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CHICAGO (AP) — Blue-
chip corporations are joining the
growing exodus of clients at
Arthur Andersen LLP, leading
some experts to question
whether the accounting giant
can survive the Enron scandal.
Andersen is known to have
lost about three dozen public
companies as clients since the
collapse of the Houston energy
giant, including Delta Air Lines
on Thursday and Freddie Mac
the day before. Merck Inc. and
SunTrust Banks also recently
dropped Andersen.
That is a small percentage of
Andersen’s more than 2,300 U.S.
public audit clients. But experts
say the quickening defections of
large and influential companies
could have fatal consequences
for the accounting firm.
Andersen spokesman
Patrick Dorton acknowledged
“a few” companies have sev
ered ties because of “concerns
about the negative publicity”
from Andersen’s role as
Enron’s chief auditor.
”We certainly regret the loss
of any one of these small num
ber of clients,” he said. “But we
are gratified that the vast major
ity of Andersen’s more than
100,000 clients around the
world remain with the firm.”
Nevertheless, Itzhak Sharav,
an accounting professor at
Columbia University, said the
extent of the sudden losses
appears to be unprecedented
among the Big Five accounting
firms. He said more companies
are expected to dump Andersen
in the next few weeks in annual
regulatory filings and at share
holder meetings.
“Normally you gain some
clients and lose some at this
time of year. But what you have
now is a one-way street. It’s
very hard for them to get other
clients to replace the ones that
defect,” Sharav said. He added:
“At least in the minds of many,
it's a sinking ship.”
University of Toronto
accounting professor Ramy
Elitzur said Andersen is being
treated as an industry pariah
despite its stellar past reputa
tion and the fact other top firms
have also been involved in
cases of negligence.
“They are in dire straits.” he
said. “Probably the only option at
this point is to merge with another
firm that will salvage them.”
Andersen has admitted its
employees shredded Enron-relat
ed documents. It is under investi
gation by Congress, the Securities
and Exchange Commission and
the Justice Department.
This year, Andersen was dis
missed by 21 public companies
and dropped 10 itself, for a total
of 31 losses, while gaining two,
according to AuditorTrak. an
Atlanta-based service that com
piles auditor changes.
The losses do not include
Delta, Freddie Mac. Merck or
private organizations.
The four other biggest U.S.
NEWS IN BRIEF
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a federal fund for victims of the
Sept. II attacks has been
expanded to cover more people
and give them more money.
The average award will be
about $1.85 million, roughly
$200,000 more than what was
calculated under draft guidelines
released in December, Kenneth
Feinberg, the special master of
the victims fund, said Thursday.
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accounting firms combined have
39 losses this year. Their total of
new clients was not available.
Andersen had 23 losses at
the same time a year ago, 14 in
2000 and 16 in 1999.
Lost fees from the Five
departed blue-chip clients —
Merck, Freddie Mac, Delta,
SunTrust and Enron, which
fired Andersen in January —
amount to between $75 million
and $ 100 million based on 2001
totals, according to industry
analyst Arthur Bowman.
“Since we’re talking about a
multibillion-dollar firm, that
doesn’t appear to be a great deal,
except that these are premier
clients who influence
clients, said Bowman.
Atlanta-based
Accounting Repon. "TV
ot events hpe a deepr
than appears on the sufcl
In a sign of potently
defections. Bowman sal
other large Andersenc :K
Georgia Pacific, FedEgj
Southern Baptist Comr,.
all have invited other
mg Finns to submit prop;
Delta is retaining Amell
perform some tax andoaj
suiting services. It didnJ
ment on what role it I
scandal played in ns<k j
hire Deloitte & Toucheij
I Each
liews r^
least o ■
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Subtracting their accountant
ftdvanta
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Arthur Anderson, which did auditing and consulting workfaH
Corp.. has seen a mass exodus of its clients in the wake of It*;
debacle.
Arthur Andersen's largest public clients and annual salts
billions as of December 2001
Bold indicates some companies that have broken with or announces
to break with Arthur Andersen
Merck & Co.
Enron Corp.
Costco Companies
Dynergy Inc.
UtiliCorp United
. Freddie Mac
International Paper
Georgia Pacific
S40.363
S40 112
$32,164
$29,445
$28 975
S28 350
$28 180
$22,218
9 Walgreen Co.
10 United Health Group
11. SysCo Corp
12. UAL Corp
13 WorldCorn Inc.
14 Sara Lee Corp
15. Ultramar
Diamond Shamrock
16. FedEx Corp
17. Aquila Energy Corp
18. Delta Airlines
19. Hartford Financial
Services Group
20. May Department
Stores
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New
SOURCES: Bowman's Accounting Report: Associated Press
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camera on Hubl
CAPE CANAVERAL. Fla.
(AP) — Spacewalking astro
nauts widened the Hubble
Space Telescope’s eyes to the
universe Thursday by
installing the most advanced
optical camera ever launched
for studying the heavens.
James Newman and
Michael Massimino made
room for the $76 million
Advanced Camera for Surveys
by pulling out the last of the
12-year-old Hubble's original
scientific instruments.
The new camera will allow
Hubble to peer deeper into
space, all the way back to
some of the early phases of
the universe more than 12 bil
lion years ago, when galaxies
began to form.
You guys just paved the
way for a lot of Ph.D.s in the
years to come,” said astronaut
Richard Linnehan, who moni
tored the 7 1/2-hour spacewalk
from inside space shuttle
Columbia.
It was the fourth spacewalk
in as many days for Columbia’s
crew and the longest one yet.
One final excursion was
planned for Friday; astronauts
will attempt to resuscitate an
infrared camera that has not
worked for three years.
Newman slid the new cam
era into Hubble on guide rails
as Massimino called out the
clearances for the 875-pound
device, about the size of a
phone booth but considerably
more fragile. Within minutes,
the camera was all the way in
and latched down tight.
h passed its initial tests.
Flight controllers in
will spend the nextnw
two fine-tuning the ins“
Astronomers hope n
using it by early May-
The instniment, "te
five years to develop©-
is actually three came®!
Altogether, it will pro'^
the field of view, twice4(
ity and five times thei$
of Hubble’s current "w
the 8-year-old Wide
Planetary Camera.
“The advanced c
going to add 10 timesift
bility to Hubble.
University of C ai
astronomer Garth I
the camera’s deputy
‘So here we have-
entist. — ,
scope that is incredibly ,
ready to move for the-- ,
He described this '
power improvement / n re
Hubble as a tuneuponj ca// .
automobile.” On Thuy
said, the astronauts p ul Em
turbocharger. ignor
“Hubble will detey reasc
faint stars and galaxies 1 peop
first 18 months than by Jen S (
detected with all of theP| dose
Hubble instruments,"'■ daydi
Hopkins University as® Out
Holland Ford, who led 1 violaf
that built the camera.' spon
the camera may he a Timo
ture images of planets 1 and
other nearby stars. nuke
The new camera f leave
ed into the slot that beojzens
the Faint Object We r
which was original et l . tons
on Hubble in 1990 but tions
ally became obsolee jus
1970s technology-It w In
out of service a few )' e ‘ j|te[
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