NEW YORK — PricewaterhouseCoopers LLP, the biggest accounting firm, has picked up the most business in the United States from Arthur Andersen LLP, dropped by clients as investigators probe its work as auditor for Enron Corp.
Andersen has lost 15 clients that are members of the Standard & Poor's 500 Index this year, including Sara Lee Corp., SunTrust Banks Inc. and Merck & Co. Seven of those went to PricewaterhouseCoopers. Ernst & Young LLP, the No. 4 accountant, picked up the second-most, four.
For competitors of Andersen, indicted on an obstruction of justice charge for shredding Enron-related documents, the next weeks present an unprecedented opportunity.
Executives of all four of the biggest accounting firms, PwC, Ernst & Young, KPMG International and Deloitte & Touche LLP, have been crisscrossing the country to meet with potential clients.
"PricewaterhouseCoopers is the biggest by about 33 percent, and that's a major selling point," said Jonathan Hamilton, editor of the Public Accounting Report, a trade publication.
"They held the dominant share of the Fortune 500 firms even before Andersen's problems. Clients pay attention to that. They want to know the resources are there."
The top 10 clients that switched to PwC last year paid Andersen audit fees of more than $30 million and total fees of more than $90 million. Some companies said they would retain Andersen for consulting work.
In many cases, the firm already had established business with the companies, said Dennis Nally, senior partner for PricewaterhouseCoopers' U.S. business.
"These are great wins, but I would be disappointed if we hadn't been this successful," Nally said. "We've been traveling a lot, but we're not aggressively out knocking on doors or cold calling. In many cases we have relationships that go back a number of years. When there is an opportunity like this, you already have the relationship."
PricewaterhouseCoopers' revenue last year was $22.3 billion, and No. 2 Deloitte & Touche's was $12.4 billion. Andersen, the fifth of the so-called Big Five accounting firms, had revenue of $9.3 billion in the fiscal year ended Aug. 31, about 52 percent of which came from its overseas partnerships.
Andersen's non-U.S. units are in talks to break away from the global network. The Chinese and Hong Kong practices agreed to combine with PricewaterhouseCoopers, while the Russian business said it will merge with Ernst & Young. The British, German and Italian affiliates are proceeding with plans to join KPMG International.
Ernst & Young Global chief executive officer Bill Kimsey said his firm is interested in acquiring all of Arthur Andersen's non-U.S. businesses.
This year, 49 U.S. companies have dropped Andersen. PricewaterhouseCoopers has gained at least 11 publicly traded companies, with its biggest gains among large companies.
In addition to the seven S&P 500 members, PwC also picked up Pennzoil Quaker State, EOTT Energy Partners and AdvancePCS.
PricewaterhouseCoopers's gains haven't only been in external auditing work. PwC's tax and internal audit businesses also gained prominent clients, including Delta Airlines Inc., Revlon Corp. and Abbott Laboratories.
"They are the biggest firm, so it certainly stands to reason that they are the first one that clients will look to when they are going to choose somebody else," said Jon McKenna, Auditor Trak's editor.
Andersen hired former Federal Reserve Chairman Paul Volcker to reform its business after Congress and the Securities and Exchange Commission began to investigate its role in Enron's bankruptcy. Volcker proposed changes, and some lawmakers and regulators have proposed that many of those be adopted industrywide.
PricewaterhouseCoopers plans to lobby against several of those reforms, including proposals that tax and auditing work be separated, and that companies be required to switch auditors every four years. It has already adopted many of the other proposals, Nally said.
The firm will sell shares of its consulting business to the public this year, eliminating potential conflicts from consultants and auditors working for the same client, a key criticism by some members of Congress of Andersen's relationship with Enron.
"You can be assured that we will speak out as appropriate" as new regulations are being formulated, Nally said in an e-mail to PwC employees.
"PwC is adamantly opposed to mandatory rotation (of auditors). Despite any surface appeal, the downside for both the client and the auditor would be significant," he said.