Final Accounting: Ambition, Greed and the Fall of Arthur Andersen

by Barbara Ley Toffler, Jennifer Reingold

A withering exposé of the unethical practices that triggered the indictment and collapse of the legendary accounting firm.

Arthur Andersen's conviction on obstruction of justice charges related to the Enron debacle spelled the abrupt end of the 88-year-old accounting firm. Until recently, the venerable firm had been regarded as the accounting profession's conscience. In Final Accounting , Barbara Ley Toffler, former Andersen partner-in-charge of Andersen's Ethics & Responsible Business Practices consulting services, reveals that the symptoms of Andersen's fatal disease were evident long before Enron. Drawing on her expertise as a social scientist and her experience as an Andersen insider, Toffler chronicles how a culture of arrogance and greed infected her company and led to enormous lapses in judgment among her peers. Final Accounting exposes the slow deterioration of values that led not only to Enron but also to the earlier financial scandals of other Andersen clients, including Sunbeam and Waste Management, and illustrates the practices that paved the way for the accounting fiascos at WorldCom and other major companies.

Chronicling the inner workings of Andersen at the height of its success, Toffler reveals "the making of an Android," the peculiar process of employee indoctrination into the Andersen culture; how Androids—both accountants and consultants--lived the mantra "keep the client happy"; and how internal infighting and "billing your brains out" rather than quality work became the all-important goals. Toffler was in a position to know when something was wrong. In her earlier role as ethics consultant, she worked with over 60 major companies and was an internationally renowned expert at spotting and correcting ethical lapses. Toffler traces the roots of Andersen's ethical missteps, and shows the gradual decay of a once-proud culture.

Uniquely qualified to discuss the personalities and principles behind one of the greatest shake-ups in United States history, Toffler delivers a chilling report with important ramifications for CEOs and individual investors alike.

Genres: Business, Nonfiction, History, True Crime, Accounting

288 pages, Hardcover

First published January 1, 2003

Reviews

[Paula Casill · Rating 4 out of 5]

A fascinating inside look at the collapse of a Big 6 accounting firm. Hearing the story of how AA collapsed as told from the perspective of a non-accountant who worked for the company was incredibly enlightening about the corporate cultures, assumptions, and pitfalls of the industry as a whole.

I picked this book up not long after I started my first job out of college in a large regional accounting firm, so I found much of what the author had to say to be especially relevant. However, the book would make a fascinating read for anyone who wants a behind-the-curtain view of the collapse of a major company.

[Jillian · Rating 2 out of 5]

Although the subject matter was very interesting in terms of learning the company's history....the author put way too much of her own opinion into it. She lacked an investigatory touch...instead there where parts I felt like I was reading a diary. For someone as accomplished as she is in the business field...writing on the Aurther Anderson/Enron scandal from an inside perspective did not come off as believable. She was part of the company at the time...but lacked any real insight into what really happened from the audit perspective. She just seemed to write the book to gain some credibility back considering she was supposed to be an ethics partner at the firm....and literally did nothing to improve the corporate culture that was going on around her.

[Rob Hamilton · Rating 3 out of 5]

I found this book to be pretty informative. There was a lot of focus on the split of Andersen Consulting (Accenture) and the lack of strong leadership at the top. Further, I think the book did a good job exploring the contributing factors of the problematic audits that ultimately resulted in Andersen's downfall. Because of their high profile, I would have liked a little bit more about the problems at Enron, WorldCom, Waste Management, etc., but I understand that this book was written primarily for non-accountants. Having just finished a novel, I was a little disappointed in the writing, as it seemed a like a really long magazine article. All in all, a good book that explores the systemic issues at an illustrious firm, that ultimately contributed to its downfall: competition between employees rather than collaboration; losing a focus of the ultimate stakeholder of their services - the public; greed; and secrecy.

[Robert Wittmann · Rating 4 out of 5]

“Usually, unethical or illegal behavior happens when decent people are put under unbearable pressure to do their job and meet ambitious goals within the resources to get the job done right.” Shows the downfall of a major accounting firm that, according to the author, has lost its ways with bad incentive structures and forgot that they are serving the investing public and not just their clients. A culture that looked down upon bringing up any bad news from manager to partner so much so that when asked who the most important stakeholder is every single manager said their own partner they worked under. Partners did not want to solve any issues with audits, instead they wanted to keep their client happy no matter what, causing a culture that lead to the company that changed the accounting landscape - Enron.

[Monzenn · Rating 4 out of 5]

Per usual, the experiences and stories themselves are excellent. The inside view to Arthur Andersen, a crucial component of the 90s to early 2000s accounting scandals, was fascinating. The look into the ethical standards was also interesting.

What prevented it to be 5* for me was the narrative. Coming into the book I knew this was a first-hand account, so I expected the narrator to come out clean. I didn't expect her to come out as Supergirl though. "If only they followed my suggestions" every five pages or so. It is what it is, but it did dampen my enjoyment a bit.

Nonetheless, I would still recommend this book, if only for the rare look at accounting and ethics.

[John Wheeler · Rating 4 out of 5]

Toffler's views on the workings of a large personal service firm in some respects are naive but she did capture the essence of the continual threat of erosion of principles in exchange for the lure of achieving success which so often is measured exclusive!y by your contribution to the bottom line in these large firms. Mixing consulting with auditing is never going to be free from such a threat.

