The hope of merging Andersen's U.S. practice as a unit into another Big Five firm has all but disappeared, scattering the firm into several pieces both in the U.S. and overseas.

Andersen has reached a tentative agreement to turn over some of its U.S. audit practice to Big Five firm KPMG. As many as 150 audit and tax partners and nearly 2,000 other staff members would join KPMG under the terms of the agreement. Offices participating in the proposed acquisition include Boston, Boise, Houston, Denver, Dallas, Los Angeles, New Orleans, Philadelphia, St. Louis, Seattle, San Francisco, Salt Lake City, and Portland.

A partner in Andersen's Denver office, Jeffrey S. Finnan, sent a message to clients Monday advising them of the office's intent to join KPMG and encouraging clients to bring their business to KPMG.

A spokesman for PricewaterhouseCoopers told the Washington Post that they are in discussions with Andersen in particular territories in the United States.

Large regional firms such as BDO Seidman LLP, Grant Thornton and RSM McGladrey Inc. are pursuing Andersen's mid-market offices in smaller cities across the U.S.

Some of the offices of Andersen, such as Miami, Houston and Phoenix, are considering becoming independent firms, according to industry analyst Allan Koltin. Still others are exploring the possibility of parceling out units within an office to other firms based on niche expertise.

The concept of an "audit-only" U.S. firm, as visualized by Paul Volcker in his new plan for Andersen, may likely result in a mass exodus of the firm's partners and staff.

The Washington Post is reporting today that over 80% of Andersen's 1700 U.S. partners have signed nonbinding letters of intent to pursue positions at other firms. Normally, when a firm appoints partners, the partners sign an agreement that, should they leave the firm, they will not take clients with them for a certain period of time, and if they do leave and take clients, they must pay a penalty. There is speculation that Andersen may have decided to release its partners from this agreement.

"There is no question the landscape has changed," said Andersen spokesman Patrick Dorton, acknowledging that Andersen is likely to become "a smaller firm."

Meanwhile, Andersen continues to negotiate with Deloitte and Touche, Ernst and Young, and Fox Paine regarding the future of its U.S. tax practice.