Speaking just days after announcing the ground-breaking split of the firm’s audit and consulting arms, PwC chief executive James Schiro told clients: ‘This constitutes something unique to the Big Five – a completely independent global auditing firm.’
PwC will now comprise the assurance practice, tax and legal services and other business advisory services only. It is considering floating its consulting arm.The move is expected to herald a similar wave of rationalisation among other Big Five firms. KPMG, which announced the incorporation of its consultancy business last month, said this week that it expected to introduce a similar structure after it completes a review of its operations.
Schiro’s thinly-veiled side-swipe at the competition is designed to pacify clients who are keen to be reassured that the new structure will not affect their dealings with the firm.
The move comes ahead of the Securities and Exchange Commission, which recently issued a damning report into PwC’s sharedealings in quoted audit clients, widening its probe into compliance with audit independence rules.
Other firms will now be forced to examine their own structures. One senior regulator said: ‘The SEC is clearly doing battle against the accountancy firms and until there is total division between audit and consultancy, it will continue.’
The SEC declined to comment on whether PwC’s new structure would satisfy its tough regulatory stance but other Big Five firms denied the changes would have any effect on their businesses.
David Whitmore, head of Arthur Andersen’s audit practice, said: ‘This statement is not something we would agree with. We are continually looking at what appropriate action we should take with our business, but there is nothing to report at the moment.’
KPMG audit partner Ted Awty said PwC’s plans were sketchy. But he added: ‘We are likely to move to a position that they have already been working towards.’
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