The accounting firm Arthur Andersen could be cut back to half its current size, under a plan to save the beleaguered company. The former head of the U.S. central bank, Paul Volcker, is proposing Andersen separate its auditing and consulting businesses.
Former Federal Reserve chief Paul Volcker said his plan to save Andersen calls for him to head a seven-member panel to run the firm in place of its current management. At a news conference Friday in New York, Mr. Volcker said the Chicago-based firm would concentrate on its core business of auditing. All non-auditing business, such as tax and consulting work, could be sold off. Non-auditing work comprises 60 percent of Andersen's revenue.
"The restored model of Arthur Andersen, obviously the firm will be smaller because it will be an auditing-only firm. It will lose the consulting, tax and ancillary things it has done. There will be shuffling of personnel," Mr. Volcker said.
Mr. Volcker has not said how many jobs could be lost under his plan.
His plan is considered a long-shot, last-chance effort to save Andersen, an 89-year-old firm endangered by the collapse of energy trading company Enron. Andersen was Enron's auditor, and several of its employees shredded Enron financial documents after the federal government began its investigation into the energy company.
The federal government has charged Andersen with obstructing justice. A trial is scheduled for early May, though Mr. Volcker said he is trying to persuade the U.S. Justice Department to drop the charge. Andersen has also lost about 100 of its corporate clients, and analysts have wondered aloud whether there will be any accounting firm left for Mr. Volcker to try to save.