Big four audit, consulting model questioned in PwC tax leaks inquiry

afr.com:

Claims by big four accounting firms that they need specialised skills in their consulting businesses to deliver quality audits have been questioned after former PwC Australia chief executive Luke Sayers said he tried to sell the firm’s consulting arm during his time as leader.

Mr Sayers told the Senate inquiry into consultants last week that he had tried to separate PwC’s local consulting arm after becoming increasingly concerned about declining audit quality and the inherent conflict between the firm’s growing consulting arm and its tax and audit arm.

Labor senator Deborah O’Neill during last week’s ongoing Senate inquiry into consulting. Alex Ellinghausen

The attempt to sell PwC’s Australia, South-East Asia and New Zealand consulting business, which would have been lucrative for Mr Sayers and the firm given its then-estimated $1 billion price tag, was ultimately rebuffed by PwC global in 2019.

PwC later that year told a separate Senate inquiry into audit quality that it opposed separating the auditing and consulting arms of the big four firms.

The firm’s 2019 submission to the audit quality inquiry stated: “PwC Australia does not support operational separation of the big four firms in the Australian market.” Instead, PwC promised it had been evolving its approach to managing conflicts by changing the way audit partners were paid so they were not given incentives to sell non-audit services.

At the consulting inquiry last week, Labor senator Deborah O’Neill said the news that Mr Sayers had tried to sell the consulting arm showed that PwC’s leadership had been aware for years of the inherent conflicts between the firm’s profit motive and its public interest role.

In response, PwC Australia CEO Kevin Burrowes said he had