[Drew Porter · Rating 5 out of 5]

This book was a page turner. I read it in a single sitting on an airplane from SFO to Newark while I was still at Deloitte. It chronicles the end of Arthur Andersen. After reading this book, and knowing what I know about the profession and the Big 4 (then Big 6) accounting firms, justice was served in the death of this firm. As Toffler illustrates, it was rotten at the core. My experience with Andersen tax consultants is consistent with the book. Ethics was not a priority. It killed them.

[J Brown · Rating 4 out of 5]

This was a supplemental reading for my ethics class was great. I have a bunch of ideas that I can thank this read to. Unfortunately, Arthur Andersen is no longer a company. It's fall from grace coincide with some of the the most unfortunate bankruptcies and scandals of the dot.com era.

[Derek VanRoekel · Rating 4 out of 5]

A great read for anyone at all interested in public accounting, even if it is a bit dated at this point. The book provided valuable insights into ethical leadership and the power of organizational culture.

[Matt · Rating 1 out of 5]

Disappointingly boring read for such an interesting subject matter.

[Andy Jin · Rating 5 out of 5]

Very exciting and interesting look into Arthur Andersen at its peak from an insider

[Ashley · Rating 4 out of 5]

I picked up this book thinking it would get into the details of the Enron debacle, which it did. But it went much further into Arthur Andersen's background, arguing that it was in fact Andersen's own poor management internally that caused the fall of this once great and respected firm.

A combination of greed, lack of ethics, a poor compensation structure (esp. at partner level and across lines of service), lack of leadership, and a tendancy to point fingers of blame instead of assuming resposibility led to a lack of quality accounting and attention to the risk assumed by the firm by taking on such large (thus highly lucrative), though very risky, clients. (In addition to Enron, which was bad enough, they also audited WorldCom, Sunbeam, and Tyco amongst others: some are discussed in the book.)

This book is an easy read: though the author is not an accountant, I can see where some pages may be "dull" or even a bit over the heads of some readers not familiar with accounting or public accounting firms. However, the management lessons that any business person can gather make this book an excellent book to read (just skim over the stuff you don't get - it will be worth it). If you are a CPA, I would go so far to say it is a must-read.

I would give it 5 stars, but, as the professor who recommended this book to me warned me, it is a bit wordier than needed.

[SweetPea · Rating 4 out of 5]

This was a very compelling read that was hard to put down. The writing style made the story flow although my being an accountant may have made the subject a little more interesting to me. The flaw that exists here is that the author didn't adequately explain how she was able to continue at Arthur Andersen as long as she did. She skewers the firm for its lack of morals and how senior management ignored the warning signs of the massive unethical behavior, and yet she continues working there as the Ethics person. She seems to have gotten sucked into the same unethical behavior and with less brain-washing efforts than the "Androids" she looks down on. In a way her metamorphosis is worse, since she claims to have seen the lack of interest in behaving ethically from very soon after joining the firm and yet she goes down the exact same path as others there. With her supposed ethical training and background, that may be more the story here - how the firm was able to corrupt even those that supposedly hadn't gone through the brain washing that recent college graduates hired into the firm go through.

[Richard Sansing · Rating 4 out of 5]

A vivid description of Arthur Andersen in the 1990s, when the author worked there. The culture had become completely dysfunctional, which was not at all the case when I worked in the Houston office from 1979-84. Well worth reading.

Some of the descriptions did not ring true. The author suggests that Arthur Andersen only hired a particularly type of person, which she describes an "Androids." That wasn't my experience; the Houston office was growing so quickly and the work was so demanding that it would not have made sense to be so restrictive in terms of hiring. Perhaps the tax department was more tolerant of flaky types because we had less direct contact with the clients.

A sad end to a once great firm. Glad to see that some of the old tax partners have partly resurrected the firm's name as "Andersen Tax."

[David Frey · Rating 3 out of 5]

Solid review of the fall of Arthur Andersen. However, the author Barbara Toffler, did not seem to be in the weeds at Andersen. In fact, she came in late already into the demise of the firm as a non-equity partner. Not sure how much deep knowledge and value she brought to the story. I would much rather prefer a book written by someone with decades at the firm seeing the development of the culture at Andersen.

[Alan · Rating 4 out of 5]

Interesting. The AA Ethics Officer (from academia) tells a somewhat naive tale of CPA firm spinning out of control. The classic behavior is recounted: everybody bills, if necessary splitting jobs, referring, churning. Meetings have lots of people so that everyone is "on board" and billable. Despite all the uproar, not much has changed.

[Kevin · Rating 3 out of 5]

After working at Andersen Consulting before the whole debacle, it's amazing to read about a company with such a strong history getting totally dismantled.

[Todd · Rating 4 out of 5]

A very interesting tale of American greed.

[Maggie Perrien · Rating 3 out of 5]

So this was a book for my ethics class in high school, but it gave really great insight as to how Anderson destroyed itself. A must read for anyone in a Big 4 firm.

[Mandy · Rating 3 out of 5]

Interesting read from a business perspective. If you ever get curious about what actually happened with companies like Enron back in the early 2000s, this is a good read.

[Jerry Herrera · Rating 4 out of 5]

Eye opener shedding light on true greed.

[Lloyd Hinkle · Rating 5 out of 5]

Gives insight into how greed drives corporate america to conduct business to the determent of the general population

[Sharon Wildfang · Rating 4 out of 5]

How true!!

[Mills College Library]

338.76165 T644 2004