Hoof prints of the maverick


Af Robert F. Kelley
Redaktør på xaaac.com – December 22, 2002

December 1, 1913  – December 1, 2002

More than three decades ago, Fortune magazine dubbed Arthur Andersen & Co. as the “Maverick” (someone who exhibits great independence in thought and action) of the accounting profession. The sobriquet was well-deserved considering the legacy of the founder, Arthur E. Andersen and the accomplishments of his successor, Leonard Spacek. Over the years from the opening of “the doors” in 1913 until near the end of its eighth decade…the Firm’s achievements influenced, but not to the desired degree of excellence, the evolution of the accounting profession … both in the United States and the remainder of the world. Portrayed as a historical trail marked by the hoof prints of the ”Maverick”…the contributions to global business and professional services organizations credited to Arthur Andersen & Co. are truly… sine qua non (one of a kind).

Here is brief summary of the odyssey of the Greatest Organization of Professionals in the world.


…the 28 year old son of Norwegian immigrants planted the seed for his “American Dream” by opening a public accounting firm with a colleague and a staff of eight…young Arthur was committed to the express purpose of creating “a different kind of firm”…concurrent with this start-up venture, Andersen maintained his professorship at Northwestern University (Evanston, Illinois) and…continued writing the accounting textbook used by the University…

World War I and After

…the “different kind of firm” distinguished and differentiated itself from the other accounting firms by conducting special business investigations “behind the figures” to evaluate financial investments made by their clients…and…further differentiated its approach to the profession of accounting by designing and installing financial and cost accounting systems…and by providing tax consulting services

Depression Era

…as the young firm entered its third decade of existence the new breed of accountants embraced industrial engineering as an essential set of skills to perform complete business analyses…with the voice of its founder, the Firm persistently advocated that the fledgling accounting profession in the U.S. needed to adopt common standards and a common language…to practice what they preached the Firm established an internal committee to evaluate emerging accounting issues and provide consistency of position taken on accounting issues within the Firm…with prescience and courage, the Firm vigorously opposed the prevailing thought among the other firms…AND… politicians that accounting standards needed to be defined solely by governmental authority…

Before, During, and After World War II

…the Firm developed Industry Competence Programs by merging accounting knowledge with systems and tax expertise to develop an integrated knowledge based approach to meet the changing needs of business …with an understanding that education must be extended and continued, Arthur Andersen & Co. pioneered centralized training conducted during normal work hours for all professional personnel creating a new paradigm for training and breaking with the accounting profession’s traditional European influenced model of apprenticeship training and studying after work…internationally, began converting their patchwork of international network affiliations with other accounting firms to a network of Arthur Andersen & Co. offices…to serve client needs and increase its business competencies, the Firm employed experienced “systems” specialists and began providing services to implement the systems designed for the Utilities and Manufacturing industries using “punch card” technology…

Dawn of the Computer Age and the Decline of Xenophobia

…Joe Glickauf (named in 2000 as the “Father of Computer Consulting” by the magazine, “COMPUTERWORLD”) a non-accountant hired by Leonard Spacek after serving as a systems analyst in the U.S. Navy, built a model of an electronic computer (the Glickiac) to convince AA&Co. Partners and clients of the potential for improving business processes by the use of computers…after a futile effort to convince International Business Machines of the emerging trend, Thomas Watson Jr. wrote a cordial letter to Leonard Spacek informing him that, according to IBM’s forecasts, the worldwide market for computers for business applications numbered only five…General Electric agreed with Spacek and Glickauf and contracted with Arthur Andersen & Co. to design, program and install an Univac computer for business processing at a new automated plant in Louisville, Kentucky…this project marked the first application of an electronic computer for business purposes…reversing the traditional migration pattern of the accounting profession which, historically, was from Scotland and England to the U.S. and other countries…the Firm established offices in Europe using U.S. Partners and Managers as mentors alongside “nationals” serving as Office Managing Partners and recruiting only “nationals” as staff…coupled with the unique program of centralized training, the nationalistic approach to serving clients resulted in a culture woven into a new fabric fit for the challenges of globalization…Leonard Spacek, the most vocal critic of the accounting profession, soundly positioned the Firm as the “Maverick” by his emphatic citation …”Generally accepted accounting and audit standards are rooted in what exists, rather than what is needed”…further, Spacek proposed a World Court of Accounting to settle differences in the interpretation and application of accounting principles…Randal McDonald, (Houston) and an expert in Oil and Gas Exploration and Production, developed an alternative accounting method called “full-cost accounting” which was what the small producers needed to compete with large companies for investors…McDonald’s method was finally endorsed by the accounting profession and the Firm further enhanced its well established reputation as the pre-eminent authority on Oil and Gas accounting and U.S.tax methods.

