Andersen's cloud has local fallout

The future of troubled accounting giant Arthur Andersen remains cloudy with Australian clients questioning both its auditing ethics and IT expertise.

One local technical architect (requesting anonymity) from a large real estate company, said while Big Five consultancies like Andersen did a "masterful job" of selling the business case for IT to clients, there appeared to be a lack of integrity in dealings with clients.

The company signed a three-year outsourcing deal with Andersen for a centralised accounting system for property management.

While IT was only a small part of the client's overall relationship with Andersen, covering property and trust accounting services, the customer told Computerworld that Andersen was "vague" on the IT aspect of the service level agreement.

The IT portion of the total agreement is worth around $700,000. Also, by mutual agreement, the client-company's IT staff were not required to involve themselves in any of the IT work. However, the source claimed Andersen's "ongoing lack of IT expertise" gave internal IT and even accounting staff "no choice" but to play troubleshooter.

"Andersen partners are fantastic at selling what the firm does, but when it comes to the nuts and bolts -- the technical side -- they seem to have no idea."

He added: "I'm sure they'll honour any agreements they have with us, but they've done virtually no IT work because they didn't have the expertise themselves. They subcontracted Kaz for back-end ASP work at the start of the contract, hiving off side to them.

"Based on my knowledge of what our CIO thinks of Andersen now, the board may pull the plug.

"I'm planning to do a migration under the current circumstances -- our finance people think we could [manage] the accounting and IT work ourselves."

The customer recommends Andersen's IT clients clarify their dealings with the firm.

"Find out what IT work they are doing themselves and what, and if, they are outsourcing," he said.

Meanwhile, some large accounting firms are scrambling to address real and perceived conflict of interest problems caused by their practice of providing non-audit consulting services -- which often involve IT projects -- to clients for which they also provide audit services.

The concern here is that accounting divisions will go easy on these such clients during the auditing process in order to avoid upsetting, and then losing the nonaudit contracts.

Customers who spoke to Computerworld said Australian clients are fleeing to rival consultancies like KPMG because they are confident Andersen will "go under".

Other local customers include Singapore Airlines and AMP. Both companies declined to comment for this story.

Andersen Australia would not discuss any specific IT consulting contracts or clients.

Andersen Australia managing partner Garry Hounsell maintains the firm "remains a financially strong business with a stable client base and team of talented people", he said in a prepared statement.

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