Andersen Strikes Deal With Rival; U.S. Tax Practice Would Go to Deloitte
Arthur Andersen said yesterday that it has tentatively agreed to transfer much of its U.S. tax practice to accounting rival Deloitte & Touche LLP in what would be the first major step in its effort to shed non-audit businesses.</br></br>Andersen said it is following a reform plan outlined by former Federal Reserve chairman Paul A. Volcker, which calls for the firm to stop providing services that conflict with its auditing. Volcker, who heads an internal oversight board at Andersen, has said that the firm should not provide "aggressive" advice to audit clients on how to reduce their taxes.</br></br>The agreement calls for "a significant number" of Andersen's U.S. tax specialists to join Deloitte as soon as April 30, Andersen said. It would provide "continuing career opportunities" for "a significant number of our people," Andersen managing partner Larry Gorrell said in a statement.</br></br>At the same time, Andersen tax partners are negotiating with a venture capital firm to get $400 million to create stand-alone firm, an Andersen source said. Some partners are hesitant to invest their capital and future in another audit firm.</br></br>In a conference call yesterday with leaders of the U.S. firm, Andersen partners were told that management is preparing to lay off a third of the firm's audit personnel and make smaller cuts in its consulting and tax practices.