Expanding Globalization – Defensive Nationalism

…after introducing computer consulting to the world as a beneficial client service, Arthur Andersen & Co. filled the void between computer hardware and computer results by designing and programming Arthur Andersen (AA) operating systems software and AA application software…rather than depend on the accounting profession to develop standards for electronic data processing, the Firm’s Management Information Consulting Division led by Victor Millar developed the profession’s first “Principles of EDP Design, Implementation and Quality Assurance” the principles became core competencies taught in the centralized training curriculum…guided by the visionary Managing Partner of the 1970’s, Harvey Kapnick, the Firm purchased St. Dominic College, near Chicago, and established the Professional Education Division marked as a first for the accounting profession …Arthur Andersen & Co. became the first accounting firm to sue the S.E.C….showing an absence of bias against governments…and on a pro bono basis, Arthur Andersen & Co., prepared the first-ever financial statements for the United States government…a practice followed by the U.S. government since that first demonstration of sound financial accounting and reporting for the public sector…to further demonstrate the Firm’s commitment to public responsibility, an independent Public Review Board, (composed of respected people from academe, government and business from around the world and the first of its kind in the profession), was established to evaluate operations and management of the Firm and issue, publicly, an annual report of their findings and recommendations…without any external impetuses, Arthur Andersen & Co. engaged a competitor in the accounting profession to conduct a financial audit of the Firm and issue, publicly, an annual report complete with financial statements; the first for any accounting firm…the first truly global professional services organization was formed under the laws of Switzerland and Arthur Andersen & Co. S. C. was born linking entities in 80 countries in a global partnership that shared people, standards, training resources, intellectual capital, a code of conduct, the name, the reputation, resources, financial credit capacity, costs and profits. …in 1975, the City of New York faced bankruptcy and the U.S. Treasury called on Arthur Andersen & Co. to prepare a financial recovery plan within 30 days for the city to avoid bankruptcy…as the only accounting firm advocating the adoption of International Accounting Standards by the world’s trade organization, the GATT, (the General Agreement on Trade and Tariffs, now the World Trade Organization, WTO), the Firm rallied support, globally, from member firms of the Arthur Andersen & Co. S.C., professional organizations, stock exchanges, organizations of regulators, regional trade groups, developing countries and international businesses…the result was the formation of the Working Party on Professional Services as a permanent part of the WTO with International Accounting Standards as the centerpiece…on a pro bono basis, a Firm-wide project under the direction of Mort Egol, Partner, created a new systems-based approach to primary and secondary education called “The School of the Future”…and, implemented the School of the Future system by funding a model school in Alameda, California…the Firm created a separate business unit for accounting, auditing, business consulting, tax consulting (the Arthur Andersen strategic business unit) and a separate strategic business unit for the remaining practice of “consulting” (Andersen Consulting)…and allowed the Andersen Consulting business unit to pursue its own destiny…a management decision not followed by the other accounting firms…the Andersen Consulting strategic business unit ultimately launched an IPO becoming the public company, Accenture, without providing financial recognition to all the Arthur Andersen & Co. S.C. Partners who had contributed to the mosaic of goodwill that was capitalized in the public offering; a business event not common to the other accounting firms’ spin-offs of their consulting business units;…the residual firm’s (Arthur Andersen’s) Research & Development, using computer modeling, was in the process of testing a computer-based fraud prediction model…when…

Branding the Maverick

…in 2002, the U.S. Department of Justice “branded” the Maverick and its entire herd as criminals thereby shooting a political arrow into the heart of Andersen…purely a judicial action for political purposes…AND truly sine qua non…


As a postscript to this odyssey of incredible achievements I must say that I believe that the “soul” of the Firm, was in a discernable pattern of descent and decay in the early 1990’s AND organizations, like humans, die gradually. Determining the exact time or cause(s) of this pattern of descent and decay of the soul of the Firm would be an exercise clouded with subjectivity. Changes in the culture of an organization are similar to the occurrences of fraud and viruses…their causes never start big and are often difficult to detect at their origin.

Suffice to say the defining watershed for the Firm occurring in 1989 was the retirement of Duane R. Kullberg as CEO and Managing Partner of AA&Co. S.C. and the creation of the two separate strategic business units. Kullberg, whose leadership quotient is in parity with Spacek, Andersen and Kapnick, assumed the leadership role during the turbulent 1980’s. His legacy for the 1990’s was a strong financial infrastructure, a greatly expanded and strengthened international network, and a strong, central accounting principles group with the unbending support of the top management of the Firm. His unflagging dedication to the “crusade for fairness” for the “widows and orphans” in the retired ranks is indicative of his integrity. We all owe a huge debt of gratitude to the last of the great leaders, Duane Kullberg.

The flag was symbolically folded on December 1, 2002 when the residual Administrative Board of the AALLP called for a final settlement of the retirement benefits due to the Retired Partners that built the Firm faithfully adhering to the principle of “stewardship” with integrity.

Robert F. Kelley
Arthur Andersen & Co. S.C
New Orleans 1964
Chicago 1997

Note from the author

This recount of salient events in the 89 year odyssey of Arthur Andersen & Co. was written to concentrate on the “best of times” and the accomplishments resulting from doing business “the Arthur Andersen way” during those times. Most of you can remember the feeling of esprit de corps that flashed through you when you introduced yourself and said that you were “with Arthur Andersen”.

The year of 2002 was without reservation…”the worst of times”. My intent in writing this piece is to…diametrically…shine a bright light on those proud accomplishments and dim the lights that we have all shined on the devastating failures of the past year. A natural concern is our association with the name and the implied denigration of our own reputation…the proverbial “scarlet letter”. When we dim our own lights on 2002…we find that the mark, the scarlet letter, on our forehead goes away. Each one of us has our personal dignity…that is effected only by us. Each one of us has personal attributes and unique experiences and knowledge that are valuable. Let’s stand tall in 2003!!!