It will hurt, but Andersen has earned its punishment. (Commentary).

ARTHUR Andersen deserves to walk the plank.

The U.S. Justice Department was right to prosecute the accounting firm -- right to charge that Andersen obstructed the federal government's investigation of failed Enron Corp. through "a wholesale destruction of documents."

Andersen partners ordered shredding of evidence in Houston, Enron's headquarters; in Chicago, the firm's headquarters; and in London and Portland, according to the indictment. Top management of the fifth-biggest accounting firm at least failed the oversight test.

In the end, Andersen may simply cease to exist. That would be fair. But it would be troublesome. Andersen audits the financial reports of about 2,300 companies. If it dies, those companies would rush to hire new accountants, largely from the Big Four firms that would remain: PricewaterhouseCoopers LLP, Ernst & Young LLP, Deloitte & Touche LLP and KPMG International.

Would other firms be able to absorb the work? Would reports be late because companies need time to find other auditors? Do reliability of reports?

This may overstate the problem. Perhaps other firms could pick up the auditing responsibilities. They could hire teams of accountants that worked at various companies, just as Wall Street firms hire teams of investment bankers from rivals.

But that wouldn't be just. The four big firms would reap the benefits of Andersen's failure when, in the broad sense, they are as guilty as Andersen.

This whole industry has sinned. Accounting firms for years have gone along with companies that push the rules to the edge. The Financial Accounting Standards Board has made its rules loose enough so that companies and their accountants can cheat without violating them.

Andersen's destruction of documents obviously was bad. But Andersen also failed to stop the Enron partnerships that removed debt from the energy trader's books, raised reported profits -- and were rife with conflicts.

Accountants have had their own conflicts, of course, in soliciting consulting work from the very companies they were auditing -- a situation they are ever so slowly rectifying by dividing their firms in two.

Andersen's demise also would concentrate accounting power into fewer hands. The more accounting firms you have, the more likely it is that you can find an honest one. It is a good thing that Andersen's looming legal liabilities deterred any of its four big rivals from acquiring it. That said, Deputy Attorney General Larry Thompson correctly rejected the notion that Andersen might be, in his words, "too big or too important" to fail.

There may be another option: reorganizing Andersen under Chapter 11 and hiring a new chief executive, who would throw out the current management and anybody else thought necessary.

A new CEO of stature -- someone like Paul Volcker, a former chairman of the Federal Reserve -- could prevent a mass exodus of innocent Andersen accountants and other employees.

Andersen already has taken on Volcker for advice on how to survive the Enron debacle. He might play a role similar to the one Warren Buffett, the noted investor, played at Salomon Inc. in 1991 and 1992 after that Wall Street firm was caught trying to manipulate the U.S. government-bond market.

If that happens, Andersen could be punished and still live to compete again.

David Pauly is a columnist for Bloomberg News.