The global chairman of PricewaterhouseCoopers (PwC) has said audit remains “at the heart of what we do”, after global revenues at the professional services giant rose above $40bn (£30.66bn) for the first time despite a series of accounting scandals.
Total revenue across PwC’s international network of firms hit $41.3bn, a seven per cent rise in local currency terms, marking 21 unbroken years of rises in the face of several major setbacks and controversies in the sector
The company grew in all areas of its operations in all regions, with particular expansions in its advisory services, and across Asia.
Bob Moritz, its global chairman, told City A.M.: “The audit business is always going to be an important part of our portfolio of businesses”, but said there had to be an “evolution of audit”, which meant the company could not “rest on [its] laurels”.
Traditionally known for audit, PwC and Big Four rivals Deloitte, EY and KPMG – which collectively dominate audit contracts for the UK’s biggest companies – have increasingly put advisory businesses at the core of their operations, providing a wide variety of services to companies.
Audit services are under intense political scrutiny currently, which the Competition and Markets Authority (CMA) widely expected to be preparing to announce whether it will conduct a review into the sector. There have been widespread calls for the CMA to look into ways the Big Four can be broken up, with the suggestion doing so would improve competition and allow challenger firms to compete for the biggest contracts.
“I absolutely do not support break-up, I don’t think break-up really solves the problems of audit quality,” Moritz said.
“I am smart enough to know we are not where we need to be, we’ve gotta continue to improve and we should strive to be better,” he added.
“We’ve made mistakes and we are learning from those mistakes and improving upon them.”
Moritz was critical of some people calling for a Big Four breakup, suggesting they were doing so “for a big bang, as opposed to being more thoughtful”.
He said technology would improve quality, and “minimise” the gap between public expectation of what auditors should deliver and the reality, and said specialised knowledge on certain sectors was becoming an increasingly crucial part of its offering.
The firm has been linked to multiple scandals around the globe in recent years. In June this year it had to pay a £6.5m fine – reduced from £10m – for failures in its audit of failed department stores BHS, which also lead to one of its partners receiving a 15-year ban from audit work.
Among other international incidents, in January this year the company was slapped with a 2-year audit ban in India, where it provides accounting services to 43 of the country’s 500 biggest firms, after its failure to detect a $1bn fraud at Satyam Computer Services, as part of one of the largest corporate scandals the country had ever seen.
The Financial Reporting Council (FRC), which monitors the audit sector, is currently investigating PwC’s work for BT Italia, after the company revealed accounting errors which led to a £530m write-down. The FRC’s report is expected to report next year.
Moritz said misconduct issues were “serious” and “important”, adding that scandals made people “question where they want to hire [PwC]”.
“We have to be more transparent around the mistakes we make,” he said.
The company strongly emphasised recruitment moves, after its global workforce rose to 250,000 people, including taking on 27,016 graduates.
PwC is pursuing simultaneous goals of improving diversity and strengthening its tech operations, while also looking at ways to give employees a chance to have a positive social impact through their work.
Moritz said modern employees want to “have an impact, not only in the work they do, but in society at large”.