I trust that the efforts of the Oversight Board and the Andersen partners will together reaffirm Andersen's leadership in quality auditing

Paul Volcker

Mr Volcker has agreed to chair an independent oversight board that will work with Andersen "in making fundamental changes to its audit practices", the company said.

The company, which is one of the world's 'Big Five' accountants, has been criticised for its auditing work for Enron, which filed the US's largest corporate bankruptcy in December.

There have been suggestions that Andersen may have been less vigilant with regards to Enron's books as not to jeopardise its consulting contracts with the Houston-based energy firm.

Operation restore credibility

Andersen recently fired one partner who allegedly ordered the shredding of documents related to Enron's collapse, even after official inquiries into the case had begun.

Volcker "will assist" in the reform of accounting

"I trust that the efforts of the Oversight Board and the Andersen partners will together reaffirm Andersen's leadership in quality auditing," Mr Volcker said of his new job.

"I anticipate that our work will assist in the broader effort toward needed reform of a profession that, by its nature, must be the trustee of truth and transparency in our capital markets."

Mr Volcker was Chairman of the Board of Governors of the Federal Reserve, the US central bank, from 1979 to 1987.

The US Senate Commerce subcommittee will open hearings into the Enron bankruptcy in US history on Monday.

Andersen are due to give evidence on Tuesday.