PracticeAccounting FirmsDeloitte ‘ringfenced’ Andersen risk

Deloitte 'ringfenced' Andersen risk

Big Four firm Deloitte & Touche, which took on the majority of Andersen's staff and assets in July last year, has said there was no risk of legal action against it from the Enron saga.

Link: Rake says others could follow Andersen

The statement follows an interview given by Mike Rake, chairman of KPMG, to the Sunday Times, during which he admitted that another firm could collapse like Andersen.

Rake said most firms faced ‘legal action of various kinds from clients over supposed accounting or consulting errors’ and that was the reason why firms were lobbying for limited liability.

In 2002, KPMG lost to Deloitte in the battle for Andersen, after KPMG was unable to reach an agreement that it felt would protect the firm from any Enron-related liability.

But a spokesperson for Deloitte said the firm was not at risk. ‘We feel the way the deal was structured by our legal advisers for the integration of Andersen staff into Deloitte & Touche, the liability issue was ringfenced.

‘Remember that we were not the only practice to take on Andersen staff,’ the spokesperson added.

During his interview, Rake also admitted that it was painful for KPMG to publish its results, but it was important to ‘practice what you preach’.

The decision to publish full results was taken in the interests of ‘transparency, accountability and openness’, Rake said. ‘We have a major position of trust in the community and ought to be accountable for our results’.

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