PracticeAccounting FirmsFormer audit client sues Andersen

Former audit client sues Andersen

Peregrine, the US software infrastructure developer, which collapsed over the weekend, is to sue its former auditor Andersen for $1bn (£643m).

Link: Peregrine examines ‘potential’ accounting errors

The company announced the lawsuit against Arthur Andersen LLP, Andersen Germany, Arthur Andersen Worldwide, audit partner Daniel Stulac and other defendants to be named later.

Peregrine is seeking damages totalling more than $1bn alleging that Andersen was negligent, engaged in fraud and breached its audit and accounting duties and responsibilities.

Trouble for the software maker began in May this year after it admitted it over-inflated earnings by $100m during a three-year period. This prompted a US Securities & Exchange Commission probe and the resignation of a number senior executives.

A month prior it fired Andersen as auditor and announced it would submit quarterly reports later than expected.

News of the lawsuit emerged after Peregrine filed for Chapter 11 bankruptcy protection. The company said it has also negotiated the sale of its Remedy Software unit to BMC Software for $350m.

The bankruptcy filing does not include subsidiaries located outside the US and its customer service unit Peregrine Solutions.

Arthur Andersen LLP had its license to audit in the US revoked earlier this month.

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