Andersen May Spin Off Audit Practice
AccountingWEB first reported rumors of a spin off of the consulting arm from Big Five firm Andersen, in the wake of Enron and in anticipation of further audit-consulting separation requirements to come from regulators and the profession. Reports this week describe details of a plan at Andersen to spin off its auditing practice into a separate entity, beginning in the United States and spreading internationally.
The report indicates that an announcement about the plan could be made as early as this week. Andersen's audit practice would become a stand-alone firm, providing audit and related services. No information has been provided as to whether firm would continue to use the name, Andersen.
The plan is being described as one of the results of an internal review of Andersen conducted by former Federal Reserve chairman, Paul Volcker, who was brought in as a consultant shortly after Andersen became embroiled in the publicity surrounding the Enron bankruptcy.
One unnamed senior Andersen partner was quoted as saying, "Clients are deciding that they will not buy consulting from their auditors. The game is up and the whole industry faces restructuring."
Meanwhile, according to a report on our sister site, AccountingWEB UK, Andersen is denying the validity of the report, and a spokesperson at Andersen UK said, "no decisions had been made, and no announcements were imminent."