Andersen, Auditing and Atonement

Ten years ago, Arthur Andersen was forced to surrender its licences in the United States after the Enron scandal, precipitating its global collapse. December 2011 marked 10 years since Enron, the Texas energy company, filed for bankruptcy after perpetrating one of the world's biggest business frauds. More significantly for the accounting profession, May 2012 marks a decade since the Enron indictment in the United States, and the beginning of the end for the well-respected Arthur Andersen, one of what was then the Big Five accounting firms.

The firm was convicted of obstructing justice by destroying thousands of documents related to its work for Enron. While the ruling was overturned in 2005 on technical grounds, it came too late to resuscitate the brand. For the profession, the scandal drew wide scrutiny on the supposed compromised position of large firms that audit the books of clients to whom they also provide consultancy services.

For a look back on the past decade of reactions, reforms and soul-searching in the accounting profession, read the article “ANDERSEN, AUDITING AND ATONEMENT: The accounting profession 10 years after Enron” by George W. Russell at GAA Accounting online.

A History of Ernst & Young

The roots of Ernst & Young go back to the 19th century and its founders Arthur Young and Alwin C. Ernst. Arthur Young was born in Glasgow, Scotland. He graduated in law, but became interested in banking and investment. In 1890, he moved to the US to pursue his career in accounting. In 1906, he formed an accounting firm, Arthur Young & Company, with his brother Stanley. Alwin C. Ernst was born in Cleveland, Ohio. After leaving school he worked as a bookkeeper. Then, in 1903, he and his brother Theodore started Ernst & Ernst, a small public accounting firm.

Young and Ernst were innovators and appreciated the importance of quality in their work. Ernst pioneered the idea that accounting information could be used to make business decisions. Young positioned himself as a business advisor. Both firms were also quick to enter the global marketplace. As early as 1924, they allied with prominent British firms: Young with Broads Paterson & Co. and Ernst with Whinney Smith & Whinney. These alliances were the first of many for both firms, which opened offices around the world to service their international clients.

Ernst and Young never met in life, but died within days of each other in 1948. Their philosophies lived on and, in 1989, were brought together when the firms they started combined to create Ernst & Young. The new organization quickly positioned itself on the leading edge of rapid globalization, new business technologies and continuous business change.

View the brief history and a timeline at the Ernst & Young Canada website.

Historical Notes on the Accounting Hall of Fame

Election to the Accounting Hall of Fame is perhaps the only longstanding national award for accountants -- and probably the only international one as well -- in which both academic and practicing accountants vie for the same award. The Accounting Hall of Fame was established at The Ohio State University in 1950 for the purpose of honoring accountants who have made or are making significant contributions to the advancement of accounting since the beginning of the twentieth century. Through 2008, 85 leading accountants from the United States and other countries have been elected to the Hall of Fame.

While selection to the Hall of Fame is intended to honor the people so chosen, it is also intended to be a recognition of distinguished service contributions to the progress of accounting in any of its various fields. Evidence of such service includes contributions to accounting research and literature, significant service to professional accounting organizations, wide recognition as an authority in some field of accounting, advancement of accounting education, and public service. A member must have reached a position of eminence from which the nature of his or her contributions may be judged.

CICA Corporate Reporting Awards celebrate 60 years of excellence

This year marks the diamond anniversary of the Chartered Accountants of Canada’s Corporate Reporting Awards. Since 1941 the program has been centre stage in Canada’s evolution to best practice reporting models.  By providing important recognition for those committed to advancing business reporting, the program has helped drive the development of best practices in financial reporting, corporate governance disclosure, electronic disclosure and sustainable development reporting, all of which are now regarded as essential components of the corporate reporting model. Judging organizations include the Canadian Institute of Chartered Accountants (CICA), PricewaterhouseCoopers, Ernst & Young, Deloitte, International Institute for Sustainable Development, Canadian Investor Relations Institute, and Toronto CFA Society.  (Read the article “Corporate Reporting Awards celebrate 60 years of excellence” in the June-July 2011 issue of CAmagazine online.)

ICAEW - Accounting History Gateway (Archives)

As noted in a previous posting (February 23, 2011), the Institute of Chartered Accountants in England and Wales (ICAEW) has created an Accounting History Gateway. As part of the Archives Section of the gateway, the ICAEW conducted an archive survey of member firms in 1991-1992 and the information gathered was published in Chartered accountants in England and Wales - a guide to historical records in 1994. It is a useful starting point for research into accountancy firms, with an overview of the types of records that may have been retained. Archival materials also include Accounting Standards Committee Archives (1952-1990) and Auditing Practices Committee Archives (1971-1991).

PricewaterhouseCoopers - A Firm History

PricewaterhouseCoopers (PwC), one of the world’s largest accountancy firms, was created in 1998 through the merger of two firms, Price Waterhouse and Coopers & Lybrand. Each firm has historical roots going back about 150 years to 19th century Great Britain (explore PwC's First 100 Years in Canada). The collection of PwC archival materials, donated to Columbia University in August 2000, traces the rise of both firms to become major worldwide professional services powerhouses through mergers and business expansion. To learn more about these extensive archives, visit the Archival Collections at the Columbia University (in the City of New York) Rare Book and Manuscript Library online. The Archival Collections provide access to descriptions and finding aids for more than 3,500 archival collections in six Columbia University Libraries repositories. These collections include personal papers, institutional records, corporate archives, architectural drawings and much more.

A History of KPMG in Canada

In Canada, KPMG's roots date back to 1840. Since that date, more than 115 firms in communities across Canada have joined forces to create KPMG. Each of these has played a vital role in the growth of KPMG in Canada. For an overview of predecessor firms Thorne Riddell, Ernst & Whinney, Stevenson Kellogg Ernst & Whinney, and Peat Marwick, visit the KPMG Canada website. (A history of KPMG International dating from 1897 is also available online.)

A History of BDO Canada LLP

BDO Canada LLP is both new and old on the scene. In January 1992, the Canadian accounting firms, Dunwoody & Company and BDO Ward Mallette ― each with approximately 70 years of history ― merged with BDO Guenette Chaput in Winnipeg and BDO Frazer Matthews in Edmonton to form one unified firm. Formerly known as BDO Dunwoody, the Canadian member firm of BDO International changed its name again in 2010 with the rest of BDO’s firms around the world to become known as, simply, BDO. (Read about the history of Dunwoody & Company and BDO Ward Mallette on the BDO Canada LLP website.)

Deloitte in Canada - 150 years and counting...

The history of Deloitte not only records the development of accounting in Canada, it is also a study in the evolution of professional services – from the days when bookkeepers in “public practice” focused mainly on estates, trusts and liquidations, to the diverse service offerings of today in which auditors, tax specialists, management consultants and financial advisors routinely assist organizations in addressing a wide range of financial, operational, regulatory and other matters. (Read highlights of The history of Deloitte in Canada and the booklet Deloitte 150 years of excellence and innovation in professional services. Also, view an interactive timeline that tracks the evolution of the firm since 1858, along with the growth of Canada and the CA profession.