Two Big Five accounting firms have stepped back from rescuing
competitor Arthur Andersen after its involvement with Enron's
collapse.
Deloitte Touche Tohmatsu and Ernst & Young International have
decided to abandon their plans to buy all or parts of fellow Big
Five accounting firm Arthur Andersen, whose survival is in question
as a result of its role in the collapse of energy trader
Enron.
Deloitte and Ernst & Young separately entered into preliminary
discussions with Arthur Andersen recently to explore scenarios for
acquiring all or parts of the embattled company. But the legal
problems and liabilities that Arthur Andersen faces prompted both
suitors to end the talks on Wednesday (12 March).
"Deloitte was unable to continue to the next stage of discussions
due to Andersen's unresolved litigation and legal issues," Deloitte
said, adding that it hoped Arthur Andersen would find a way to
survive as an independent company.
"After reviewing the possibility of combining with Andersen, Ernst
& Young has concluded that as long as Enron and other Andersen
litigation matters are unresolved, it is not in the best interests
of our people, clients, and our firm to pursue such a combination,"
Ernst & Young said in a statement.
Chicago-based Arthur Andersen was Enron's auditor, and its
involvement in the fall of the energy giant - including the
shredding of documents and allegedly improper accounting practices
- has won the accounting firm civil lawsuits, an exodus of
important clients and employees, and, according to published
reports, investigations from US federal government agencies,
including the US Securities and Exchange Commission and the US
Department of Justice.
This week, an independent oversight board, created by Arthur
Andersen to reform the company's operations, mandated that the
accounting firm stop offering consulting services not related to
auditing, including most of the firm's IT consulting
services.
How Arthur Andersen chooses to rid itself of its consulting
practices, including the IT services team, is up to the company,
the board said. Options would include selling the consulting units
to other companies or spinning them off into independent companies.
No one from Arthur Andersen was available for comment.