PWC Scandal

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PWC scandal analysis

What key strategy was Joe Hockey focusing on during his time as Treasurer?

How many global companies were approached with a plan to avoid the new tax rules?

Why are there calls for all recipients of leaked information to be named?

What concerns does Senator Deborah O'Neill have regarding PWC's actions?

What is the main criticism of the independent review led by Ziggy Switkowski?

What accountability regime does Senator O'Neill believe should be employed to investigate PWC?

According to reports, what did the global chair of PWC say about the behavior of the firm's senior partners?

What other cultural practices at PWC have whistleblowers reported on?

How does Senator O'Neill view the so-called independent review led by Switkowski?

Do you think similar cultural practices exist in other large consulting firms in the industry?

How did the international arm of KPMG identify the problem that Australian regulators missed?

What issues have been associated with EY?

How many partners are allowed in a typical partnership according to partnership law?

Why does partnership law not apply to partnerships with over 20 partners?

What cultural issues have been allowed to fester in these big partnerships?

What is one of the main reasons why there is little disincentive for these companies to do the right thing?

What recommendations were made in a report into the auditing sector a few years ago?

PwC slashes 329 more staff, up to 37 partners face early retirement
Colin Kruger
12 March 2024

The Sydney Morning Herald - Online

Embattled consulting firm PwC is slashing its staffing levels again as it restructures a business that continues
to suffer as a result of the fallout from the tax leaks scandal.
PwC announced it would make 329 roles redundant over the next nine months and up to 37 partners would
accelerate their retirement from the firm. The moves follow a review of its remaining business after the forced
spin-off of the consulting firm’s government arm, which accounted for more than 20 per cent of its revenue
and is now known as Scyne Advisory.
PwC Australia CEO Kevin Burrowes says the cuts will help realign the business structure with the firm’s new
long-term strategy. Supplied
“The purpose of this review was to ensure the firm is positioned for future success and long-term growth.
Therefore, current to medium-term economic and market conditions were also taken into account,” PwC said.
The firm, one of the big four accounting firms along with EY, Deloitte and KPMG, has come under immense
pressure this year, and was forced to spin off its lucrative government business for $1 after partners at the
firm allegedly used confidential government tax plans to help multinational companies avoid the new scheme.
“This has been a very challenging and complex process, but an important one, as we realign our business
structure with our new long-term strategy,” PwC Australia chief executive Kevin Burrowes said.
“At its heart, this reorganisation will make the firm a more simplified, efficient and centre-led business,
enabling us to continue delivering the highest quality of service to our corporate and private-sector clients.”
The latest round of job losses adds to the 340 staff sacked in November as PwC’s core consulting business
was hit by the tax leaks scandal and general economic conditions.
“We acknowledge that days like today are especially difficult for those affected, as well as their teams and
colleagues. I can assure you that we will work closely with impacted individuals to ensure they are aware of
their options and next steps,” Burrowes said on Wednesday.
PwC employed more than 8000 people, including more than 900 partners, before the scandal. About 1200
staff and 100 partners joined Scyne Advisory last year.
The latest cuts come just days after longtime PwC client Westpac announced the replacement of PwC as its
auditor. The firm generated more than $70 million in fees with the bank over the past two years.
While the trouble centred on PwC’s tax practice, not its audit business, the scandal triggered a damning
report into the culture of the whole organisation and led to questions about its suitability as an auditor for
some of Australia’s biggest companies.
The drain of business is also hitting partner pay levels, which dropped 12 per cent last year, and are expected
to drop a further 30 per cent this financial year as PwC bears the full brunt of revelations that a number of
senior partners had used confidential government advice to drum up work from multinational companies and
help them pay less tax.

What insights does the scandal provide into the overall challenges and complexities faced by audit firms ?

What challenges does Mr. Erickson identify regarding the listing process, particularly in the US?

From a regulatory perspective, what balance do regulators need to strike, according to the text?

What implications do these observations have for the future of capital markets, as discussed in the text?

Guess what is the source of this text ?

