Arthur Andersen's recent troubles in the wake of Enron's financial meltdown and its uncertain future have begun wafting over to the fund industry.
According to data from Lipper, Andersen is the independent auditor to 410 mutual funds with total net assets of $167.2 billion, or about 6% of the mutual fund industry's assets. Among the industry's top 10 auditing firms, Andersen places fifth, far behind the fund industry's top auditor, PriceWaterhouseCoopers, which audits an overwhelming 55% of funds' assets with a collective $3.5 trillion in assets. Deloitte & Touche takes a distant second place as auditor for 1,100 funds and 18% of industry assets.
Andersen's list of mutual fund audit clients include Fred Alger Management, Calvert Group, The Hartford Funds, Northern Trust, Nuveen Investments, Pioneer Investments and Wasatch Funds, according to Lipper.
Andersen had not returned calls seeking comment by press time.
So what are Andersen's fund audit clients doing--jumping ship or keeping the faith? While several clients declined to comment, most said they are watching and waiting.
"We've been in close contact with our [audit] team and partners at Andersen, and also with the audit committee of our funds," said Elizabeth Laurienzo, a spokeswoman at Calvert. "At this time we will continue to closely monitor this situation and will take appropriate action when, and if, necessary."
"In the best interest of our shareholders we are exploring other options and we are examining other auditing companies and possibilities," said a spokeswoman with Wasatch Funds.
Jim Connelly, executive vice president at Fred Alger Management said Andersen audits all of the firms 17 fund portfolios. He suspects the source of Andersen's problems may to be within its Texas office.
"We've worked with the New York office of Andersen for years," he said. They are a good group of knowledgeable people, and are very good auditors," "We are not going to react. We will continue to use them," said Connelly.