Washington, Aug. 26: It might seem like the worst of times for accounting firms: Accounting scandals dominate the news. Congress last month passed a law to regulate auditors more strictly. Arthur Andersen LLP, convicted of a crime, has virtually disintegrated. However, for the remaining big accounting firms, the business outlook may be rosy, industry officials say.

The collapse of Andersen, which was the nation’s fifth-largest accounting firm, has created a windfall for Big Five survivors, which have taken on most of Andersen’s former clients.

Furthermore, the parade of accounting horrors at companies such as Enron, WorldCom, Xerox and Qwest Communications has sensitized corporate boards to the dangers of lax audits. As a result, companies have asked their auditors to do more work and are likely to go along with higher audit fees, auditing specialists say.

The Sarbanes-Oxley Act, which Congress passed in July in response to the accounting scandals, limits the consulting work accounting firms can perform for companies they audit. But one big accounting firm’s loss might be another’s gain, industry analysts say. For example, Deloitte & Touche LLP may pick up business that Ernst & Young LLP loses, and vice versa.

The law also requires auditors to perform additional services-such as examinations of companies’ internal controls-which are likely to translate into additional revenue.

“If anything, we’re being elevated in this whole process,” said Richard Kilgust, global public policy leader of PricewaterhouseCoopers LLP. “I look at it as being a plus for our business, for the auditing business. It’s hard for me to see that this is a negative.

“I think revenues will definitely be higher,” he said. “There is some possibility also that (profit) margins will be higher.”

It’s too early to know how the new law will affect practices in the accounting industry, many observers say. The Securities and Exchange Commission has yet to translate the legislation into detailed rules, and key provisions may not take effect at least until the fall of 2003.

The law, which governs audits of companies listed on stock exchanges, prohibits auditors from providing several types of services to audit clients. But most of those activities already were banned under SEC rules adopted in 2000. An exception involves IT consulting. The new law for the first time prohibits auditors from designing or implementing computer systems that generate financial data they are responsible for auditing.