Services Risk Watch — Beware of Arthur Andersen's Legacy Partner Reputation for Aggression

Courtesty of my good friend and colleague Brian Sommer, I recently came across this in-depth blog entry from re: the auditors that explain in detail a bit of the history behind the latest Huron blow-up. Brian, a former Accenture partner who got started at Andersen in the old AA days, knows what he's talking about when he writes that "Francine McKenna of Re: TheAuditors is possibly one of the best bloggers to cover the audit space. She gets deeper into independence and governance issues than anyone else I know." This recent above-linked post is proof of just that.

One of the lines I found fascinating in the story is the culture link that ties Huron to Arthur Andersen. Francine writes that while "the Arthur Andersen link is an easy and convenient one to use to characterize the culture of the firm ... senior management … is Arthur Andersen thorough and through. And they tend towards aggressive. The 'type' is well known here in Arthur Andersen’s hometown, Chicago." It most certainly is. And this extended to the sourcing and supply chain groups at Arthur Andersen as well (not to mention the marketplace practice which was run by Ariba's own Kevin Costello).

Now, on the consulting side, there's nothing wrong with being aggressive. Though I will say Loren Trimble, Venanzio Arquilla, Kevin Costello, Jim Broering and others tied to the old procurement, marketplace and supply chain practices at Arthur Andersen certainly had a 'love us' or 'hate us' relationship with clients and internal political squabbles. They were all type A through and through (and still are), fighting for territory within the broader market while at the same time fighting aggressively to grow their practices at the time. In strategy, process and IT consulting, this type of approach and leadership style can work well. Very well in many cases. But when it comes to working with firms for advice on tax, audit and related issues, this type of aggressive nature is scary indeed.

My wife, Lisa Reisman, worked within AA for around five years before that practice blew-up. I've asked her to share some stories with Spend Matters readers about the culture of the company and why organizations should be careful when engaging folks who came from it (outside of the consulting area) for accounting, tax and legal advice. Stay tuned. But in the meantime, do check out Francine’s piece, as it's clear things were clearly remiss at the firm, potentially from the type of aggressive behavior that came out of AA. Quoting an expert from another article, Francine notes that “Lynn Turner, managing director in forensic accounting at LECG, said Huron’s published statement suggests ‘there was some sort of kickback payments being made, which raises serious business and ethical questions.’”

Bottom line: as procurement professionals, do you monitor the reputations and actions of the services firms that your company engages with? If not, you should. The old AA (and even Deloitte) audit and tax cultures spawned many smaller firms with similar aggressive philosophies.

Jason Busch

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