"As a firm, we are committed to moving forward with reforms that will create higher standards and restore the public's faith in Arthur Andersen and the public accounting profession," Andersen said in a statement released jointly by the two accounting firms.

"We are continuing to work together to consider possible ways in which to combine our operations throughout the major markets of Europe, Africa, Middle East, Canada, Asia and Latin America.  Such a combination would be complementary in terms of geographic coverage and industry expertise."

Meanwhile, Arthur Andersen said while merger talks continue, it will remain part of the Andersen Worldwide network until Oct. 1 or until a transaction is completed between Andersen's member firms and KPMG.

Any transaction between the two firms would require the approval of member firms' local partners and regulatory authorities.

Deloitte Touche Tohmatsu and Ernst & Young both pulled out of merger talks last week, prior to the indictment of Andersen.

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