KARACHI, July 2: Two of the top six firms of chartered accountants have held merger talks, which if the deal goes through would be the first such institutional merger in Pakistan.

Fordes, Rhodes, Robson, Morrow (FRRM) and Sidat Hyder Qamar & Co.,— both independent firms of chartered accountants — are understood to be pouring over a ‘terms sheet’, which forms the core of scheme of amalgamation of the two partnership firms.

“The discussions are really in a preliminary stage, but the desire for combination of businesses is apparently there,” confirmed a partner in one of the firms, who asked not to be named. If the talks progress as envisaged and both parties put their signature to the ‘terms sheet’, the merger of the two firms could be completed by as early as August 31, the source close to the talks said.

Fordes, Rhodes, Robson, Morrow maintains offices in principal cities with about a dozen partners to supervise the vast teams of audit and tax staff. The firm has continued to occupy a place among the top auditing firms for nearly three decades. FRRM is an affiliate of one of the global ‘big’ four accountancy firms: Ernst & Young.

Sidat Hyder Qamar & Co., also one of Pakistan’s big six (or maybe eight) accountancy firms — with nearly as many partners as that in FRRM — was in affiliation with Arthur Andersen. Also recognised as another of the world’s big, Arthur Andersen fell from grace in the wake of Enron bankruptcy and WorldCom scandal. The firm was the statutory auditor to both those global corporate giants that collapsed under the weight of ‘obstruction of justice’ indictment (Enron) and allegations of cooked up accounts (WorldCom).

As Andersen’s clients changed auditors world over, Sidat Hyder also went to lose a couple of audits, such as that of Singer Pakistan. In line with the parent’s decision to switch auditors globally from Arthur Andersen to KPMG, the 70-per cent majority stakeholder in Singer Pakistan voted at the June 25 annual general meeting to pass on the audit work from Sidat Hyder to Taseer Hadi Khalid & Co. — the affiliate of KPMG.

The possible loss of auditing jobs of Andersen related multinationals may not have been a major blow for Sidat Hyder, but an industry source admitted that international ‘branding’ is indeed a valuable asset. With the merger with FRRM, Sidat Hyder could hope to restore that lost asset.

Another look at the current affiliation of the remaining global ‘big’ four accountancy firms: KPMG is in affiliation with Taseer Hadi Khalid; Deloitte & Touche with (Khalid Majid) Hussain Rehman; Ernst & Young with Fordes, Rhodes, Robson, Morrow; and perhaps the world’s biggest and most powerful PriceWaterhouseCoopers with arguably Pakistan’s biggest in the field — A.F. Ferguson & Co.