illinois . the firm of arthur andersen was founded in 1913 by arthur andersen and clarence delany as andersen delany & co. 3 the firm changed its name to arthur andersen & co. in 1918 . arthur andersen s first client was the joseph schlitz brewing company of milwaukee . 4 in 1915 due to his many contacts there the milwaukee office was opened as the firm s second office . in 1908 after attending courses at night while working full time he graduated from the kellogg school at northwestern university with a bachelor s degree in business . 5 andersen had an unwavering faith in education as the basis upon which the new profession of accounting should be developed . he created the profession s first centralized training program and believed in training during normal working hours . he was generous in his commitment to aiding educational civic and charitable organizations . in 1927 he was elected to the board of trustees of northwestern university and served as its president from 1930 to 1932 . he was also chairman of the board of certified public accountant examiners of illinois . reputation edit andersen who headed the firm until his death in 1947 was a zealous supporter of high standards in the accounting industry . a stickler for honesty he argued that accountants responsibility was to investors not their clients management . during the early years it is reputed that andersen was approached by an executive from a local rail utility to sign off on accounts containing flawed accounting or else face the loss of a major client . andersen refused in no uncertain terms replying that there was not enough money in the city of chicago to make him do it . for many years andersen s motto was think straight talk straight . arthur andersen also led the way in a number of areas of accounting standards . being among the first to identify a possible sub prime bust arthur andersen dissociated itself from a number of clients in the 1970s . later with the emergence of stock options as a form of compensation arthur andersen was the first of the major accountancy firms to propose to the fasb that stock options should be included on expense reports thus impacting on net profit just as cash compensation would . by the 1980s standards throughout the industry fell as accountancy firms struggled to balance their commitment to audit independence against the desire to grow their burgeoning consultancy practices . having established a reputation for it consultancy in the 1980s arthur andersen was no exception . the firm rapidly expanded its consultancy practice to the point where the bulk of its revenues were derived from such engagements while audit partners were continually encouraged to seek out opportunities for consulting fees from existing audit clients . by the late 1990s arthur andersen had succeeded in tripling the per share revenues of its partners . predictably arthur andersen struggled to balance the need to maintain its faithfulness to accounting standards with its clients desire to maximize profits particularly in the era of quarterly earnings reports . arthur andersen has been alleged to have been involved in the fraudulent accounting and auditing of sunbeam products waste management inc asia pulp & paper 6 and the baptist foundation of arizona worldcom as well as the infamous enron case among others . 7 8 two of the last three comptrollers general of the us general accounting office now the government accountability office were top executives of arthur andersen . 9 andersen consulting and accenture edit the consulting wing of the firm became increasingly important during the 1970s and 1980s growing at a much faster rate than the more established accounting auditing and tax practice . this disproportionate growth and the consulting division partners belief that they were not garnering their fair share of firm profits created increasing friction between the two divisions . in 1989 arthur andersen and andersen consulting became separate units of andersen worldwide soci t coop rative . arthur andersen increased its use of accounting services as a springboard to sign up clients for andersen consulting s more lucrative business . the two businesses spent most of the 1990s in a bitter dispute . andersen consulting saw a huge surge in profits during the decade . the consultants however continued to resent transfer payments they were required to make to arthur andersen . in august 2000 at the conclusion of international chamber of commerce arbitration of the dispute the arbitrators granted andersen consulting its independence from arthur andersen but awarded us 1.2 billion in past payments held in escrow pending the ruling to arthur andersen and declared that andersen consulting could no longer use the andersen name . as a result andersen consulting changed its name to accenture on new year s day 2001 and arthur andersen meanwhile now having the right to the andersen consulting name rebranded itself as andersen . four hours after the arbitrator made his ruling arthur andersen ceo jim wadia suddenly resigned . industry analysts and business school professors alike viewed the event as a complete victory for andersen consulting . 10 jim wadia would provide insight on his resignation years later at a harvard business school case activity about the split . it turned out that the arthur andersen board passed a resolution saying he had to resign if he didn t get at least an incremental us 4 billion either through negotiation or via the arbitrator decision for the consulting practice to split off hence his quick resignation once the decision was announced . 11 accounts vary on why the split occurred executives on both sides of the split cite greed and arrogance on the part of the other side . the executives on the andersen consulting side maintained breach of contract when arthur andersen created a second consulting group aabc arthur andersen business consulting which competed directly with andersen consulting in the marketplace . aabc grew quickly most notably its healthcare and technology practices . many of the aabc firms were bought out by other consulting companies in 2002 most notably deloitte especially in europe hitachi consulting pwc consulting which was later acquired by ibm and kpmg consulting which later changed its name to bearingpoint . enron scandal edit main article enron scandal following the 2001 scandal in which energy giant enron was found to have reported 100bn in revenue through institutional and systematic accounting fraud andersen s performance and alleged complicity as an auditor came under intense scrutiny . the powers committee appointed by enron s board to look into the firm s accounting in october 2001 came to the following assessment the evidence available to us suggests that andersen did not fulfill its professional responsibilities in connection with its audits of enron s financial statements or its obligation to bring to the attention of enron s board or the audit and compliance committee concerns about enron s internal contracts over the related party transactions . 12 on june 15 2002 andersen was convicted of obstruction of justice for shredding documents related to its audit of enron resulting in the enron scandal . although the conviction was later reversed by the supreme court the impact of the scandal combined with the findings of criminal complicity ultimately destroyed the firm . nancy temple andersen legal dept. and david duncan lead partner for the enron account were cited as the responsible managers in this scandal as they had given the order to shred relevant documents . since the u.s. securities and exchange commission can not accept audits from convicted felons the firm agreed to surrender its cpa licenses and its right to practice before the sec on august 31 2002 effectively putting the firm out of business . it had already started winding down its american operations after the indictment and many of its accountants joined other firms . the firm sold most of its american operations to kpmg deloitte & touche ernst & young and grant thornton llp . the damage to andersen s reputation also destroyed the viability of the firm s international practices . most of them were taken over by the local firms of the other major international accounting firms . the andersen indictment also put a spotlight on its faulty audits of other companies most notably waste management sunbeam the baptist foundation of arizona and worldcom . the subsequent bankruptcy of worldcom which quickly surpassed enron as the then biggest bankruptcy in history and has since been passed by the bankruptcies of lehman brothers and wamu in the 2008 financial crisis led to a domino effect of accounting and corporate scandals . on may 31 2005 in the case arthur andersen llp v. united states the supreme court of the united states unanimously reversed andersen s conviction due to what it saw as serious flaws in the jury instructions . 13 in the court s view the instructions were far too vague to allow a jury to find obstruction of justice had really occurred . the court found that the instructions were worded in such a way that andersen could have been convicted without any proof that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents . the opinion written by chief