Arthur Andersen (defunct) vs Pwc

Arthur Edward Andersen founded his accounting practice in Chicago in 1913 at age 28. In its early years, the firm famously refused to certify the accounts of a railroad client that was misrepresenting its revenues. The client threatened to take its business elsewhere. Andersen reportedly told the client: "There is not enough money in the city of Chicago to make me do that." The client left. The story was repeated in the firm's training programmes for decades — as a founding myth that would make the firm's eventual destruction all the more ironic.

Through the mid-twentieth century, Arthur Andersen grew to become the most prestigious accounting firm in the United States. The firm was known for its culture of uniformity — partners across the country were expected to dress the same, speak the same, and apply the same standards. Andersen recruited from the top universities and invested heavily in training. At its peak, the firm had 85,000 employees in 84 countries. The "Arthur Andersen way" was a benchmark that other firms aspired to match.

Arthur Andersen's consulting division had grown so large and profitable that it dwarfed the audit practice. The consultants resented subsidising the auditors. In 2000, after years of internal warfare, the consulting division was spun off as Accenture — which would go on to become one of the most valuable professional services companies in the world. Arthur Andersen retained the audit business but had lost its most profitable revenue stream, leaving the firm financially dependent on a single catastrophic client failure away from disaster.

Arthur Andersen had been Enron's auditor since 1985 and earned $52 million from the company in 2000 alone — split roughly equally between audit and consulting fees. When Enron's accounting irregularities became public in October 2001, Andersen employees began shredding documents and deleting emails on the orders of a senior partner. Investigators later concluded that tonnes of documents were destroyed in the weeks before the SEC formally requested them.

The U.S. Department of Justice indicted Arthur Andersen for obstruction of justice in March 2002. The indictment alone was fatal — major clients immediately terminated their relationships with the firm, unwilling to be associated with an indicted auditor. By June 2002, Arthur Andersen had ceased auditing public companies. 85,000 employees had lost their jobs. In 2005, the Supreme Court unanimously overturned the conviction, ruling that the jury instructions had been legally flawed. Arthur Andersen's conviction had been wrongful. But the firm was already gone — dissolved three years earlier, 89 days after the indictment, before any court had found it guilty. It remains the most dramatic corporate death in American professional services history.

Pwcis the product of two separate Victorian accounting practices. Price Waterhouse was founded in London in 1849 by Samuel Lowell Price and later expanded by Edwin Waterhouse. Coopers & Lybrand was founded by William Cooper in 1854. For nearly 150 years, the two firms were direct competitors — both operating globally, both serving the world's largest companies, both considered among the most prestigious names in the profession.

Price Waterhouse won the audit of U.S. Steel — the world's first billion-dollar corporation — in the early twentieth century, establishing itself as the auditor of choice for America's largest industrial companies. In an era before the SEC existed, the name "Price Waterhouse" on an audit report was the closest thing to a government guarantee of financial credibility.

Price Waterhouse and Coopers & Lybrand completed their merger in 1998, creating Pwc— at the time the largest professional services firm in the world. The merger reduced the Big Six accounting firms to the Big Five. Two firms that had competed for 150 years became one overnight.

At the 89th Academy Awards ceremony in February 2017, PwC accountants mistakenly handed presenters Warren Beatty and Faye Dunaway the wrong envelope. Beatty announced La La Land as Best Picture. Producers and cast members took the stage. Then a PwC representative walked on and announced that the actual winner was Moonlight. The firm had managed the Oscars vote count for 83 years without incident. The two accountants responsible were never allowed to work the Oscars again. PwC retained the contract.

In 2023, PwC Australia became the centre of one of the most damaging scandals in the firm's history. A senior partner had leaked confidential government tax policy information to colleagues, who used it to advise corporate clients on how to avoid new tax rules before they were announced. The scandal triggered parliamentary inquiries, forced the resignation of PwC Australia's CEO, and prompted a global review of how the Big Four's consulting and audit practices conflict with each other.

PwC laid off approximately 5,600 employees globally in 2025 — including 1,500 in the U.S. alone — after global revenue growth slowed to 2.9%, its lowest rate since the pandemic-recovery boom. The firm had aggressively expanded headcount between 2021 and 2023, and with attrition falling sharply, it had more staff than clients demanded. Meanwhile, PwC spent approximately $1.5 billion on AI capabilities between July 2024 and June 2025, attempting to position the firm for a future where AI would do much of the analytical work that had made consulting firms valuable. Advisory revenue grew just 4.5% in 2025. The question facing PwC — and every major consulting firm — was whether AI would eventually replace the human judgment that justified their fees, or whether it would simply be another tool to sell to clients at a premium.