More companies back away from auditing firm

CHICAGO -- Three companies that had committed to Arthur Andersen LLP as their 2002 auditor announced a change of heart Monday, and another Fortune 500 corporation also dropped the troubled firm.

Andersen has lost more than 100 public audit clients so far this year -- most defecting in the last month amid the mushrooming scandal involving the now-indicted auditor of collapsed Enron Corp.

Pacific Capital Bancorp, Andersen's ninth-largest bank client last year, said it had rescinded its selection of Andersen in a newly filed supplement to its proxy statement.

FirstEnergy Corp., a utilities holding company based in Akron, Ohio, took similar action, telling shareholders in a proxy filing that its audit committee no longer recommends continuing an auditing relationship with Andersen that dates to 1930. Options are being evaluated, said spokesman Ralph Dinicola, noting that Andersen is "dealing with some very significant issues."

SPX Corp., whose audit committee selected Andersen as the company's 2002 auditor less than five weeks ago, announced it will reopen the selection process as soon as it files first-quarter results. The multi-industry company, based in Muskegon, Mich., until acquiring United Dominion Industries last year and moving to Charlotte, N.C., also cited new developments since it made its choice.

Andersen was indicted by a federal grand jury March 14 for alleged obstruction of justice for destroying Enron documents.

Newell Rubbermaid Inc., a consumer products company that ranks 270th on the latest Fortune 500 list of largest U.S. corporations, announced the appointment of Ernst & Young as auditor in place of Andersen, which had handled its books since 1984.

Freeport, Ill.-based Newell cited an interest in ensuring that its shareholders "continue to have the utmost confidence in the integrity of the company's financial statements."

Andersen spokesman Patrick Dorton emphasized that the majority of clients have not defected. "Thousands of clients in the U.S. remain with the firm and we are hard at work on their accounts," he said.