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PwC Consulting Chief Hartz Resigns

January 28, 2002|From Bloomberg News

WASHINGTON — PricewaterhouseCoopers, the largest accounting firm, said Scott Hartz resigned as chief executive of its PwC Consulting arm and was replaced by Thomas O'Neill, formerly the firm's chief operating officer.

O'Neill's appointment was made by Samuel A. DiPiazza Jr., Pricewaterhouse's global CEO, said Sehra Eusufzai, a spokeswoman for the firm. Eusufzai said she didn't have information on the reason for Hartz's departure. Eusufzai said Friday that Hartz will stay at the firm long enough for a reasonable transition.

Hartz joined Pricewaterhouse in 1970 and became a partner in charge of the firm's U.S. southeast and mid-Atlantic regions, according to a biography on the firm's Web site.

Neither Hartz nor O'Neill could immediately be reached for comment.

Hartz's departure comes as the U.S. accounting industry faces greater scrutiny after Enron Corp.'s collapse and reports that its auditor, Andersen, helped the Houston energy trader conceal debt and destroyed Enron-related documents.

One issue that regulators are probing is whether accounting firms' dual roles as auditor and consultant jeopardize the independence of their audits. Andersen made $27 million from nonaudit work for Enron in 2000, more than the $25 million it was paid as auditor.

"The likelihood that Congress will force the divestiture of at least some consulting activities by the major accounting firms has certainly been increased by the Enron debacle," said Richard Breeden, a former chairman of the Securities and Exchange Commission.

He added that both Congress and the public are more sensitive to the "substantial conflicts of interest built into the current structure of the Big Five" accounting firms.

Although Breeden said he doesn't know Hartz and isn't aware of the reason for his departure, Breeden said it's reasonable to expect limits on audit firms' consulting role.

"Consulting partners who work for audit firms are probably worried their business could be affected down the road if Congress adopts restrictions or if the business community decides it's not healthy to buy their consulting services from consulting arms of audit firms," he said.

PwC Consulting had revenue of $6.7 billion for the year ended June 30, representing about 30% of Pricewaterhouse's total revenue of $22.3 billion. The unit has more than 35,000 consultants and does work for more than half the Fortune Global 500 companies, according to the firm's Web site.

Accounting firms are eager to sell consulting services to clients because they're more profitable than auditing services.

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