PricewaterhouseCoopers (PwC), one of the world's top accountancy firms, has said it is to spin off its business consultancy arm to protect its reputation in the wake of issues raised by the Enron affair.

In a filing with the US stock market regulator, PwC said it was taking the action because the fallout from the Enron affair "is significantly limiting our ability to compete".

The collapse of Enron focused attention on whether auditors could be sufficiently independent of their clients, if their in-house consultants were providing those same clients with costly advice.

Since January, new rules from the US Securities and Exchange Commission have forced stock-market listed firms to disclose how much they pay auditors for other services like consultancy.

"The primary purpose of this offering is to ensure that we will no longer be subject to the rules and regulations governing the independence of auditors from their clients and to eliminate any perceived conflicts of interest," said PwC.

Windfall

However, it will also raise a lot of money.

Analysts expect the sale of shares in PwC Consulting could value the business at between $4bn and $6bn.

PwC has not yet put a price on the new shares.

But the 7,500 existing partners of PwC will not benefit because the money is needed to plug a shortfall in the firm's pension funds, according to a report in the Financial Times.

However, the 1,500 partners in the consultancy business could each get a windfall of up to $1m worth of shares, the paper said.

PwC Consulting is in the midst of rebranding itself as PwCC and shares in the firm will be sold under this name.

PwC has gained from the Enron fallout, picking up several Asian branches from Andersen, the rival accountancy firm facing prosecution over its part in Enron's collapse.