Andersen crisis: Competition issue, no issue

The confident prediction came on Tuesday as Andersen revealed it expects to complete the merger – which does not include its US operation – before KPMG’s new accounting year begins on 1 October. It expects the UK merger will be concluded much sooner than other national offices.

John Ormerod, UK senior managing partner for Andersen, said the two firms sought guidance and admitted there were competition issues to answer.

But he added: ‘This is an unprecedented case. We’ve been in contact with the authorities and we expect them to understand and react in a favourable light.’

One way Andersen may pacify regulators is to split off its consultancy arm – just two years after losing Andersen Consulting, now called Accenture. This policy would also neatly tie in with KPMG’s aim of selling off its consultancy business.

Under the plans the Andersen name would disappear but Ormerod said the change would be reviewed with market research soon after. However, there seems little likelihood the 89-year old Andersen brand will survive.

Ormerod was also eager to make clear the move to KPMG was the best ‘choice’ for the firm, despite Deloitte & Touche pulling out of talks once the indictments emerged. The firm has let it be known it has a plan B in place should the KPMG move fall through, although no talks have so far been carried out with any mid-tier firm.

Ormerod also reiterated his confidence that UK partners would not be liable for the claims made against the firm in the US.

He added: ‘The UK arm is a separate legal entity and no questions have been raised here regarding our legal position. I see no reason why the liability issue will arise here in the UK.’

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