NEW YORK (CNN/Money) -
Arthur Andersen LLP plans to follow through on reforms suggested by former Federal Reserve Chairman Paul Volcker and cede control of the accounting firm to an outside board, outgoing CEO Joseph Berardino told CNNfn.
Key Andersen audit leaders in the United States are communicating their support of the Volcker reforms, a source close to the situation told CNN/Money Wednesday.
"There will be a meeting this week to hammer out how these reforms are implemented," the person said.
Berardino, who resigned as the leader of Andersen, told CNNfn Tuesday that Volcker's group would become the de facto board for Andersen and that top managers would step down. The accounting firm will also split its auditing and consulting units, Berardino said.
A spokeswoman for Volcker declined comment Wednesday. The former Federal Reserve Chairman heads an oversight board charged with implementing change at Andersen.
An Andersen spokesman also declined comment.
Berardino's resignation was seen as a last-ditch effort to save Andersen and sway the Department of Justice to soften its stance. But a Justice spokesman said Wednesday that Berardino's resignation will have no effect on the DOJ's indictment of Andersen.
"We are still moving forward with the trial date," the spokesman said. "This doesn't change anything."
On March 14 the government filed a one-count criminal charge against the firm for allegedly obstructing justice by shredding Enron documents. Andersen has since fought back, launching a massive public relations campaign to publicize the firm's claim of innocence.
Berardino will stay on for a few days until a successor is named. The senior executive's resignation comes 15 months after he assumed the helm of Andersen Worldwide SC, the umbrella organization that controls the Andersen partnerships across the world. Arthur Andersen is the U.S. member firm.
The board of Andersen Worldwide, which is comprised of 18 representatives from member firms across the world, is expected to meet soon with the primary goal of naming Berardino's replacement. Anne Groves, an Andersen spokeswoman in London, told CNN/Money that although a meeting to appoint a replacement, or an interim CEO, for Berardino is not scheduled for Thursday, the partners will discuss the issue over the next couple of days.
But a different source within Andersen told CNNfn that Andersen Worldwide Partners will meet in London this weekend.
Berardino's resignation is not the only management change at Andersen. After Andersen was indicted, the firm restructured and named Larry Gorrell to head an administrative board to oversee the U.S. partnership, a spokesman said.
Gorrell replaced Terry Hatchett, who was head of Andersen North America. Hatchett remains on the administrative board and is still an active member of Andersen, the spokesman said.
Andersen is considering cutting 6,000 jobs in the U.S, more than 20 percent of the accounting firm's workforce, the Financial Times reported Wednesday.
The accounting firm said it is considering a number of options but that no final decision on reductions in its U.S. personnel has been made. Andersen is trying to accommodate those who will remain at Andersen and those who will search for other opportunities.
"Given the decision by the Justice Department to indict the entire 28,000 person firm, it is inevitable that some reductions in the workforce will have to be made in the coming months," Andersen said in a statement Wednesday.
Berardino said Tuesday that continuing as CEO of Andersen would have impeded Volcker's and others' efforts to save the firm. Volcker last week called for a seven-member board to take control of the accounting firm. Volcker, who would head the new Andersen board, also recommended a change in the firm's senior management and proposed that the Department of Justice consider more lenient actions.
Volcker, in a statement Tuesday, said that Berardino believes his resignation will help "clear the air" and facilitate the recovery of Andersen under fresh management.
The Department of Justice will take into account all meaningful reforms at Andersen and any acceptances of responsibility, a DOJ spokesman said. However, the DOJ has not changed its position.
Andersen served as Enron's auditor for 16 years before it was fired in January. Houston-based Enron allegedly used off-the-books partnerships to hide nearly $1 billion in debt and inflate profits. Andersen, as Enron's outside accountant, signed off on the energy trader's financial statements.
Enron filed the largest bankruptcy in United States history in December.
Merger on the brink?
Arthur Andersen is still trying to find a buyer for its businesses in the United States, press reports said. Chicago-based Andersen failed in talks to merge or sell all or parts of its operations to Ernst & Young and Deloitte Touche Tohmatsu.
The Wall Street Journal reported Wednesday that Andersen is holding discussions with several firms, including Deloitte & Touche (the U.S. member firm of Deloitte Tohmatsu) and KPMG to sell U.S. operations that aren't connected to Enron.
A sale of Andersen's non-audit businesses could raise as much as $5 billion or as little as $1 billion, the report said.
Deloitte & Touche could not be reached for comment, while KPMG declined to comment.
Outside the United States, Andersen's proposed deal to merge its businesses with KPMG International continues to stagger. Partnerships have broken ranks and joined with rival firms. Andersen Australia's operations on Monday abandoned negotiations with KPMG due to a conflict.
Both Deloitte and Ernst & Young are in talks to acquire Andersen's Australia unit, sources close to the situation told CNN/Money. However, either firm could win, a source said.
But Andersen's Japanese member firm, Asahi & Co, did sign a memorandum of understanding and has begun the process of merging into KPMG. Asahi Group in Japan has more than $ 400 million in revenue and over 3,500 personnel.
--CNNfn Correspondent Allan Chernoff contributed to this report