The news that another PricewaterhouseCoopers client had put its audit out to tender put a smile on the face of its rivals last week. Allied Irish’s decision was greeted by some commentators as further evidence that the merged firm was just too big for its boots.
Alas, it is not that simple.
It certainly is true that a number of companies are reviewing their relationship with PwC precisely because it is so big and has so many potential conflicts of interest. The firm’s concentration of clients in banking and insurance was recently cited by Abbey National as a reason to switch its audit to Deloitte & Touche.
Far more prosaically, the implementation of the principles of good corporate governance is leading automatically to companies tendering their audits.
Although the firms may not like it, company directors are accepting the argument that reviewing your audit regularly is a good way of keeping it objective.
The real problem for PwC is that its bullish public pronouncements are now coming back to haunt it. In the run-up to the merger, and since, senior partners have been insisting that no clients will be lost. In reality, of course, clients are looking at the new merged firm afresh.
No one is suggesting that PwC is hemorrhaging clients, but there is no doubt that the firm’s lack of candour has contributed to the current sense of alarm. Realism may be less macho but it hurts less in the long run.
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