On the money with Gavin Hinks

gavin hinks, accountancy age editor

He didn’t go when the news broke, despite press reports, but last week he had
to put himself at the centre of the storm as it became clear that the firm’s
position was worsening dramatically.

Observers in India believe that what’s at stake is PwC’s lucrative work for
state institutions and possibly the future of the firm in what has been one of
the fastest growing economies in the world.

That’s not to be under-estimated. PwC needs to be in India ­ if it’s not,
it’s no longer a global firm.

But what is he doing there? I imagine two things. Firstly he will be
reassuring key government figures of the
firm’s sincerity in trying to resolve the mess.

Secondly, he needs to know what part of the the mess is down to PwC and its
staff. Has the firm been hoodwinked by a sophisticated fraud or is the role of
the audit partners themselves more worrying?

Strategically, what leaders seek to do is ‘bottom out’ the crisis. Get the
worst of it out into the open, so you can move on.

There is something of a model in Mike Rake’s handling of the tax haven abuse
scandal that hit KPMG in the US.

Figure out what the problem is. Has the firm be fooled, or is it in someway
complicit? If it is complicit, work out where the poison is ­ instititionalised
across the network members or is it restricted to key individuals. Then hold
your breath and be ruthless. If it’s the network member, you need to ditch the
whole shebang as PwC itself did in Japan. If it’s individuals, act like KPMG,
cut them loose so there is distance between them and the firm.

It’s brutal, but it’s likely to be the calculation DiPiazza is making right

Gavin Hinks is the editor of Accountancy Age

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