Ruing Andersen's demise and the loss of audit competition.

• Author: Cunningham, Colleen

A unanimous Supreme Court recently overturned the 2002 criminal conviction of Arthur Andersen for shredding documents related to its audit of Enron Corp. Andersen's conviction by a jury was reversed by the high court based on a finding that the trial judge's instructions to the jury were improper.

In writing the opinion, Chief Justice William Rehnquist stated that if the lower court's jury instruction is applied as a definition of law, then any company ever destroying any document might need to be concerned that the document would be relevant in future investigations or lawsuits.

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I was at a dinner recently sitting next to a very accomplished gentleman, who, when asked where he began his career, rather sheepishly whispered, "Arthur Andersen," as if it were a deeply held secret that he feared would get out. It reminds me of the famous quote from President Reagan's former Labor Secretary, Ray Donovan, who asked after his acquittal, "Which office do I go to, to get my reputation back?"

It is a shame that the actions of a few individuals at Andersen caused about 28,000 employees in the U.S. to lose their jobs. Putting the entire company out of business for the deeds of a couple of individuals was the real crime here. I believe that this reversal will help to remove the unjustified cloud over the extremely competent and high-integrity individuals who have been employed by this firm. While this reversal comes "too little, too late" for Andersen, it hopefully denotes a change in the prosecutorial environment.

Industry Is Less Competitive

While we still have to endure some state attorneys general who continue to "try" cases via the press, many of the current cases are indeed going after the individuals who perpetrated the alleged criminal acts rather than the companies themselves: Enron, Adelphia Communications Corp., Tyco International Ltd., HealthSouth Corp.

The only thing accomplished by putting Andersen out of business was depriving the market of another audit firm that might have been useful in this post-Sarbanes-Oxley world. The accounting industry has become less competitive.

We have seen the Big Eight dwindle down to the Big Five due to consolidations; with Andersen gone, we...