Many reforms following PwC tax leak scandal ‘already mandated in UK’
An expert in the management of professional service firms says many of the recommendations of the governance report into PwC Australia are for practices that are already mandated in the UK for the big four consulting firms.
Professor Laura Empson says professional services firms present unique challenges for leaders.
The report, published last week, was ordered in response to the firm’s tax leaks scandal, and made 23 recommendations for reform, including adding independent members to the firm’s governance board.
PwC Australia’s leaders have accepted all the recommendations and, in a first for the big four locally, will publish audited financial accounts from 2025.
Laura Empson, a professor at the University of London, said the big four firms in the UK already had independent directors on their boards.
“[It’s] good to see PwC [in Australia] adopting the practice already mandated in the UK for the big four and beyond,” she wrote on LinkedIn last week. “They appoint independent non-executives to their boards. But PwC [Australia] are going further by appointing a non-executive chair[man].”
However, she disagreed with the report’s finding that part of the firm’s problems were caused by the “overly collegiate” culture within the partnership.
“It seems that LACK of equality among peers was the problem at PwC, with some rainmaker partners exempt from the rules and other partners feeling they couldn’t challenge the chief executive who enabled this behaviour,” wrote Professor Empson.
She said the move to have an independent chairman was a “bold experiment for a professional partnership and just might work”. “My research demonstrates the importance of a dual leadership structure in professional partnership,” she said.
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