NP Times/ Groups Rethinking Deals With Arthur Anderson

By Jeff Jones

But, some will follow their audit team to a new accounting firm

The American Cancer Society (ACS), based in Atlanta and a long-time Arthur Andersen client, is seeking proposals from other Big Five accounting firms, officials said.

And, the World Wildlife Fund (WWF), in Washington D.C., is seeking requests for proposals from Andersen and other Big Five firms, said Controller Patty Froehle.

They are among several large national nonprofits that are or will soon reconsider relationships with embatttled Chicago-based Arthur Andersen LLP. The accounting firm has been hit with an exodus of clients since its energy giant client Enron filed for bankruptcy protection.

Peter Tartikoff, ACS's national chief financial officer, said this is the normal time in the organization's fiscal year to select an auditor. ACS has been satisfied with Arthur Andersen's service, officials said. But given the climate and uncertainty of the firm's future, a contingency plan is needed, Tartikoff said.

Both ACS and WWF expect to make a decision about an auditor within a month, probably by April's end, officials said.

"They (Andersen) are currently our firm and may continue to be. It just depends on how the RFPs (requests for proposal) come out," WWF's Froehle said. The RFPs are part of a normal process, she said. "Every so often you want to go out and see what the market looks like for this," she said.
One unidentified nonprofit has dismissed Andersen as of March 22, according to Auditor-Trak, a database of audit changes provided by Strafford in Atlanta.

The Nature Conservancy's (TNC) audit committee will meet in June, said Craig Neyman, vice president and director of finances for the Arlington, Va.-based group. One subject sure to surface is Andersen's future role with the organization, Neyman said.

Officials at TNC have taken a "wait and see" approach to Andersen since January, but that was before an indictment came down against the firm. TNC's audit committee hasn't met since January, Neyman said.

TNC typically reviews its auditor every five years and did so last year. At that time there was no reason to stop the relationship with Andersen, Neyman said.

"If there is a significant blemish in what their signature has come to mean on audited financial statements then we would contemplate whether we have to change auditors," Neyman said.

Other nonprofits, such as the United States Olympic Committee, based in Colorado Springs, Colo., and the John F. Kennedy Center for the Performing Arts in Washington, D.C., remain mum on their relationship with Arthur Andersen. Officials at both organizations declined to comment.

Arthur Andersen doesn't publicly disclose its revenue by industry, said a spokeswoman at the firm's headquarters. Andersen's 2001 North America revenue was $4.488 billion, according to its Web site. Other questions about Arthur Andersen's nonprofit practice were referred to another spokesperson who did not return calls seeking comment.

Walter Bristol, executive vice president and chief financial officer of the American Heart Association (AHA), based in Dallas, said the organization is talking about seeking proposals from other firms.

"We have put together a task force of volunteers that is beginning to look into the issue of whether we should in fact replace Andersen," Bristol said. "This situation is very fluid as you can imagine. Every time you look in the paper there's a different set of issues that you have to face."

The group will decide what steps to take by the end of April, Bristol said. The organization has been an Andersen client for about seven years, he said.

United Cerebral Palsy Associations (UCPA), based in Washington, D.C., is contracted with Arthur Andersen through October, said David Gribble, finance director for UCPA. Andersen has completed the fieldwork for its audit, and the association has an extension until May 15 to file its Form 990. Arthur Andersen clients for about three years, UCPA rebid for firms last summer and Andersen won again, Gribble said. The UCPA could opt out of the contract and choose from other top firms, Gribble said.

A "wait and see" approach dominates the organization's thinking. If Arthur Andersen dissolves, Gribble said, the association's first choice is to stay with the partner they work with now.

Fred Hutchinson Cancer Research Center (FHCRC) in Seattle has been an Andersen client since 1990, said Randy Main, chief financial officer of FHCRC. Andersen would remain the center's auditor another year under a current fee arrangement, but FHCRC can terminate that agreement at any time, Main said. FHCRC has time to make a decision about its accountant because preliminary audit work for the fiscal year ending June 30, 2002 doesn't start until early June, Main said in an email statement.

Main wrote that, if possible, the organization will follow its Andersen audit team elsewhere if Andersen were to work out a deal to sell off pieces of its partnership. "We might be able to follow our audit team to another firm, which would maintain audit continuity and avoid the necessity of bringing new auditors up to speed," Main said in the email statement. He believes this could happen fast, "probably within the next two or three weeks because defection of both Arthur Andersen clients and partners is accelerating."

Andersen entered a not guilty plea to the felony charge brought by the U.S. Department of Justice. The New York Times reported Andersen is going after an expedited trial in hopes of quickly clearing its name. Jury selection in the case is set to begin May 6, and the presiding judge hopes for about a three-week long trial, The New York Times reported.

Some Andersen partners outside the United States have announced plans to separate from the firm. Competitors of the Big Five firm are baiting their lines to catch Andersen's clients, according to The Wall Street Journal.

At least one other firm outside the Big Five is doing the same. Bob Leavy, national managing partner for not-for-profit organizations, at Grant Thornton LLP's office in Boston, said the firm "will certainly respond to any inquiry or opportunity that comes our way."

"I know I have reports from several offices around the country where we have received inquiries from clients of Andersen," Leavy said. Those inquiries are from both nonprofits and for-profits, he said.

Arthur Andersen isn't a major player in the not-for-profit sector in most markets, so the opportunity is less significant, Leavy said

Natalie Gardner is a Little Rock, Ark.-based business writer.