The son of a Norwegian immigrant, Andersen was left on his own at the age of 16 after the death of his parents. He worked during the day as a mailboy and attended school at night. Eventually he was hired as the assistant to the controller of Allis-Chalmers in Chicago where he became intrigued with the work of independent public accountants. He received a degree as a certified public accountant at the University of Illinois in 1908; at age 23 he was the youngest CPA in Illinois. In 1917, after attending courses at night while working full time, he graduated from the Kellogg School at Northwestern University with a bachelor's degree in business.
In 1913 at the age of 28, he entered into business for himself under the firm name of Arthur Andersen & Co.
Andersen, who headed the firm until his death in 1947, was a zealous supporter of high standards in the accounting industry. A stickler for honesty, he argued that accountants' responsibility was to investors, not their clients. During the early years, it is reputed that Andersen was approached by an executive from a local rail utility to sign off on accounts containing flawed accounting, or else face the loss of a major client. Andersen refused in no uncertain terms, replying that he would not sign the accounts "for all the money in America." Leonard Spacek, who succeeded Andersen at the founder's death, continued this emphasis on honesty. For many years, Andersen's motto was "Think straight, talk straight."