Andersen, like all the other global accounting firms, offers its clients a mix of low-margin auditing work, combined with high-margin consulting work. Unluckily, some of Andersen's consulting work has been extremely "aggressive" in the telecoms sector. Andersen has reportedly been widely advising clients on the use of capacity swap arrangements, which artificially boost both companies' revenues, without incurring any cost to the profit-and-loss account.

Qwest is currently under investigation from the Securities and Exchange Commission, for its use of these capacity swaps, advised by Andersen. Denver, Colorado-based Qwest disclosed the decision to drop Andersen in a proxy statement filed last week by Qwest. The SEC and various other US financial standards bodies have tried for a long time to force accountancy firms to not give audit and consulting advice to customers, as there is a perceived conflict of interest.

Auditors may not be particularly diligent if they run the risk of losing the far more lucrative consulting work. In 2001, Qwest paid Andersen around $3.6m for audit and related services, and $8.3m for consulting services. Qwest insists the decision was voluntary.