📷
Opinion
It's time to clean up consulting
The Australian Financial Review
Deborah O'Neill
By Deborah O'Neill
6 March 2024,
 We cannot let the pendulum swing back to the unacceptable status quo where greed, deceit and a conflict of interests are allowed to thrive.
It is now more than a year since parliament, and the public, first heard the shocking allegations of misuse of confidential government information at PwC.
In a Senate estimates hearing late on February 15, 2023, Australia was shocked to hear about Peter Collins of PwC, and the international scheme of tax avoidance planned by one of our country's most visible companies.
Following this revelation, there has been a torrent of criticism against our largest consulting, audit and accounting firms: KPMG, EY, PwC, Deloitte, McKinsey, BCG and Accenture. Almost every one of these franchises and conglomerates has faced a public lashing at the hands of the media or parliamentary inquiries.
But this is not the first time that major consulting firms have faced intense criticism.
The consulting pendulum is a concept that suggests that at some points public favour is inclined towards consultants, and at other times they may face intense public scrutiny and critique.
The sector's ongoing survival and largely unchanged methods of operation are supposedly assured by the pendulum's eventual swing.
It is time to end this back-and-forth, and to still the pendulum at an appropriate point, where the valid contributions of these firms can be recognised and valued, but those contributions are made within a framework of assurance on ethical standards and professional conduct that is in the national interest.
Since PwC's gross misconduct became public, the sector-wide airing of grievances has been necessary and the exposure of wrongdoings by every major firm has been deeply confronting.
However, real change demands more than public shaming.
The Albanese government has been prompt and firm in its response to this scandal. There have already been fundamental changes to both government procurement practices and the penalties applicable to those engaging in wrongdoing.
The Senate's finance and public administration committee will soon table its final report, which will speak to the government's use of consulting services and the procurement practices and ethical considerations that govern this area of public expenditure.
Beyond these issues remains a vast ecosystem of regulatory capture, ethical malaise and administrative dysfunction within the audit, consulting and accounting sectors. It is the prerogative of both the public and private sectors to ensure that the work of reform does not stop here, and that the thoughtful deliberate work of sector-wide rehabilitation is assured.
So far, the problems have been revealed and the territory laid out. Now the task is to get into the detailed, careful work of deep consideration and a robust and sustainable reform package of policy ideas and recommendations.
The parliamentary joint committee on corporations and financial services that I chair will spend the next months consulting with industry stakeholders and key firms with a view to genuine, long-lasting reform of this troubled sector.
It is an undertaking necessitated by the severity and complexity of the transgressions to which we have all been witness. This body of work is a moral, economic and political imperative for the benefit of the financial markets and all those Australians whose superannuation investments are reliant upon the ethical action of auditors.
This is a historic moment that demands immense scrutiny for the audit, accounting and consulting sector. We cannot allow the pendulum to swing back to the opaque and unacceptable status quo where cultures of greed, deceit and conflict of interest mismanagement are allowed to thrive. We cannot allow the degradation of basic ethical and governance principles, the minimisation of staff welfare, and the gross abandonment of professionalism to ever occur at this level again.
The firms in question are deeply enmeshed within our financial sector, government departments and the superannuation industry. These firms play a crucial and irreplaceable role within Australian society, but we must fundamentally change how they engage in our public life and in our economy. There must be an ongoing determination within all public and private spaces of our nation to clearly commit to procedures, practices, beliefs and ethical standards that reveal and accept the primacy of the public good above all other considerations.
To guard against the kind of misconduct that has occurred from ever happening again, government, industry and the firms themselves need to participate in the process of change, and fully commit to it. It is a significant task, but it is one worth undertaking.
Senator Deborah O'Neill is chairman of the parliamentary joint committee on corporations and financial services.

In what ways does the author emphasize the importance of ethical standards and professional conduct in the national interest?

What are some of the challenges highlighted by Senator O'Neill regarding the current state of the audit, consulting, and accounting sectors?

How does the author characterize the role of consulting, audit, and accounting firms within Australian society, and what changes does she propose for their engagement in public life and the economy?