TechnologyAccounting SoftwareAndersen denies Year 2000 liability

Andersen denies Year 2000 liability

If the Andersen Consulting customer attempting to recover the costs of making its 10-year-old IT system Y2K-compliant wins its legal battle, it could sound the deathknell of the computer industry.

That is the discouraging opinion of Year 2000 expert Peter de Jager who said: “We cannot have software companies financially responsible for every piece of code that has ever been written. If they were, the entire computer industry would collapse. Everyone would be suing everyone else and no-one would write another piece of code in case they were liable to fix it in years to come.”

De Jager is supporting Andersen in its battle with US retailer J Baker.

The latter has not actually sued the consultancy so far but Andersen has made a pre-emptive legal strike against its former customer, after the retailer hired a law firm that plans to specialise in Y2K work. The two companies have had extensive talks about J Baker’s claims for compensation for the cost of making its software Y2K compliant.

Andersen Consulting has asked the Massachusetts State Court for a “declaratory judgement”, which would rule that the firm met all its contractual obligations when it implemented a merchandising system nearly 10 years ago. J Baker has not been an Andersen client since then but has, according to the consultancy, been happy to be a reference site and has said publicly that the system generated benefits of $1m a month.

Eric Jackson, a spokesman for Andersen in New York, said that, while he had no indication how long it would take the judge to rule, he expected the issue to be resolved swiftly.

“We are not asking for any type of penalty. All we want is for the judge to determine did we or did we not meet our contractual obligations.”

Jackson added that Andersen was left with no option but to take legal action after months of negotiations did not reach a resolution and after the retailer hired the lawyers.

Andersen claims J Baker’s argument – that it would have insisted on Year 2000 functionality in 1989 had it known that the package did not provide it – is groundless, because the retailer approved design documents that explicitly set out a two-digit year dating format. “We are a very thorough organisation,” said Jackson.

J Baker, which is a $600m clothing and shoe retailer based in Canton, Massachusetts, is not commenting on the affair.

According to de Jager this is the first Y2K legal case he has encountered that will go before a judge. However, he said there was anecdotal evidence that around 150 cases have been settled out of court under non-disclosure.

The fact that the case involves Andersen is prophetic. The consultancy is all but refusing to do any Y2K work.

Andersen spokesman Jackson says this is not because it fears lawsuits but because the work was not deemed a strategic way to grow the firm.

Even long-standing Andersen customers are being passed on to other consultancies if they request Y2K help.

Reporting by John Geralds for the VNU Newswire service.

Related Articles

Accountancy in the digital age: Flexibility, agility, efficiency

Accounting Software Accountancy in the digital age: Flexibility, agility, efficiency

3w Pegasus Software | Sponsored
Sage purchases Intacct in its largest ever acquisition

Accounting Software Sage purchases Intacct in its largest ever acquisition

5m Alia Shoaib, Reporter
5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
UK behind foreign markets in digital accounting, but gap is narrowing

Accounting Software UK behind foreign markets in digital accounting, but gap is narrowing

7m Alia Shoaib, Reporter
The rise of the progressive accountant

Accounting Software The rise of the progressive accountant

7m Emma Smith, Managing Editor
Making Tax Digital: Revolution or revolt?

Accounting Software Making Tax Digital: Revolution or revolt?

8m Emma Smith, Managing Editor
Making Tax Digital: Is HMRC’s recent system fault a cause for concern?

Accounting Software Making Tax Digital: Is HMRC’s recent system fault a cause for concern?

8m Emma Smith, Managing Editor
Four reasons why SME owners should switch to cloud accounting

Accounting Software Four reasons why SME owners should switch to cloud accounting

9m Emma Smith, Managing Editor