Before 10 years, in the Financial accounting world there were Big five well known auditing firms.?

Question

But now I heard only Big four why? what happened to the 5th one

Answer 1

Arthur Anderson Consulting closed doors after Enron filed for bankruptcy.
At the time Enron was one of the larger companies in the United States, and Anderson was the sole auditor.
Due to the inconsistancies involved with Enron, Andersons name was probably smeared beyond repair.
This was then followed up with an indictment against Anderson from the US govt.
http://news.findlaw.com/hdocs/docs/enron/usandersen030702ind.html

Answer 2

There has been many cases where fall of a huge corporates and along with a corresponding auditing firms, not only in India but also in the US. The famous Enron Corporation Scandal and the auditing firm Arthur Anderson in the year 2001. These two scandals are comparable since the reasons for their downfall are similar. They manuplated the accounts to manuplate a small-sum which later became a routine practise. Then later the cumulation of small sums blew-up into a big monster. Satyams manuplation include: Showing inflated (high) cash and bank balances than actual balance. Showing interest income that was not present. Debtors value inflated. Raju said that - "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore (US$ 2.4 billion) in the September quarter of 2008 and official reserves of Rs 8,392 crore (US$ 1.79 billion)). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.***” However in enron's case its Auditing Firm (Arthur Anderson) also closed down along with, since it's customer's lost confidence with it. These frauds could not have been done with the knowledge of it's Auditors. These frauds can been controlled (cant say stopped) by having dynamic and strict laws. Dynamic : To cover any loophole found in law Strict : Fear of punishment stops/control frauds. For example: In US after the fall of companies like Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom the act of: Sarbanes–Oxley Act of 2002 Where a company every has to do reporting on 11 heads on its various accounting and till now has done fairly.

Answer 3

It was discovered that Arthur Anderson was cheating on their audits for Enron and ended-up having to close shop after some VERY messy litigation.

Answer 4

Arthur Anderson was the 5th and were Enron's auditors. Needless to say, they are no more.

Answer 5

I believe that Arthur Andersen was one of them, but with the Enron scandal and the penalties that they had to pay, they declared bankruptcy. They came back, smaller, and their name is Accenture.

Answer 6

It merged with the other ones - I think.