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Some Andersen Partners Said to Be Joining Deloitte

Some Andersen Partners Said to Be Joining Deloitte

By CHRIS CZIBORR

The hiring of partners from Arthur Andersen LLP’s Orange County office by rival Big Five firms has begun, according to an industry source.

Last week a source familiar with Deloitte & Touche LLP’s Costa Mesa office said the firm quietly hired three Andersen OC tax partners. Deloitte plans to bring on an unspecified number of Andersen’s tax staff along with the newly hired partners, the source said.

A local Big Five accounting firm official who asked not to be named said he believed Andersen OC managing partner Michael Puntoriero and his office’s audit partners would end up joining the Irvine office of PricewaterhouseCoopers LLP.

“My understanding is that the Andersen office here could be closing within the next week or two,where their staff and non-partner managers go is still a little bit up in the air,” the official said. “These things can always change.”

Officials at the Irvine offices of Andersen and PricewaterhouseCoopers did not return calls.

Last month, Ernst & Young LLP’s Los Angeles office said it was hiring 100 people from Andersen’s Los Angeles, Denver, Phoenix and San Diego offices.

Ernst isn’t hiring from Andersen’s OC office, though some of the recent hires could end up working in OC, according to Sarah “Sally” Anderson, managing partner of Ernst’s Irvine office.

“We’re looking for people for Orange County,” she said. “The number depends on the hiring needs throughout our surrounding offices.”

Anderson, whose office has grabbed the biggest client defections from Andersen, said newly won work stands to create need for new hires in the next year (see story, page 1).

“With those new Andersen clients, we’ll probably need to hire some more people from all over, including Andersen offices,we’re looking at all avenues,” she said. “Once the 100 new Andersen staff all come onboard and are given their assignments in L.A., we may end with some of them joining the OC office.”

KPMG LLP hasn’t been going after Andersen partners and staff all that aggressively, according to a source. KPMG feels the firm already was adequately staffed in OC and that Andersen’s practices here overlap with KPMG’s.

“Andersen cherry picking wouldn’t have added a whole lot of value there,” the source said.

Legal wrinkles arising out of the Enron Corp. case have made Big Five officials mindful of potential successor liability, where parties in the Enron-Andersen case could go after firms that hire Andersen partners.

“These things have dragged on and on because people have liability concerns,that’s why none of the firms can take too many Andersen offices,” one official said.

Another local Big Five official, requesting anonymity, said other Big Five firms have scanned their list of offices making strategic city-by-city assessments in the wake of the Enron-Andersen scandal.

“Each of the remaining Big Five firms prioritized which of their offices had the most strategic value and which ones clearly needed people the most,” he said. “And then we all just sort of stopped,once you hit a certain number you don’t want to continue to take on many more people because of the liability issues.”

The official said local trends may not exactly mirror national trends, but at the national level Andersen’s practice is likely to get divvied up among what could become the Big Four.

“At the end of the day, if you took a map of the U.S. you’ll see Andersen’s practice split up fairly equally among the remaining four Big Five firms,” he said. “In each area everyone picked and chose based on what their needs were.”

So far, most of the larger public and a few private companies that were clients of Andersen’s OC office have switched auditors,the bulk of those going to Ernst.

“Primarily the public companies made their decisions first because they wanted to make sure they had accountants on hand for their quarters that were coming up,” Ernst’s Anderson said. “But some of the private companies haven’t yet made their decisions on where they’re going.”

Last week, Irvine-based Exult Inc. said it is switching to KPMG as its independent auditor.

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