PracticeAccounting FirmsJob cuts may cost Andersen partners £1m each

Job cuts may cost Andersen partners £1m each

UK partners of crumbling firm Andersen expect to lose a minimum of £1m each to pay for the 1,660 redundancies announced by the firm, with the money coming directly from their paypackets and their equity in the firm.

Although the firm is not releasing any official figures, a partner this week told Accountancy Age they would be losing capital in the firm, with partners having an average of approximately £500,000 invested in Andersen.

They also expect to lose the equivalent of two years’ net salaries – even if the UK firm avoids litigation from the Enron affair – estimated to be in the region of £780,000. The losses, which partners are treating as a ‘dent’ rather than ‘disaster’, will largely come from the payoffs for the redundancies the firm announced as a result of the Enron affair.

Partners, led into the merger by managing partner John Ormerod, are also being hit by the reduction in work and the decrease in referral work to the UK from the US firm. ‘Partners earn a lot of money and in most cases they can afford to lose this,’ said an Andersen partner. The firm refused to comment.

Meanwhile, it has been revealed that the firm was ‘asked to resign’ as auditor of drug company Cambridge Antibody Technologies, after five years, following ‘a number’ of Cambridge-based auditors handling its account quitting the firm. An announcement was made to the London Stock Exchange that Deloitte & Touche had been voted in to replace the ailing firm.

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