Accounting firm Andersen will back away from its consulting business to focus on auditing as it fights a criminal indictment over audits that failed to flag the looming collapse of energy trader Enron, former US Federal Reserve chairman Mr Paul Volcker says.
About 60 percent of the firm's current partners work in divisions outside the core auditing business, including technology and management consulting, he said. He declined to say how many people may lose their jobs.
Mr Volcker has said he will head a seven-member board to take control of Andersen and replace management if he has support of Andersen partners and if the US government considered dropping or suspending its case.
Andersen agreed to support the plan Mr Volcker proposed earlier to separate its consulting and auditing businesses, a move that will likely deprive the firm of lucrative consulting contracts.
Such consulting deals have boosted revenues at top firms in recent years, but also raised conflict-of-interest questions about whether auditors go easier on lax bookkeeping at their firm's consulting clients.
Mr Volcker's plan to whittle down Andersen could halve the size of the 89-year old firm and put it at the forefront of reforms sought by critics after the Enron debacle.
In the latest blow to Andersen, the Justice Department said on Thursday it had impelled a new grand jury to investigate Enron and Andersen, arguing the accounting firm has no right to stop it from going forward despite already being indicted for obstruction of justice.
On the merger front, Andersen has been pushing for deals across the globe in a bid to salvage some of its international businesses. Talks are continuing between Andersen and KPMG on a merger of partnerships in various countries, although some have done deals with rival firms, including Russia, Australia, New Zealand, Hong Kong and China.