Friday, May 3, 2002 | 11:10 a.m.
SUN STAFF AND WIRE REPORTS
CHICAGO -- Arthur Andersen LLP lost one of the biggest remaining blue-chip clients in its home city Thursday when UAL Corp., parent of United Airlines, dumped the troubled firm as its auditor after 67 years.
Andersen also lost Las Vegas-based Harrah's Entertainment Inc. Thursday as the casino company announced that it had hired Deloitte & Touche LLP as its independent public accounting firm.
In a statement Thursday, Harrah's said the decision to change auditors "was not the result of any disagreement between the company and Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure."
Harrah's spokesman Gary Thompson said today that actions by gaming regulators in New Jersey and Louisiana were at the root of the company's decision to boot Andersen.
New Jersey's Casino Control Commission voted to force casinos and their parent companies to sever ties with Andersen by May 15 because the firm was indicted on federal obstruction of justice charges in connection with the Enron scandal. Harrah's operates a property in Atlantic City.
Thompson said Louisiana regulators took similar actions in a move that would affect three Harrah's properties operating in that state.
The New Jersey action also is expected to affect another Andersen client, MGM MIRAGE, which is in a partnership with Boyd Gaming Corp. to build a resort in Atlantic City. MGM MIRAGE has yet to announce its plans, other than to say Andersen would not be able to represent the company in New Jersey.
Meanwhile, UAL said uncertainty was a key factor in that company's decision to drop Andersen. The airline company picked Deloitte & Touche LLP as its auditor for 2002, effective June 1.
Andersen has now lost the business of 314 of the 2,300 publicly traded companies whose books it audited last year, according to Auditor-Trak, which tracks the accounting industry on behalf of Atlanta-based Strafford Publications. The Big Five firm also reportedly had about 32,000 private, mostly smaller companies as clients in 2001. It's not known how many of those have defected.
Forbes magazine estimated recently that Andersen had lost more than $700 million of its $4 billion a year in annual revenue since Jan. 1.
Chicago, where Andersen was founded in 1913, has remained one of the firm's biggest client bases. But local companies have joined the rapid exodus of clients since Andersen was indicted in March on a criminal charge of obstruction of justice for destroying Enron records.
Among the other Chicago-area Fortune 500 companies to have replaced Andersen besides UAL of suburban Elk Grove Village are Walgreen, Sara Lee, Abbott Laboratories, R.R. Donnelley & Sons, Brunswick and Northern Trust.
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