The Fall of Arthur Andersen - Organizational Culture Issues

According to former Arthur Andersen partners, the decision to remove the two-year audit practice rule was the first step in developing a generation of future leaders at Andersen who did not share a deep bond with the audit group or its values. According to Victor Miller (Miller), the head of the consulting group, "The real bitterness emerged when we began pulling people [into the leadership circle] with no background and no personal relationships with the auditors." During the late 1960s, Arthur Andersen's consulting group continued to grow, and began competing with computer giants like IBM in computer consulting services...

Arthur Andersen Worldwide had not only experienced internal conflict, it had also experienced an erosion of its culture. Various factors were responsible for this cultural decay. During the 1990s (especially in the mid and late-1990s), the auditing services business was at a low. Arthur Andersen had the slowest rate of growth (12.6%) among the Big Five auditing firms. Also, though its consulting group was making profits, it was still in the initial stages. The consulting groups of competitors such as KPMG and Ernst and Young were, however, making high margins on their consulting services...