Andersen may lose top audits

ACCOUNTING giant Andersen is facing the prospect of losing more lucrative contracts to audit some of Britain's leading companies as concerns grow over the firm's role in the collapse of energy group Enron.

Among its half-dozen FTSE 100 audit clients, Amvescap said it is concerned by revelations about Andersen's involvement in Enron, WPP admitted it is keeping a 'watching brief' on the fallout from the accounting scandal, and Cadbury Schweppes refused to say whether the firm would be asked to audit its accounts for the current financial year.

Their fears follow an unsettling year for Andersen in Britain. Early last year it lost the audit of Tomkins to Deloitte & Touche after revelations of accounting irregularities at the conglomerate. In November, in a relatively rare occurrence for a FTSE 100 company, Safeway said it was dropping Andersen as its auditor in favour of KPMG.

An Amvescap spokesman said: 'Clearly these sorts of things need to be examined in light of Enron. Our audit committee needs to give some thought to these issues.' He said some 'due diligence' would be done in respect to Andersen and it would be dropped only if this process unearthed 'something they didn't like'.

A Cadbury spokeswoman said Andersen had already started auditing the confectionery group's accounts for the year to 2 January 2002. But asked if it would be retained beyond then, she said: 'We are not prepared to comment about that at the moment.'

WPP said Andersen is keeping it informed of developments Other leading audit clients showed more confidence in the firm. British Sky Broadcasting said it was 'pleased with the work Andersen had undertaken', while Shire Pharmaceuticals and Carphone Warehouse made similar positive statements about retaining the firm.

Andersen, the smallest of the Big Five accounting firms in Britain, has been dogged over the years by high-profile audit and reporting failures, not least at DeLorean and the then record management buyout at Magnet.

The firm is still awaiting the outcome of an investigation by the accountancy profession's regulators into alleged fraud at its audit client Wickes, while it has also attracted negative publicity for work done at Allied Carpets, from which it was sacked.

Enron shredding claim

SHREDDING of confidential Enron documents was still going on a fortnight ago, according to a former employee. Maureen Casteneda, a director in the foreign investments section of Enron's Houston, Texas, head office, claimed she was given shredded documents as packing material for her belongings when she, like 20,000 others, was laid off. Shredding was still going on when she left in the second week of January, she said.

Enron, which collapsed amid accounting irregularities in November, said it had repeatedly ordered staff to preserve all papers.

William Lerach, a lawyer suing Enron, said he plans to take some of the shredded material to a Federal court to ask that all relevant documents be put in the custody of the court.