DEATH of Aurther ANDERSEN

CNN | March 13th | LOU DOBBS

[Roger_W_Isom]

LOU DOBBS is reporing that ERNEST YOUNG one of the TOP FIVE ACCOUNTING FIRMS HAS REFUSED TO ACQUIRE AA!!!!! This is NOT good NEWS!!!! if YOUNG refuses to accept AA offer to sell itself to YOUNG that means only one thing FOLKS!!!!

AA is in FAR more seious shape then we realize and we could be looking at the other accountting firms REFUSING TO ACQUIRE AA as early as Mid April!!!!

[Roger_W_Isom]

Don't worry!!! have had that happen on not a few times myself!!!! :-))))

[GovernmentShrinker]

Uninsured liability most certainly is the primary issue for potential acquirers, which is why AA exec's have been making the rounds of insurance companies -- "self-insurance" isn't worth anything when the firm doesn't have the assets to cover its current liabilities, never mind the ones that haven't surfaced yet.

As for SEC certification, that could be an obstacle to AA continuing as an independent firm, but in the event that an acquisition by another firm was arranged, you can be sure that the deal would include a pre-arranged guarantee from the SEC that the merged entity would be covered by the acquirer's certification.

[Endeavor]

I'm with you, CB.

[TopQuark]

May their employees suffer. I hate that firm...

A certain thugette at that firm mistreated and abused a 72 year old woman two years ago - and I will despise that firm so long as I live...

Neutrino, if a member of your family unjustly offends me --- and almost every family has a bad apple, doesn't it? --- should I send similar curses onto you and the rest of your family? Guilt by association is considered a fallacy in the Western world for a long time.

Your name-handle suggests that you deal with science. As such you are able to face nature as it is, regardless of what you would prefer it to be. It is unfortunate when natural scientists leave that wonderful ability in the office and do not apply it to everyday life. Please do not be one of them: after all, you are able to penetrate even solids.

[KC Burke]

See my #79 for some of the issues involving partnerships. No I don't work for Andersen. I am sometimes involved in hiring audit and consulting firms and while not having utilized their services, I've known some people there.

None of these firms are monoliths. Not even Wal*Mart. They all have different segments, real people with real concerns...that's my point.

The constant lament that "The Sheriff will save us" just isn't my cup of tea...

I will agree, all the big five (and others) have the hubris and self-importance of which you speak, but all such businesses are prone to that. When people talk to me in my field, I even get more pontifical than I do on FR if that can be believed.....LOL

[Roger_W_Isom]

INTERESTING to NOTE..... That could be about the ONLY thing that might SAVE these cos...and given YOUNG nixing this IDEE the first thing the REST would want to know up front is simple.... HOW SALAVAGABLE are you?????

[John Jorsett]

AA is in FAR more seious shape then we realize and we could be looking at the other accountting firms REFUSING TO ACQUIRE AA as early as Mid April!!!!

This isn't necessarily a bad thing for AA. Instead of fleeing Paul Volker's suggested reforms by selling out to a competitor, they'd have to deal with them.

Considering how the law seems to work, I don't blame other accounting firms for not wanting to take on the potential legal liabilities of AA by acquiring them.

[nicmarlo]

I heard, I think last night or the other night, on Fox that a company has refused to allow Andersen to be their accountants any longer. It was a big name company....I just can't remember the name.

[LouD]

Sure, firms come and go all the time. 90,000 people changing jobs in one industry is just a little hiccup..... ....oh, pay checks are nice to have but the Nanny state can provide...

Demand for accounting services remains unchanged. What changes is who does it. There will probably be some "overhead" job losses in aggregate, but not many.

[antaresequity]

What does the Price to earnings ration of the S&P have to do with KPMG

Specifically nothing...The post I responded to invoked a strong underlying belief of mine that we are far from the bottom.....that is all....

I just have a lot of trouble jumping on the GreenSpan RA-RA wagon when a Major cap weighted index is at 62:1 PE , Oil, Gold and Silver are in BULLISH moves, there isn’t a snowballs chance in hell of a further rate cut, and the entire planet is over extended in terms of debt: Personal, Corporate and Government, Japan is ready to really tank this time, Israeli PLO conflicts are escalating....Iraq....ad nauseum.....blah blah blah.

I could go on forever...the crap (IMHO) hasnt even begun to hit the fan...Recovery Shumvry...Show me the money!

Long Oil, Long Rates, Long Gold, Long Silver..Shorte Equities..................

[KC Burke]

Oh, I don't doubt that unfunded liability is a concern of the puchasing firm. Its just not a primary issue for AA if it stays intact as an audit concern. Would they like insurance after the fact? Who wouldn't but as an LLC when they set these contracts up under Enganging Partner and Account Mananging Partner in Charge, much of the LLC is insulated from liability of certain partners.

No, the SEC certifications, an ability to perform their core business, and any semblance of a remaining market share are going to be the only things that can save them if someone doesn't outright aquire them, less the LLC Partnerships with the liability we both are refering too....no one will touch those Partners now.

[CatoRenasci]

In my experience, and I've dealt with all of the big accounting firms here and several abroad, is that Andersen's hubris was something special, an order of magnitude greater than the others. I think that's why you see so much Schadenfreude in the industry over their humbling and probable demise.

The article you referred to on the partnership issues was good, although necessarily superficial. My practice involves a significant amount of corporate/partnership governance and mergers & acquisitions work. The word I hear on the street doesn't look good for AA.

[Grampa Dave]

It is time to break out Registered's classic on AA:

A Picture worth billions of profits/income that was really twinkle dust:

[cactmh]

Well here's what I could find. Also, FYI, PWC has more lawyers in the firm than any law firm in the U.S.

This is in the UK: 1 PwC (1) 2,119.9

2 KPMG 1,160.0

3 Deloitte & Touche (2) 796.0

4 Ernst & Young (3) 625.6

5 Arthur Andersen (4) 618.9

6 BDO Stoy Hayward 201.5

7 Grant Thornton 190.2

I can't remember the order worldwide, though I have the list somewhere. I know PWC is the biggest and KPMG is second. I am pretty sure that Andersen is the smallest (and has not had much growth during the last few years)

[mtman]

Suprise suprise!!!...AURTHER ANDERSON WILL HAVE A WILLIAM CLINTON LEGACY....Same morals same results....sometimes it takes awhile for the chickens to come home to roost...but eventually they do!...C-Ya AA!!!

[APBaer]

"How'd YOU like to be the IRS and see the name AA as AUDITTORS on a COMPANY TAX RETURNS????? ROFLMAO that would be ALL I NEDD to get a new accounting firm FOLKS!!!:-))))"

Why?
Didn't the INS see the name MOHAMMED ATTA on the visa application they just approved?

[GovernmentShrinker]

I think there's little hope at this point for AA surviving as an independent concern. What I hope will come out of this whole fiasco is a much-heightened awareness of the auditing-consulting conflict. It's high time for some enterprising mutual fund and portfolio managers to adopt a strict, published policy of not investing in companies whose financials are audited by a firm which is also in the consulting business (not just which does consulting for the same company-- this year's audit client could be next year's consulting client and vice versa, so the firm would be marketing both services to all of its clients all of th time). This is the free-market approach to solving the problem, and if enough large managers get badly burned in this round, it could become a reality. Otherwise, I'm afraid it'll take another round or two.